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Weekly Market Recap Aug 12, 2018

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Indexes spent the past week churning along as news flow was generally quiet…outside of Turkey and Russia that is.  The NYSE McClellan Oscillator has been in the red for weeks, and breadth has remained pretty weak but the indexes continue to hold up!  A conundrum indeed!  That said keep an eye on foreign markets to see if any “contagion” happens – thus far, the U.S. markets have been acting impervious.

“Despite the gains in the averages last week, fewer stocks hit new 52-week highs and an increasing number of issues reached new lows for the year. Overall, the technical indicators argue on the side of caution,” said William Delwiche, an investment strategist at Baird, in a note.

Trade Wars!! ™ continued but without much affect on markets.

“Things are looking good in the U.S. in terms of earnings and data, but things aren’t as rosy if you look to China, emerging markets or Europe. Weakness in those regions could eventually become a headwind for the U.S.,” said Suzanne Hutchins, senior portfolio manager of the $1.5 billion Dreyfus Global Real Return Fund, which is run out of the investment boutique Newton.

The Turish lira took a hit late in the week (-17% Friday) as Trump and the ECB attacked… boosting the U.S. dollar… and bonds.

The steep decline in the Turkish currency came after the European Central Bank expressed concerns about potential contagion from Turkey’s problems, especially in the banking sector.  The country is struggling with double digit inflation and its reliance on foreign funding. With much of its debt denominated in U.S. dollars, the stronger buck has added weight to its debt burden.  Analysts and investors have also attributed the relentless pressure on the Turkish currency to a growing diplomatic spat between Washington and Ankara over the detention of a U.S. pastor in Turkey.  The lira’s stumble prompted U.S. President Donald Trump to announce a doubling of U.S. tariffs on certain Turkish goods.

Turkey’s currency volatility has recently accelerated and now gotten to the point where it’s beginning to impact global markets as investors worry about European banking exposure,: said Alec Young, managing director of global markets research at FTSE Russell.

Russia also had a rough week as Trump attacked…

Newly announced U.S. sanctions—and the potential for a second round of actions in 90 days—roiled Russia’s currency and blue-chip stocks as the country braced for further economic pain amid uncertainties over the Trump administration’s commitment to enforcement.

Economic news was sparse and not market moving.

For the week the S&P 500 lost 0.3% while the NASDAQ added 0.4%.

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

Everyone thought Snapchat would be the new hip thing but it’s Instagram which is stealing the show!  Another win for Facebook.

For large parts of the past two years, it seemed like Snapchat would be the next platform that no one could afford to ignore. Having quickly gained popularity it only seemed like a matter of time before it would break through to the mainstream and compete with the likes of Facebook, Twitter and Instagram. However, over the past 12 months Snapchat’s growth has slowed significantly and many people are beginning to ask whether the once innovative social media app was nothing more than a passing fad.  In fact, it has been Instagram, not Snapchat, that really had its big breakthrough in the past year. Having implemented, or shamelessly copied as some would argue, Snapchat’s popular Stories feature, Instagram’s simple design appears to be more appealing to the broader public than Snapchat’s sometimes confusing user interface. The platform that Facebook acquired for $1 billion in 2012 recently passed the 1 billion active user mark.

Speaking of which…

Snap (SNAP) stock fell 6.8% Wednesday after the company issued quarterly guidance for the first time as well as reported a user decline.

The week ahead…

Retail sales hit Wednesday.

Will any of the “foreign weakness” matter?

The longest bull market on record hits in about a week!

Index charts:

Short term: The S&P 500 is holding its breakout – is that a double top in the NASDAQ??? Hmm – see the Russell 2000. 😀  A new high negates that thought in the NASDAQ.

This double top in the Russell 2000 continues to hold.

The NYSE McClellan Oscillator stayed in the red for a FOURTH week in a row (a full month).  When this happens it is usually a good idea for short term traders to go cautious but in this case the indexes have held up quite well.

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

Charts of interest / Big Movers:

Monday, SeaWorld Entertainment (SEAS) surged on positive earnings.

Pain Thereapeutics (PAIN) plunged 48% after the drug company said the U.S. Food and Drug Administration rejected its non-opioid drug.

Tuesday, Elon Musk tweeted Tesla (TSLA) was going to go private @ $420 a share – a pretty interesting (but legal) way to announce corporate news!

Zillow (Z) sank 15% after the company late Monday posted earnings and announced its acquisition of a mortgage lender.

Rite Aid (RAD) sank 12% Thursday after a merger between the retailer and Albertsons Cos. was called off.

Yelp (YELP) surged 27% after the review website late Wednesday reported better-than-expected earnings and raised its full-year profit outlook.

Roku (ROKU) jumped 21% a day after it reported better-than-expected revenue and unexpectedly swung to a narrow profit.

Friday, Redfin (RDFN) tumbled 22.4% a day after it forecast slower revenue growth in the third quarter.

