A Truckload Of Earnings
Equities start the day lower as a truckload of earnings gets dumped in our laps. All kinds of reports last night and this morning got people buzzing about the market! Companies like FB, QCOM, TXN, DNKN, EBAY, T….I mean I could go on and on but you’d delete this email so fast it would make my head spin. We can get to the nitty gritty of winners and losers later but let’s chat really briefly about internals! How exciting, when you opened this I bet you were saying “if he doesn’t talk about market internals I’m going back to the Treasury recap where they were talking about historical yield curves.” Since we are sitting on the highs I wondered whether market breadth was where we needed it to be.., or is there a worry to be had. Bespoke had a great link last night looking at this topic and here was their conclusion: “breadth has been hanging right in there with price. This implies that there are no negative divergences underneath the surface making the market vulnerable to a bigger decline. That doesn’t mean that the market can’t fall from here, but instead that the internals aren’t suggesting any weakness.” That sounds pretty good right? I mean it’s not a screaming buy signal but it helps to hear that the machinery below ground isn’t creaking. We’ve also seen ultra broad indices like the Wilshire 5000 and NYSE Composite threatening their own breakouts so we just need it to happen! I mean doesn’t it feel like if we got one or two days of fresh highs that a giant capitulation would occur? All that patience would finally end? It does to me, which is why this entire process has been so frustrating. Ok, let’s see what Thursday brought.
After the open, we spent a little time underwater but you know what? The sun beckoned, and we swam towards the surface. Right before lunch we broke above the waves like we had just shot out of Monstro. Higher…a bit higher…then as I digested some really bad leftovers the S&P touched 2,118, JUST shy of the intraday high on Feb 25. Tons of earnings today but you know what sector had the most eye opening move? That’s right…energy. We’ve spoken about this a lot recently but wow…I mean is the bottom in here? Oil seems to have found its 2nd wind from the low 40s and today nearly touched $60. All sorts of “hey, remember me?” type moves from names like HAL, CAM, NOV, and HP. Tech and media also looked good with winners like CVC, T, DTV, EBAY, JCI, and IBM. IBM and Crude…glad they made the same recap. Both things were just hated…hated….sentiment was godawful. Now they creep ever so higher because that hatred is fading into the rear view mirror. Fun to watch. Losers were PHM/LEN (new home sales not so hot), TXN (earnings), and GM (earnings). By lunch it felt like we were finally going to put this sideways misery behind us!
Which we did…kinda. The S&P touched 2120, which is a new all time “intra-day” high, but slid near the end to close at 2,113. Which is, as you know, is not a new all-time closing high. The Nasdaq composite DID put in a new all time high, so, you know, if you bought in March 2000 congrats! You are back to even! What do we need now? Follow thru, plain and simple. Friday flat out HAS to be an up day or this might all be in vain. Friday is huge…HUGE. You gotta tune in tomorrow because it’s gonna be bigger than the Superbowl….of random Fridays….in US markets….in April….of this year….
Final Score: Dow +11bps, S&P500 +24bps, Nasdaq +41bps, Rus2k +48bps.
- Succinct Summation of the Day’s Events: Touched new highs. Whohoo. There was no macro catalyst, it wasn’t due to some Fed speaker or data point. Just a market that finally got tired of banging its head on the ceiling.
- After hrs movers (415pm ET): JNPR +7%, SBUX +4%, MSFT +3%, GOOG +2%, AMZN -4%, UBNT -14%, AWAY -15%.
- Tidbit of the day: CMCSA is debating dropping their TWC deal. If it fell thru it would rank as the 4th largest US M&A cancellation ever. There have to be bankers cancelling their Apple Watch.
- Come on WSJ! Not exactly the kind of story we need on the highs! “The 36-year-old one-time club promoter is among a vanguard of retail investors who are diving into the stock market with social media as their primary tool for research and communication. Some aspire to become investing stars themselves”
- This one is much better! Thanks Marketwatch: Forget about Wall St: Shanghai is now the market to watch. Yes yes! Go look over there, nothing to see here.
- Is the US economy a boring dividend stock? Interesting thought about that here: The debate over secular stagnation is all the rage today, but I want to throw out another potential option – the golden era of low and stable growth. If we look at the growth in the US economy it’s clear that we’re becoming a lower growth economy. But this might not be all bad because while the rate of growth is slowing the quality of our growth isn’t necessarily deteriorating.
- Wouldn’t you love to know the story behind this?
- Things Michael should’ve Invented #112. I would play way more golf if these were widely available.
- Barry looked at that same chart I did earlier: “When we look at how market tops get made, it is usually on narrowing breadth and diminishing advances. The good news is that we are not seeing signs of that domestically. However, the bad news is the easy-money may have been made already -- at least, in the U.S. Because of the large gains in the past six months, hotter markets abroad, elevated valuations and earnings hampered by low oil prices, U.S. equity markets could still have some wandering ahead of them.”
- This actually happened….it’s not a movie
- We are moving to a new home and seriously, seriously debating cutting the cord. This is 100% my family.
We’ll end tonight with something I can’t say I’ve ever seen before. A snowmobile base jump. You’d think they use a more beat up snowmobile given the result…
Have a good night.