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Weekly Market Recap May 27, 2018

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The second week in a row of low volatility which is usually advantage bulls.  Monday saw a nice spike up for indexes and then the other four days of the week the range was very narrow.  Monday’s rally was due to the lessening chance of TRADE WARS!!(tm):

Treasury Secretary Steven Mnuchin said over the weekend that the Trump administration would delay implementation of tariffs on Chinese goods and “put the trade war on hold” while working out details of a deal between the countries.  At the end of trade negotiations that weekend, China agreed to buy larger amounts of U.S. goods to help narrow the trade deficit between the two economies, but didn’t agree to the specific U.S. target of $200 billion.

News was generally quiet but we did get the Fed minutes late Wednesday which were considered market positive.

Federal Reserve officials in their meeting in early May confirmed they planned to raise interest rates in June and were not concerned they were behind the curve on inflation.

“Most participants judged that if incoming information broadly confirmed their economic outlook, it would likely soon be appropriate for the FOMC to take another step in removing policy accommodation,” the minutes said

Although inflation hit the Fed’s 2% target in the latest reading for March, for the first time in a year, officials were not convinced it would remain there for long.

“It was noted that it was premature to conclude that inflation would remain at levels around 2%, especially after several years in which inflation had persistently run below the Fed’s 2% objective,” the minutes said. Only a “few” officials thought inflation might move “slightly” above the 2% target.

For the week the S&P 500 closed up 0.3% while the NASDAQ added 1.1%.

Outside of some housing reports, economic news was sparse.

Treasury yields dropped back down the 2.9% range this past week after popping to 3.1% the week before.

The dollar chart continues to strengthen.

After FIVE+ weeks of great action in the oil chart we finally saw some stumble Thursday, and then a sharp reversal Friday as there were reports that OPEC and Russia may increase production.

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

Apparently there are 101 people with over $1M in student loans….

Due to escalating tuition and easy credit, the U.S. has 101 people who owe at least $1 million in federal student loans, according to the Education Department. Five years ago, 14 people owed that much.  While the typical student borrower owes $17,000, the number of those who owe at least $100,000 has risen to around 2.5 million, nearly 6% of the borrowing pool, Education Department data show.

Warren Buffet’s empire in one infographic (click to enlarge)

The week ahead…

Markets will be closed Monday in observance of Memorial Day.  Friday brings ISM manufacturing and the May employment report with 190K jobs expected to have been created.

Index charts:

Short term: The S&P 500 is consolidating while the NASDAQ tipped its head over this trend line connecting highs of the year.

The Russell 2000 held its breakout.

The NYSE McClellan Oscillator remains in a positive spot.

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

Charts of interest / Big Movers:

Tuesday, home builder Toll Brothers (TOL) slumped 9.6% after the building company posted a 10% fall in second-quarter profit on higher impairment charges, and said gross margin fell.

Micron Technology (MU) rallied 6.4% Tuesday after the company raised its third-quarter outlook and announced a large stock-buyback program.

It was a good week for “luxury” as Tiffany & Co (TIF) jumped 23% Wednesday after it reported first-quarter results that came in above expectations .  Meanwhile Ralph Lauren (RL) rallied 14% after it posted fourth-quarter earnings and revenue that topped analyst forecasts.

Friday, Foot Locker (FL) soared nearly 20.2% after profit and sales for the sportswear maker beat forecasts.

Zoes Kitchen (ZOES) plunged 40% after the restaurant chain posted a bigger-than-expected first-quarter loss.

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

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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

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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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Tom Basso Interview with Michael Covel on Trend Following Radio

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Tom Basso
Tom Basso

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Tom Basso is back for episode 700. Tom is featured across Jack Schwager’s “Market Wizard” series and most famously known as “Mr. Serenity.” He was featured on episode 400 of Trend Following Radio with a mega 4 ½ hour episode, and today he is back for this new episode. Now retired from managing client money, Tom was president and founder of Trendstat Capital Management. He became a registered investment advisor in 1980, a registered commodities advisor in 1984, and was elected to the board of the National Futures Association in 1998.

Although Tom has been retired for over 15 years he still gets emails daily from aspiring traders. While on vacation with his wife, they came up with a more efficient solution to answering all these emails. Tom decided to start an educational platform that he more candidly describes as a “Tom Basso brain dump into a website.” He has had 28 years of experience managing money and over 40 years of managing his own money. With all that knowledge, his new website addresses what he feels new and old traders alike struggle with. All content on his website will be free aside from his personal training videos and a narrated version of his book “Panic-Proof Investing.”

What is it about the individual that is so important in trading? How do you become the best trader you can be? How does exercise and diet play into trading? How do you separate self worth from your net worth? How do you stay young in your energy? Michael and Tom keep their conversation on trading today more philosophical rather than technical.

In this episode of Trend Following Radio:

  • Trend following philosophy
  • Separation of net worth from self worth
  • How to view winning trades vs. losing trades
  • Staying mentally young
  • Brooks Koepka vs. Tiger Woods
  • Dealing with stress in the markets
  • Social media stressors

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