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Weekly Market Recap Aug 12, 2018



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 May 18, 2019




China – U.S. trade talk continued to dominate the week.   A heavy selloff Monday was followed by 3 up days, with Friday moderately down.

On Monday, Chinese officials announced retaliatory tariffs against the U.S., hitting $60 billion in annual exports to China with new or expanded duties that could reach 25%.

Then on Wednesday:

The Trump administration plans to delay a decision on instituting new tariffs on car and auto part imports for up to six months, according to media reports.

Trump also called the most recent news “a little squabble”.

On the economic front, retail sales came in below par Wednesday.

Retail sales figures for April showed that U.S. retailers are seeing decelerating purchases for a second time in three months, declining 0.2% last month, compared with expectations for a 0.1% increase. Excluding autos, retail sales were flat for the month, versus expectations for 0.7% growth.

“The 0.2% [monthly] decline in retail sales in April was weaker than the consensus expectation of a small gain and supports our view that GDP growth is set to slow in the second quarter,” wrote Andrew Hunter, senior U.S. economist with Capital Economics.

For the week, the S&P 500 fell 0.8% and the NASDAQ 1.3%.

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

The week ahead…

Interesting data point:

Trading in fed-fund futures reflect a 74.1% chance of a rate cut this year, with a 32.1% probability of two or more rate cuts by end of 2019, according to CME Group. That is a sharp reversal from just two weeks ago, when the market gave a more than 50% chance that the Fed would hold steady through the remainder of the year.

As a “trade deal has become much less likely [in the near term], what the bond market sees as increasingly likely is the Fed easing policy, a net benefit to stocks,” Gary Pzegeo, head of fixed income at CIBC U.S. Private Wealth Management, said in an interview with MarketWatch.

Wednesday, the Fed will release minutes from its meeting that ended May 1.  A few major earnings reports are on the docket, mostly from retailers.

Index charts:

Short term: Both the S&P 500 and NASDAQ might have double tops in which would be bearish.  That would be erased by the index powering through those highs.

The Russell 2000 has been stuck in a range since February.

The NYSE McClellan Oscillator has been in the red for a few weeks now – that raises caution.

Long term: the S&P 500 actually bounced nicely off this trend lines that connects the lows of 2017 and 2018.

Charts of interest / Big Movers:

Beyond Meat (BYND) continues to impress post IPO.

Thursday, Cisco Systems (CSCO) rallied 6.7% after the networking- and telecom-equipment company reported quarterly results that topped Wall Street forecasts and delivered an upbeat revenue forecast.

Also Thursday, Dillard’s (DDS) slumped 10.5% following an earnings release that showed the department-store chain missing revenue projections for the first quarter, while same-store sales were flat.

Friday, Pininterest (PINS) sunk 14% after the social media company announced first-quarter losses of $41.4 million, which were three times as large as analysts had expected.

Deere (DE) fell 7.7% after the agricultural, construction and turf care equipment maker reported fiscal second-quarter earnings that missed expectations and provided a downbeat outlook.

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

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Thales Teixeria Interview with Michael Covel on Trend Following Radio




Thales Teixeria
Thales Teixeria

Subscribe to Trend Following Radio on iTunes

Based on eight years of research visiting dozens of startups, tech companies and incumbents, Harvard Business School professor Thales Teixeira shows how and why consumer industries are disrupted, and what established companies can do about it—while highlighting the specific strategies potential startups use to gain a competitive edge.

There is a pattern to digital disruption in an industry, whether the disruptor is Uber, Airbnb, Dollar Shave Club, Pillpack or one of countless other startups that have stolen large portions of market share from industry leaders, often in a matter of a few years.

As Teixeira makes clear, the nature of competition has fundamentally changed. Using innovative new business models, startups are stealing customers by breaking the links in how consumers discover, buy and use products and services. By decoupling the customer value chain, these startups, instead of taking on the Unilevers and Nikes, BMW’s and Sephoras of the world head on, peel away a piece of the consumer purchasing process. Birchbox offered women a new way to sample beauty products from a variety of companies from the convenience of their homes, without having to visit a store. Turo doesn’t compete with GM. Instead, it offers people the benefit of driving without having to own a car themselves.

Illustrated with vivid, indepth and exclusive accounts of both startups, and reigning incumbents like Best Buy and Comcast, as they struggle to respond, Unlocking the Customer Value Chain is an essential guide to demystifying how digital disruption takes place – and what companies can do to defend themselves.

In this episode of Trend Following Radio:

  • Unlocking the Customer Value Chain: How Decoupling Drives Consumer Disruption

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Strategies & Ideas

Weekly Market Recap May 12, 2019




Trade deal worries between China and the U.S. dominated the headlines all week.   A large gap down Monday morning due to some Trump tweets was mostly fended off as buyers came in hot and heavy.   A significant selloff ensued Tuesday.   The rest of the week ended up choppy but without significant end of day moves up or down.

Trump’s tweet Sunday night was:

For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars….

Then Friday those tariffs were announced as happening although there will be a grace period before they are instituted which market watchers believe is to allow time for the late stages of this trade agreement to continue.

“Goods currently in transit to the U.S. from China aren’t subject to the new 25% tariffs, just the old 10% tariff. That grace period was not included in previous rounds of tariffs and is likely an olive branch of sorts to the Chinese side,” Tom Essaye, president of the Sevens Report wrote. “Given shipping times, goods sent from China today will take two weeks or so to reach the U.S., so if a trade deal is stuck in that time frame, the pain of the 25% tariffs will never be felt.”

It was a poor week for the Chinese market.

Uber (UBER) IPO’d Friday and fell below the initial IPO price of $45.

No major economic news this week.

For the week, the S&P 500 fell 2.2% and the NASDAQ 3% – that broke a 6 week winning streak for the NASDAQ.

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

The week ahead…

We are through the bulk of earnings season but still some heavy hitters such as Walmart (WMT) are due soon.

Wednesday the retail sales report for April will be released, which could give investors a clue as to whether the slump that began in December was a temporary blip or the beginning of a worrisome trend.

Obviously the trade deal will continue to be a central focus.

Index charts:

Short term: The S&P 500 reversed at fall 2018 highs.  Some may call that a double top which is a negative.  But this market has made fools of everyone bearish for a decade.

The Russell 2000 has been stuck in a range really since February.

The NYSE McClellan Oscillator has been in the red for a few weeks now – it finally mattered this week.

Long term: Things are still strong longer term.

Charts of interest / Big Movers:

Monday, Sinclair Broadcast Group (SBGI) soared 35% to a record high, and the biggest one-day gain in 10 years, after the TV broadcasting company’s deal to buy regional sports networks from Walt Disney.

Tuesday, Mylan (MYL) fell more than 23% Tuesday, after the drugmaker reported a revenue shortfall that offset a profit beat.

Lyft (LYFT) slid 11% Wednesday after the ride-hailing company late Tuesday reported quarterly earnings for the first time since its initial public offering in March. The company reported first-quarter losses that were wider than expected, but revenue that topped expectations.

TripAdvisor (TRIP) sank 11% after the company posted first-quarter earnings that beat analysts’ expectations, but revenue that widely missed forecasts.

Thursday, Etsy (ETSY) sank 11% after the online marketplace reported first-quarter earnings Wednesday evening, with the company reporting profit and sales that grew more slowly that analysts had predicted.

Roku (ROKU) popped 28% Thursday following a Wednesday-evening earnings report that showed the streaming platform company beating earnings expectations for the first quarter, while it forecast second-quarter revenue that also beat estimates.

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

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