TradeDesk (TTD) for the win… that’s TWO massive gap ups the past 2 earnings seasons and well ove 100% GAINS since May!!!

The fast-growing provider of programmatic solutions is hitting new all-time highs after posting strong second-quarter results following Thursday’s market close.   Revenue surged 54% to hit a record $112.3 million for the quarter. The Trade Desk’s own guidance three months ago was calling for just $103 million on the top line, 41% growth.  Marketers are taking to The Trade Desk’s algorithmic solutions, and several of its categories including connected TV, audio, mobile video, and mobile in-app saw their numbers more than double. Advertisers that come to the company tend to stick around. Customer retention has now clocked in north of 95% for 19 consecutive quarters.

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



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Strategies & Ideas

Weekly Market Recap Feb 17, 2019

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The “V” shape bounce continues in unrelenting fashion as bulls are stampeding bears in 2019!  All due to a little “patience” from the Federal Reserve.  It is really quite breathtaking but we have seen it repeatedly the past decade as the Federal Reserve pours gas on the market.  Hopes for a deal with China also spurred the action upward.  Rallies (both with gap ups) on Tuesday and Friday provided the juice this week.   The S&P 500 is back over its 200 day moving average after being below for 46 days – it’s longest period of time below that level since March 2016.

Mat Klody, chief investment officer at Keebeck Wealth Management, told MarketWatch that the major benchmarks’ steady march higher since the beginning of the year is being driven “by the perception that the Fed has done a complete 180” in its apparent dovish turn, after raising rates four times last year.

U.S.-China trade talks wrapped up Friday in Beijing, with reports that negotiators remained deadlocked over key issues, but were set to resume discussions next week in Washington — viewed as a sign that both sides were eager to reach a deal ahead of the March 1 deadline.

In economic news, retail sales plunged 1.2% the largest single-month decline since 2009 and well below the flat growth expected by economists.  That said the market isn’t concerned with such things as it’s all about the Federal Reserve giving out goodies.   It will be interesting to see if there is a big jump next month as a “reversion to mean”.

Sales fell in every retail category except auto dealers and home centers. What’s was surprising was a 3.9% reported decline in sales at internet sellers. That would mark the sharpest drop since November 2008 — the middle of the last recession. Sales also fell at bars, restaurants, apparel stores, grocers, home furnishers, pharmacies and outlets that sell hobby items such as books and sporting goods.

“The consumer is no longer enjoying tax cuts or falling gas prices, but that’s no reason to expect a rollover,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.  “It’s a puzzle. Strong job gains, wage growth, and the drop in gasoline sales should be very supportive of consumer spending growth,” added Scott Brown of Raymond James.

For the week the S&P 500 gained 2.5% and the NASDAQ 2.4%.  That is 8 up weeks in a row!

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

The week ahead…

More talk about the US-China trade talk and seeing if the market can go down for a week.

Index charts:

Short term: the S&P 500 didn’t have much trouble with that 200 day moving average – the low 2800s is the next interest spot.  The NASDAQ is where the S&P 500 was a week ago.

Unlike 2018, the Russell 2000 seems to be patterning itself pretty closely to the S&P 500 and NASDAQ of late.

After 5 weeks in a row at abnormal levels of overbought the NYSE McClellan Oscillator is now just at a normal overbought level!

Long term: The S&P came a touch over our very long term weekly trend line.

Charts of interest / Big Movers:

Tuesday, Coty (COTY) jumped 13% after JAB holdings announced its plans to commence a tender offer to acquire 150 million shares of the company at a price of $11.65 a share, versus Monday’s closing price of $9.66 per share.

Molson Coors Brewing (TAP) slid 9.4% Tuesday after the beer maker reported higher-than-expected, fourth-quarter earnings but missed Wall Street’s revenue forecasts.

Thursday, Coca Cola (KO) fell 8.4% Thursday after the beverage giant reported results that showed the company falling short of fourth-quarter revenue expectations.

Bloomin’ Brands (BLMN) jumped 9% after the parent company of Outback Steakhouse reported fourth-quarter profits and sales that surpassed Wall Street expectations.

Six Flags (SIX) tumbled 13% after the firm reported weaker-than-expected fourth-quarter earnings.

Friday, Newell Brands (NWL) skidded 21% after the consumer-products company beat fourth-quarter earning and revenue expectations, but offered a downbeat outlook for 2019.

Also Friday, Mattel (MAT) tumbled 18.3%, notching its worst daily drop since Oct. 4, 1999, when shares cratered 29.6%. Friday’s decline for the toy maker came after it revealed that sales would remain flat this year.

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



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Ethan Kross Interview with Michael Covel on Trend Following Radio

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Ethan Kross
Ethan Kross

Subscribe to Trend Following Radio on iTunes

Ethan Kross is a professor of psychology at the University of Michigan. His research seeks to “Understand factors enabling people to adaptively regulate triggered impulses and emotions that undermine their goals and compromise their health.” He wants to resolve a key paradox in coping literature by finding insights and translating those insights to the rest of the world.

