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The following stock market analysis is based on the most fundamental core concepts of the technical analysis of the financial markets. We employ supply and demand signals, Dow Theory, Wave Theory and a cold hard look at reality. This is how industry financial analysts perform market analysis... but without the hype.February 2nd, 2021
Get the Champaign Out – Its Bubble Time + ADR Analysis.
I want to discuss stock market bubbles versus new highs and bull runs.
Many of you, I am sure, are concerned about the current market climate. Economies in recession, industries on the brink of disaster, high unemployment, Covid, and a multitude of other issues.
But Mr. Market does not care about your worries; Mr. Market cares about the availability of cheap money, Central Bank stimulus, and the promise of better times.
We have the promise of better times.
We live in an age where it is actually difficult for a publicly listed company to go bankrupt because it has access to life support and cheap credit.
The question for you “shorties” is…
Are you willing to continue to lose out on profits while the market rises?
Sure, this might end in catastrophe at some point in the future. But that point is not now.
Bullishness With the Avance Decline Ratio Analysis
Please take a look at the chart; I have plotted the largest spikes in the Advance/Decline Ratio over the past five years. Do you see a correlation? This is not a lagging indicator like RSI, Moving Averages, MACD, etc.
It tells you now what the market participants are doing. They are either providing demand and pushing prices up, or being a supplier and pushing prices down.
Keep an eye out for large spikes in ADR, as it quite literally predicts a bull run for the subsequent days to months.
An ADR above 3.6 is a strong predictor. This means 3.6 stocks increase in price for every 1 that declines. Of course, the biggest the ADR the stronger the move.
Remember this is a weekly chart.
Finally, remember the stock market would never go up if it did not break into new highs and continue to climb.
June 23rd, 2020
The Force is Strong in This One. The Fed is Strong But Will the Rebel Alliance Win?
The Empire is strong, Darth Powell’s lightsabre is carving into every company, fund, and bond, but instead of cutting off limbs, his magical weapon is adding them.
What we end up with is a grotesque monster that does not resemble anything in the known universe.
Every right-minded investor knows in the back of their mind that this cannot last.
But while it does last, why not make a profit?
I know many of you are strong bears, even Perma-bears. However, you need to go big as a bear at the right time or it begins to hurt quickly.
I reserve the right to change from a bull to a bear is the drop of a hat, so don’t be surprised if I change. And you should to, being flexible is key.
What I share here are my thought processes, I do not want or expect anyone to take my advice, make your own mind up what to do with your money.
Technical Analysis & Thoughts
The ISLAND TOP – in technical analysis this is a serious concern for a major direction change because it depicts the battle between extreme bulls and bears. In this case, the bears won. I guess the feds massive purchasing of Index ETFs, stabilized everything again.
Shock Day
The mauling of the markets on June 11th was huge, although the market has recovered, but this is an important sign. In a normal pullback, a 5% loss in a week indicates a serious reversal. I have backtested this back to 1920. This was greater that 5% in a day, a serious shock. Another 1 or 2 of these shocks will be the end of this Goldilocks recovery.
Confidence is everything and we are all feeling very itchy.
ADR is still very positive, the up days are excellent, freakish really, but they are weakening.
RSI and KST are not telling us too much.
Pyjama investors / Ma and Pa investors are pouring into the market, and even the Economist magazine mentioned it this week. A sure sign of a bubble if I ever saw one.
Summary
You expect it, I expect it, the right-thinking rebel alliance of bears see an unsustainable market.
But in the short-term, I am long and making money, until Mr. Market tells me to move to cash and short.
Watch out for drops of more than 5% in a week as a tell-tale early signal of a significant move down.
Stay safe traders/investors.
Barry
June 8th, 2020
The Game is Up.
Although all the Bears out there agree that the market action is illogical there is a strong counter-argument.
Reasons to be Bearish:
- Corporate Profits and Weak Manufacturing Outlook
- GDP is slashed
- Massive unemployment
- Corona Second Wave
- Mass Protests / Rioting
- Massive Quantitative Easing Will Corrupt the Economy
Reasons to Be Bullish:
- All Major Economies are using QE therefore the relative side effects are negligible vs other leading economies.
- Corona Situation is improving
- Inflation is very low
- Money is super cheap
- Central Banks are fully committed to saving economies
BUT MOST IMPORTANTLY
There is nowhere else for the money to go:
- Bonds Worthless.
- Gold – only increased by 9.5% in 2020
- Cash – Useless
- Commercial and Private Property – Flakey
Simply put, stocks are the only place for the big money to store and grow wealth at the moment.
Therefore I am long until the market tells me otherwise.
May 18th, 2020 – Pre-market Update
The Trump Pump Effect is Starting to Wear Off
The market is currently in a short term 22-day consolidation.
We currently have a double top and considering the futures, we will probably hit a triple top.
What is interesting to note is the recent $3 trillion aid package did not have an extremely positive effect on the market, unlike those previously.
