August Sizzles On The Platter
Equities start the day flat as August sizzles on the platter. Not a great month for stocks but I’m telling you what, this time it’s different (the worst phrase to use in investing!!). All those other Augusts didn’t have the Fed standing in the batter’s box ready to swing a huge bat. We’ve been on hold all year waiting for Janet and her crew to make their move so I don’t see why anything would be different this month. Sure, we’ll have our up’s and down’s like the others but ultimately this market is going nowhere until that first rate hike is handed down. All the major concern has shifted to AAPL as it broke its 200 day yesterday. Is that a big deal? Sure, maybe, I guess it could be. It’s been pointed out that only a few stocks are leading the parade and Apple is definitely one of them so if it falters that’s a pretty big deal. On the other hand, Transports have successfully traded above their 50 day MAVG for four days now which might signal a change in that goat rodeo (we need it to change badly). So many cross currents my friends…which one should we pay attention to? I guess all of them, or none of them, I’m not sure they matter. The Fed…The Fed looms….it’s all about that Sep meeting. We can talk endlessly about trends and moving averages and margin debt and training camps but none of it means jack right now. We wait…just wait…..like standing at the bus stop staring down the street saying “really..are you ever gonna get here?”
After the open, this was an actual headline on the venerable “Drudge Report”. Two thoughts swirled thru my gray hair covered head and I pondered the ramifications of such a claim 1) COME ON MAN and 2) I wish I thought of it because that’s some epic clickbait. Apple did indeed trade lower (down 3%) but I honestly doubt one company could “bring down the market”. A few could (financials circa 2008 almost did), but one company, no matter how big, probably won’t crater a $19 trillion dollar market. That being said, this video about sums up Apple’s chart. We spent most of the morning going sideways because its August and virtually everyone is on vacation still (you should see the string of “out of office” I get when I hit send on this thing, it looks like a slot machine). A few decent movers to talk about though. NFLX rose 7% because they are launching in Asia, VMC also rose 7% after beating earnings with their pointy ears (sci fi nerdery!), and IPCM jumped 35% after getting a takeout offer from Team Health. Hey junior banker….are you in Healthcare M&A or Healthcare banking anything? Congrats on winning the 2015 lottery. Losers were ALL, NRG, NK, and CNX. Coal…my God. Are there going to be any survivors in this space? Maybe Tiffanys? All of their charts look like the glidepath to runway 10L at O’hare.
The afternoon saw us break the sideways malaise and trade lower. Why? Well, it wasn’t Apple or Crude oil. Atlanta Fed President Lockhart said “there’s a high bar not to act in Sep” and that was enough for sell algos to break away from smashing coal stocks and start smashing all stocks. We closed at 2,093, down 22 bps, but we’re still nowhere. Someone on Twitter said its been 50+ days since we made a new high and that’s the longest streak in 2+ years. We’re on perma hold people, it’s like calling the cable company and trying to cancel. Sideways, it ain’t just about Merlot anymore.
Final Score: Dow -22bps, S&P500 -22bps, Nasdaq -19bps, Rus2k -24bps.
- Succinct Summation of the Day’s Events: Quiet August Tuesday. Some hawkish Fed speak, weakness in AAPL, and earnings specific moves.
- Cullen asks “what have Q2 earnings taught us”: So, the long story short is that the decline in energy is having a substantial impact on earnings as a whole, but the ex-energy economy is not as weak as this story says. And the reason the US stock market probably hasn’t declined substantially is due to the fact that there is now some pent up upside risk if energy prices rebound and lead to better than expected growth in the energy sector. After all, if energy starts to positively contribute to growth in the coming year then those earnings expectations are going to rebound as well. So, in a strange way the US stock market might be telling us that it thinks we’re closer to the bottom in oil prices than the top. In other words, all this global turmoil isn’t going to sink corporate America and that means the stock market is beginning to discount the economy being closer to an energy trough than some might think.
- Come on…do we really think that housing is in another bubble? “In some ways, the current housing bubble is even more bonkers than the last one — which, if you’ll recall, sorta-kinda almost destroyed the world’s financial system.” Honestly, I had to prove 5 years of income and present asset statements that were rock solid before a major bank would even look at me. Lending standards are WAY different now, we aren’t in another housing bubble.
- San Francisco though…. “Someone gets an award for investment of the year at 1150 Sacramento St., #202. Property records show the unit, a 2-bed, 2-bath co-op on Nob Hill, sold for $690K in June of 2014. It was listed, went pending, fell out, was relisted and then sold for $1.740M in May 2015. No need to do the math: we’ve done it for you. That’s an appreciation of $1,050,000 in one year.
- Every time I think living in Florida would be cool….nah maybe not.
- We’re on a road to nowhere….2015 is now tied with 1933 for the second most 50-DMA crosses since 1929. Further, if the index closes above its 50-DMA one more time this year, it will be tied with 1993 for the most crosses of the 50-DMA in a given year on record. Keep in mind that there are still nearly five more months left in the year!
- One of my favorite chartists looks at the S&P from the top down: “I still think this overhead supply is too much to ignore until the market proves it can be break through it. Regardless of the Fibonacci extension target being hit, regardless of the breadth of the market deteriorating, we are still within a sideways range, period. Price is the only thing that pays, so that’s always indicator #1. Until this resolves to the upside I would continue to stay away. A smart trader once told me,“If you trade the averages, you get average returns”. I have to agree with that, but even more so when the market lacks a trend direction.”
- I swear this isn’t an ad but I absolutely love this thing. We got it for summer and it’s a total home run. Puts out incredible sound in a small package.
- Dinner Party etiquette! You need to read this story, brush up on age old traditions we all whiff from time to time. Speaking of booze, how many bottles of pinot have to die before we stop bringing subpar, last-minute wine to dinner parties? As much of a no-brainer as you may think the bottle of wine-as-tribute is, therein lies its downfall: very little thought.
Once again I have a couple end links for you. This time we’re gonna see just how big your attention span is.
The first video is 14 minutes of motorbike crashes. Lots of painful stuff in here
The second video is 14 seconds of hammer throw fail. I guarantee 99% of my readers choose this one. We live in such a quick hit society right?
Have a good night.