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Weekly Market Recap Apr 15, 2018

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One thing technicals cannot account for are news events, and Tuesday’s relaxation of fears about #TRADEWARS(tm) due to a speech in China drove indexes to a very nice rally that day.  That said we’ve stated that fear has been a bit overblown and emotional as we are in the bluster and trial balloon stage.

Monday, Trump tweeted “China will take down its Trade Barriers because it is the right thing to do. Taxes will become Reciprocal & a deal will be made on Intellectual Property.”  Tuesday, Chinese President Xi Jinping made a speech touting plans to give foreign companies greater access to financial and manufacturing sectors. He also talked about a cut in tariffs on car imports and an improvement in protection of intellectual property, among other measures.

“It was a short-term surprise to the risk markets that Xi put out a positive comment saying he’s open to trade negotiations and relaxing trade restrictions. This is going to be an ongoing issue for months, but for today it’s a shot of adrenaline,” said Chad Morganlander, senior portfolio manager at Washington Crossing Advisors.

All that said, more #TRADEWARS(tm) hand waving could be coming as it was reported late in the week the White House plans to step up pressure on China to make trade concessions, via a plan for fresh tariffs and a threat to block Chinese technology investments in the U.S. Details of which Chinese products are on the hit-list of $100 billion in tariffs could be revealed as soon as next week.

For the week the S&P 500 gained 2% and the NASDAQ 2.8%.

Crude oil rallied through the week, hitting the highest levels since late 2014 as the tensions in the Middle East fed concerns over potential supply disruptions in the region.

“With the U.S. oil production set to rise further in the coming months, the global oil market will likely remain amply supplied in the long-term. We therefore think that oil prices will struggle to rise significantly further, although in the short-term price spikes are possible given the heightened possibility of military action in Syria,” Razaqzada wrote.

On the economic front, the consumer-price index fell 0.1% in March, while the core CPI—which excludes food and energy—was up 0.2%. Both readings were in line with analyst forecasts.

The minutes from the Federal Reserve’s latest policy meeting show that policy makers discussed the need to tap on the brakes on the economy.

Here is the 5 day weekly “intraday” chart of the S&P 500 …via Jill Mislinski.

Also from Jill, the # of >1% move days on the S&P 500 in 3.5 months is already nearly at levels seen for entire years such as 2013 and 2014.  And you can see just how BORING and unusual 2017 was.

Zillow is getting into the house flipping business!

Trillion dollar deficits are soon here again — but this time during an expansionary period.   And they soon look to be a permanent thing – the real interest now is when the next recession comes and it’s time to “stimulate the economy” is if we can see a $2 trillion deficit.  But no worries – tax cuts pay for themselves!

The Congressional Budget Office on Monday forecast a rising tide of red ink in the coming years, saying that trillion-dollar deficits will return in 2020 in its first report since President Donald Trump signed last year’s tax cut and this year’s big spending bill. The CBO said the budget deficit would be $804 billion for the current fiscal year, which ends Sept. 30, well above the $665 billion shortfall the government notched at the end of fiscal 2017.

The U.S. hasn’t run deficits exceeding a trillion dollars since 2012. From 2009 to 2012, deficits were above $1 trillion as the government grappled with the recession and a financial crisis.  Debt held by the public will rise from 78% of the economy at the end of 2018 to 96% by 2028, the report estimated, and said that would increase the likelihood of a fiscal crisis.

The week ahead…

Earnings season will begin in earnest with the next few weeks bringing most of the big hitters.  Earnings season is expected to very strong – it will be interesting to see how companies guide up the rest of the year due to the tax cuts.  More #TRADEWARS(tm) and political intrigue.  Retail sales for March will be reported Tuesday.

Index charts:

Short term: Things look better than a week ago but some more work is needed over the intermediate term.  The S&P 500 DID hold that 200 day moving average despite testing it quite a few times.  That said breaking over 2800 would be a new “higher high” and would signal and all clear – that is quite a ways away.  Also, breaking over the trendline connecting the 2 recent highs of January and March would be a needed first step.

The Russell 2000 is back over its 50 day moving average.

The NYSE McClellan Oscillator was positive this week so a feather in cap for the bulls, but it’s not aggressively above 0.

Long term: Still very positive for the “buy and never sell” crowd.

Charts of interest / Big Movers:

Monday, in the biotech lottery AveXIs (AVXS) surged 82% after Novartis (NVS)said it would acquire the clinical-stage gene therapy group for $8.7 billion in cash, or $218 per share.

Verifone Systems (PAY) surged 52% Tuesday after the payment and business services provider said it has agreed to a $3.4 billion private-equity acquisition by a group led by Francisco Partners.

Also Tuesday, Sprint (S) surged 17% after The Wall Street Journal reported that the telecommunications company had restarted merger talks with T-Mobile about five months after previous deal talks were abandoned.