Looking at the advance-decline ratio we see that the Bullish appetite is diminishing, meaning the extremely bullish days are losing their power.
RSI is neutral suggesting a potential turn-around.
Finally, the KST indication is crossing over at the suggesting the market is running out of steam.
At some point, the market participants will realize that there is a serious economic decline ahead.
My guess is a triple top, decline, panic selling, and another bottom.
“You will get business failures on a grand scale.” So declared James Bullard, president of the Federal Reserve Bank of St Louis, on May 12th. Peter Orszag, a former official in Barack Obama’s White House and now with Lazard, an investment bank, warned that the American economy could face “a significant risk of cascading bankruptcies”.
April 29th, 2020 – Pre-Market Update
Ominous Rising Wedge Suggests X=X 1,000 Point Collapse
According to technical analysis theory the rising wedge points in the opposite direction to the breakout.
In this hourly chart of the corona crash we can clearly see the rising wedge pattern formation.
This pattern also predicts that the length of the move into the wedge “X” is the same distance as the length of the break-out “X”.
Therefore X = X
The downtrend into the wedge was a drop of 1,000 points, ergo the breakout will be a 1,000 point drop.
Caveat.
I have back-tested stock chart patterns and they are not 100% true, but in general, they are better than 60%.
That’s not saying much.
Mostly the direction will be set by the news, especially today with 2 big news items.
- GDP Advance Announcement – Productivity in the Economy
- GDP Spending – very important for the economy and sentiment, spending drives the economy
I expect both of these to be bad numbers, but will it be the start of the resumption of the much-needed downturn in the market?
Not necessarily.
The “Trump Pump” will be in full effect I am sure with a new announcement of stimulus designed to boost spending and therefore save the stock market.
It will be interesting to see if the technical analysis Rising Wedge is predictive in this case, or will ultimately fail because of government intervention.
I believe the monetary policy is now to encourage healthy inflation above 2% and keep interest rates at close to zero for the next decade, to ensure the debt burden is reduced over time. As Ray Dalio calls it a “Beautiful Deleveraging”.
An interesting day ahead, and be sure, the only thing that can save Trump’s re-election campaign is to ensure the stock market does not collapse, and he will do everything to save it.
Barry
April 27th, 2020 – Pre-Market Update
AD Ratio Suggests Birth of a New Bull Market!
AD Ratio Suggests Birth of a New Bull Market!
Or the madness of crowds.
The Advance-Decline Ratio (ADR) is a simple measure of how many stocks increase versus how many decline. A ratio of 1 means 1 company’s stock increases to every 1 that declines. A ratio of 4 means 4 increase to every 1 that declines.
It is a good measure of the bullishness of the market participants. The magic number I am using for this analysis is an ADR of 4, as anything above 4 increases to one typically indicates a turning point in the market.
There are two stories here. You need to decide which one you believe.
Chart Setup:
- Price – Log Weekly
- AD Ratio – 10 Bar Moving Average + 200 Bar Moving Average
- AD Ratio Red Line = 4 Indicating Extreme Bullishness
-
S&P500 Weekly Chart: Analysis Suggests New Bull Market
Pre 2008 Crash – The Madness of Crowds.
During the Financial Crisis crash from 2007 to 2009 the crowds were simply wrong. Extreme ADR indicated only temporary market bottoms, which were followed by brief rallies then market collapse.
Post-2009 – The Birth of Bull Markets.
Since 2009 the market participants signaled extreme positive sentiment with an AD ratio above 4 on 9 separate occasions which all indicated the end of the bear market and birth of a new bull market.
This suggests one of two things.
- During a major market crash, the crowds are overly optimistic, underestimating the full impact of the economic devastation.
- During a long-term bull market, the crowds are correct, in fact, it is the crowds of course, who power the bull market.
The Key Point.
The Corona Crash has shown us 2 extreme bursts of ADR buying above 7 for the week’s March 9 and April 6.
This means either the birth of a new bull market, or the radical underestimation of the impact of Corona on the economy.
Final Summary.
I am not convinced either way.
Part of me thinks that this is the start of the new bull market because in fact, governments have done everything possible to stimulate the economy and save jobs and industry, there is no other choice apart from instant economic devastation. Interest rates will remain close to zero for the next 10 years and in governments stimulate inflation that the debt will eventually reduce by itself (according to the Economist April 24th Edition)
The other part of me thinks that we simply cannot move to a new market high without further market correction to account for the large losses in future earnings.
Do not forget.
This market is driven now by central banks, Trump and Macro-economics. This market will turn on its head with a few massive headlines.
Stay healthy.
Barry
April 16th, 2020 – Market Update
Hourly Price Action Suggests Weakening Market: Analysis SPX, SPY
When analyzing a market or stock on shorter timeframes it is very important to use a mix of indicators that can confirm the price trend, or suggest and underlying weakness in the price move.