What got Ethan into studying behavior and how the mind works? Around the age of 4 or 5, whenever Ethan would get upset, his dad would ask him to “go inside” and look within himself to figure out why he was feeling how he was feeling. For years Ethan would do this as a positive coping mechanism. When he got to college he learned that when most look inside themselves to dig deeper, this takes them to a negative place. Introspection seemed to only prolong their negative feelings. This resonated with him and started him down his current path of asking “Why?”

Much of his work is focused on social media. In early 2010 Ethan became increasingly interested in Facebook. He found himself looking around his classroom and in the hallway–relentlessly seeing students with open Facebook windows on their phone. He wondered: “Are these students happier now that they have social media in their lives?” Ethan started digging and found research that was all over the place. Some studies would say, “People who are on Facebook are more happy” and then he would come across another study saying the complete opposite. He concluded that the methods in which those studies were using to gather data were grossly inefficient.

In this episode of Trend Following Radio:

  • Thinking objectively
  • Passive and interactive activities on social media
  • Experian sampling
  • Regulation on social media
  • LeBron James move from the Cavaliers
  • Self talk
  • Dealing with problems under stressed.

Mentions & Resources:





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Weekly Market Recap Feb 10, 2019

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A good week for the bulls once again as a very overbought market essentially went sideways to help work off some of those near term extreme conditions.  The S&P 500 stalled exactly at the 200 day moving average after a frantic rally the past month and a half.  It was generally a quiet week with lowered volatility as the word “patience” continues to have the investor class in a happy daze.

In economic news, ISM Services fell from 58.0 in December to 56.7 last month, below economists’ expectations of a 57.4 reading. A reading above 50 indicates an expansion in activity.

For the week the S&P 500 gained 0.1% and the NASDAQ 0.5%.  That is 7 up weeks in a row.

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

A couple of interesting infographics in regard to Facebook (FB) from Statista.  First the growth of employees – 2018 was pretty amazing growth for an already large company.

Second is how Facebook properties are dominating the newest area in social media: stories.

First introduced on Instagram in August 2016, the Stories format was heavily “inspired” by one of Snapchat’s most popular features and gradually found its way to all of Facebook’s social media and messaging apps.  All of Facebook’s stories features, i.e. Instagram Stories, WhatsApp Status (which might as well have been named Stories too) and Facebook Stories have surpassed Snapchat in terms of daily active users by now, regardless of whose idea it originally was. The ongoing shift towards stories at the expense of feeds in social media poses a new challenge for Facebook, because it’s unclear whether the new format can be monetized as effectively as the news feed.

The week ahead…

Earnings will begin to slow down, and move to the smaller type of companies.  The Fed remains on hold for half a year at minimum it seems.  News flow seems like it will be light with perhaps a nod to China-US trade talks.

Index charts:

Short term: the S&P 500 rallied exactly to the 200 day moving average.

Unlike 2018, the Russell 2000 seems to be patterning itself pretty closely to the S&P 500 and NASDAQ of late.

This is the 5th week in a row the NYSE McClellan Oscillator remains ABOVE the level it usually stalls out at: +55 to +65.

Long term: The S&P rallied exactly to our trend line which connects the major lows of 2017 and 2018, before stalling a tad.

Charts of interest / Big Movers:

Monday, Ultimate Software Group (ULTI) soared 20% after it agreed to be bought by an investor group led by Hellman & Friedman in an all-cash dealvalued at about $11 billion.

Tuesday, Estee Lauder (EL) rallied 12% after the cosmetics company posted fiscal second quarter earnings and sales beats and raised its full-year outlook.

Ralph Lauren (RL) jumped 8.4% Tuesday after the luxury lifestyle brand reported fiscal third quarter earnings and revenue that beat expectations.

Wednesday, Snap (SNAP) surged 22% after posting record quarterly revenue and narrowing its loss on the back of a boom in online advertising.  This one has been a massive disappointment since its IPO.

The power of Fortnite!  Electronic Arts (EA) sunk 13% Wednesday after the company missed holiday-season sales estimates and issued a downbeat outlook.  Apparently this was due to it’s major gaming release not having a “battle royale” component in initial release – i.e a copycat to Fortnite.  However Friday the company announced that battle royale game Apex Legends drew 10 million players in its first 72 hours.

Thursday, Chipotle (CMG) soared 11% after the restaurant chain reported adjusted quarterly earnings above expectations.

Twitter (TWTR) skidded 9.8% after the firm issued a downbeat outlook for the current quarter, while announcing it would stop reporting the monthly average user metric.

Mattel (MAT) shares were up 23% after beating Wall Street revenue and earnings forecasts.

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



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