Thursday, Bed Bath & Beyond (BBBY) tumbled 20% after the home-goods retailer late Wednesday guided earnings for fiscal 2018 below forecasts.

Enterprise software company Zuora (ZUO) spiked 43% in its trading debut.  Five things to know about Zuora.

Have a great week and we’ll see you back here Sunday!



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Weekly Market Recap Oct 14, 2018

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Wednesday and Thursday finally brought some fireworks to a very complacent market.   The S&P 500 had not had a 1% move in 74 days until Wednesday’s drawdown.

Rising yields were nailed as the culprit but months of rallying eventually require some sort of shake out – whatever the catalyst.  Wednesday’s sell off was the worst day for the S&P 500 since February and the worst for the NASDAQ since June 2016.

The market losses are “a reaction from investors finally realizing we are in a higher interest-rate environment, and given the elevated level of stocks, market participants were likely looking for a reason to sell,” said Charlie Ripley, senior investment strategist for Allianz Investment Management. “Higher interest rates typically bring on tighter financial conditions which could dampen growth going forward and equity markets are reacting to that.”

Yields on the 10 year fell back to their “breakout” level late in the week.

The Chinese market’s “reversal” was stunted by the selling in U.S. markets – now back to new recent lows.

It was such a rough week even gold got a bid as a “safe haven”.

This selloff in housing stocks continues unabated. Rising mortgage rates and high prices seem to be working together to hurt the sector.

One would think the selling would knock off some of the most speculative stocks but “market leader” Tilray (TLRY) held in amazingly well.

For the week the S&P 500 fell 4.1% while the NASDAQ sunk 3.7%.

Economic news was not market moving.

Here is the 5 day weekly “intraday” chart of the S&P 500 … via Jill Mislinski.

The week ahead…

Markets look quite oversold short term and the start of earnings season may turn attention back to underlying fundamentals.  The bears have constantly been crushed during this bull market run so let’s see if this is yet another case of that.   Retail sales will also be reported.

Third quarter earnings will be a major driver as companies report over the coming weeks. According to FactSet, analysts are looking for earnings growth of about 19% and sales growth of 7%.

Index charts:

Short term: Amazingly both the S&P 500 and NASDAQ closed right on their 200 day moving averages to close out the week.  Obviously both charts now have some damage to them after months of unrelenting rallying.

This Russell 2000 had been the worst performer going into this selloff, and obviously looks poor.  It couldn’t even rally Friday like the other indexes.  That said it’s extremely oversold short term.

The NYSE McClellan Oscillator tipped into the rarely seen -90 range Thursday which usually portends some sort of near term bounce.   Last time we saw this sort of extreme reading was February.

Long term: Finally something to sweat about?  The NASDAQ hit the bottom of it’s channel for the first time since 2016!

Charts of interest / Big Movers:

Tuesday, Affimed (AFMD) sank 24% after the biotech drug developer put two clinical trials on hold following the death of a study participant.

Wednesday, Imperva (IMPV) soared 28% after it announced it would be acquired by private-equity firm Thoma Bravo LLC in a deal valued at $2.1 billion.

The LONG rumored bankruptcy of Sears Holdings (SHLD) finally seems afoot.  The stock skidded 17% Wednesday after the Wall Street Journal reported that the troubled retailer has hired M-III Partners LLC to prepare a bankruptcy filing.  This was confirmed late Sunday.

The Chapter 11 filing to reorganize debts of the parent of Sears, Roebuck and Co and Kmart Corp follows a decade of revenue declines, hundreds of store closures, and years of deals by billionaire Chief Executive Officer Eddie Lampert in an attempt to turn around the company he bought in 2004.  Shares in Illinois based Sears closed at about 41 cents on Friday, down from over $100 in the years after hedge fund star Lampert, once hailed as another Warren Buffett, merged it with discount store Kmart in a $11 billion deal in 2005.

“Pot” themed traders now seem to be looking at Pyxus (PYX) as the next Tilray – note the performance (and explosion of volume) in a terrible week overall!  Again a very highly speculative space – this is a tobacco company with “cannabis plans” announced February.  This reminds one of cryptocurrencies and all the crazy trends of the decades before.  That said, short term speculators can still make money until the music stops playing.

Have a great week and we’ll see you back here Sunday!



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Jeffrey Gitomer Interview with Michael Covel on Trend Following Radio

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Jeffrey Gitomer
Jeffrey Gitomer

Subscribe to Trend Following Radio on iTunes

Jeffrey Gitomer is an author, professional speaker, and business trainer, who writes and lectures internationally on sales, customer loyalty, and personal development. He is best known for “The Little Red Book of Selling” and his newest book, coming out at the end of October, is “Truthful Living: The First Writings of Napoleon Hill.”

Jeffrey was introduced to the Napolean Hill Foundation about 10 years ago and volunteered to start writing for their newsletter with an article every Friday. Napoleon Hill was the founding father of positive attitudes. In 1917 he had a course in advertising and selling. At the end of every course he would lay out positive thinking. When the Napolean Hill Foundation found these writings, what they call “After the Lesson Visits by Napolean Hill,” the foundation approach Jeffrey about writing a book outlining his teachings. Jeffrey did not hesitate to say yes – and after years of pining over these lecture notes, his newest book was formed.

What energizes Jeffrey and motivates him to write? He loves what he does. Every day is a great day for him. He doesn’t have two days that are alike, or two books alike, or two speeches alike. He is most excited about “What is next?”. Jeffrey lives in the moment but is ready for tomorrow and his ideas, strategies, and connections – they are all in place to set him up for success in the present day and the next.

In this episode of Trend Following Radio:

  • Personalization
  • Service as the foundation of success
  • Truthful living
  • Communication

Mentions & Resources:





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Weekly Market Recap Oct 7, 2018

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Certainly the chart of the week was not in the stock market but the bond market.  The yield on 10 year bonds surged over recent highs, which rattled the indexes late in the week; in fact these are levels not seen since 2011.

“Yields spiking up this week have caught many by surprise and some repricing is happening; however, the reason yields are rising are positive, not negative,” said Jamie Cox, a managing partner at Harris Financial Group, who argued that higher yields are a result of a strong economy.

In other news TRADE WARS(tm)!! with Canada seemed to have come to an end which bolstered the market Monday.

The Chinese market was closed for holiday last week but let’s see if it can continue this reversal which would indicate “those in the know” are seeing a trade deal being done…

Oil remained strong:

Housing stocks do not appear to like those rising interest rates!

For the week the S&P 500 fell 1.0% while the NASDAQ sunk 3.2%.

Economic news of interest: (1) ISM Manufacturing came in at a very strong 59.8 Monday, a tad bit below expectation, (2) ISM Services rose to 61.6 which was the 2nd highest reading on record!

The big one was of course (3) the employment report for the month of September:

The economy created a modest 134,000 new jobs in September, but it was enough to push the U.S. unemployment rate down to a 49 year low of 3.7%.   The last time the jobless rate was lower was in December 1969.  Economists had expected a gain of 168,000 nonfarm jobs. The average hourly wage paid to American workers rose 0.3% to $27.24 an hour.   Employment gains for August and July were revised up by a combined 87,000. The government said 270,000 new jobs were created in August instead of 201,000. July’s gain was raised to 165,000 from 147,000.

“Overall, a strong report that will keep the Fed firmly on track to continue raising rates once a quarter, with the next hike likely to come in December,” said senior U.S. economist Michael Pearce of Capital Economics.

Here is the 5 day weekly “intraday” chart of the S&P 500 … via Jill Mislinski.

The week ahead…

All eyes on those bond yields.

Index charts:

Short term: NASDAQ broke a trend line Thursday that connected at the recent lows since summer; meanwhile the S&P 500 has been so impervious to selling it had not even touched the 50 day moving average since early July… until Friday.

This Russell 2000 had not really joined the party with the other indexes and actually fell as far as the 200 day moving average at its low Friday.

The NYSE McClellan Oscillator has been red for a long time while the major indexes have continued to rally – that is usually not the case.  THAT said, the Russell 2000 has been weaker during this time and now we are seeing some of this correlation coming back even in the senior indexes.  At this point we are a bit oversold so one would normally expect a bit of a bounce near term.

Long term: Still very positive for the “buy and never sell” crowd.

Charts of interest / Big Movers:

Monday, Tesla (TSLA) Chairman and Chief Executive Elon Musk settled a Securities and Exchange fraud probe. The settlement will force him to step down as chairman and cost him and the company a combined $40 million in fines. He also reportedly told employees in a weekend email that the electric-car maker is on the verge of making a profit.  However, all those gains disappeared by Friday when Greenlight Capital’s David Einhorn argued that Tesla was following the same doomed path as Lehman Brothers. The criticism comes a day after Chief Executive Elon Musk took to Twitter to mock the Securities and Exchange Commission and accuse the agency of helping short sellers.

General Electric (GE) has been a bit of a disaster in 2018 but Monday the stock surged 7.1% after the industrial conglomerate said its chief executive officer, John Flannery, was being replaced after a little over a year in the role.

Tuesday, Stitch Fix (SFIX) tumbled 35% after it late Monday reported fourth-quarter earnings that beat expectations, though revenue was slightly under forecasts and it missed estimates for active clients, considered a key metric for subscription-based companies.

Thursday, Barnes & Noble (BKS) soared 22% after the bookstore chain said its board of directors has decided to enter a formal review process to evaluate “strategic alternatives” for the company.

Tilray (TLRY) is still holding up and consolidating.  The Canadian based cannabis company announced the pricing of $450 million in convertible debt late Thursday, valuing the company’s stock at a 15% premium.

Have a great week and we’ll see you back here Sunday!



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