Technical analysts call different indicators moving in the same direction “confirmation”. When the indicators are moving in a direction contrary to the price trend it is called “divergence”.
The core idea is to use Price, a price indicator and a price volume indicator. If all indicators are moving together in the same direction this is confirming the trend.
When the oscillators contradict the trend this divergence suggests an underlying weakness in the trend and possible direction change.
The Indicators
Chaikin Money Flow
Created by Marc Chaikin, this indicator attempts to discover future trends by summing the accumulation and distribution days of the stock over the set period. If a stock closes in the upper half of the trading range for the day on higher volume this increases the count for the day. If it closes in the lower half for the day on higher volume this decreases the count for the day. This indicator takes into account volume as well as Price Open, High, Low and Close. This is then multiplied by volume for the day and divided by the volume over the selected period.
Relative Strength Index
Wilders RSI , developed by J. Welles Wilder. The premise is that a stock shows strength when it closes on a high and the number of points gained to achieve that high is also important. Also, if the stock closes on a low, that shows weakness in the stock and the number of points lost during the period is also relevant. As we know from candlestick charting the Japanese also say that the closing price is very important psychologically and this factor is taken into consideration in RSI .
In the Hourly Chart
The Green Boxes show that the price trend was confirmed by the indicators.
The Red Boxes Show that the indicators are diverging from the price action.
Technical Conclusion.
The strength of buying is diminishing at these price levels on decreased demand. It is not visible in the price trend yet, but we would expect it to become apparent over the next few days.
Fundamental Conclusion.
Trump is controlling the narrative and continuing to say and do everything he can to support the stock market. The talk of opening up the USA as the pandemic is nearing its peak is designed to give the market bulls more confidence.
The chart above suggests that confidence is weakening, but this could all change with another Trump speech suggesting everything is fine and the economy will be back in business in 2 weeks.
April 14th, 2020 – Market Update
Learning From 5 Market Cycles & The Crashes That Ended Them
To put into perspective what could happen in the current market climate is always helpful to study historical market behavior.
For this analysis, I am using Gann Boxes a great drawing tool from TradingView.
Although each market cycle is different in duration, boom and bust, they share one common characteristic.
The ability to be unpredictable, erratic and wipe out wealth.
Another trait they all share is the ushering in of a new era of wealth building.
Only the new era that we face may be built on deflation, significantly weakened currencies and potentially a new world order. Additionally, in the west, the distribution of wealth is very seriously skewed toward the super-rich. Things will need to change.
Anatomy of wealth creation and destruction.
- The 60s and 70s ended with an 80% loss of gains accumulated.
- The 80s ended with Black Monday which wipes out 38% of gains (relatively mild)
- The Dotcom Bust wiped out 60% of gains
- The Financial Crisis wiped out 100% + of gains
So far, the Corona Crash has been relatively mild, thanks to massive government intervention, with currently 25% of gains lost.
The question you must ask yourself is:
Is this the end of the crash? Is the retracement of the market commensurate with the actual economic activity & jobs market collapse?
Just be clear all options are on the table, including a retracement to Zero, for the S&P this is close to 700 points.
No one knows the future and we humans are notoriously bad at predictions.
What do you think?
April 9th, 2020 – Market Update
S&P500. Deep Technical Analysis, Mixed Messages + 3 Outcomes
When analyzing daily chart price moves to determine the future direction of a market, it is important to use a good mix of indicators each focused on telling a different story.
In this analysis I will be using a few of my favorite indicators:
- Price – the most important indicator of all
- Volume – the power behind the price trend
- RSI – Price Strength Indicator
- Money Flow – A Price & Volume Indicator
- On Balance Volume – A Price & Volume Indicator
By having a mix of price and price-volume indicators we can see is the indicators agree with price (confirm) or they contradict the price direction (Divergence).
Analyzing Price & Volume
Price Down–Volume Up (PDVU)
In an uptrend, this may indicate a crisis, panic selling or simply when a stock is going out of favor. The pressure is on the sell-side and to sell they have to accept lower prices. A strong negative signal!
Price Up-Volume Down (PUVD)
In an uptrend, this is very bearish as it suggests that although prices are rising, there are fewer participants suggesting people are backing away from the higher prices. This also infers that the trend is weakening. In a downtrend, it suggests a continuation of the downtrend.
Indicator Analysis
- Relative Strength Index – Confirms the current short-term uptrend in price
- Money Flow – Confirms the current short-term uptrend in price
- On Balance Volume – Flat Not Confirming Uptrend
Conclusion & Outcomes
We are seeing mixed technical analysis messages here. Volume says down, RSI & Money Flow say up, OBV is not indicative.
So, what can we hypothesize as the outcome? Well, there are 3 possibilities.
- Price Moves Down from Here (2,800) to the Current Crash Low of 2,00 points
- Price Moves up to psychological level 3,000 and then collapses to 2,000 points
- Price Moves Up to challenge previous highs.
What possibility do I bet on?
I think 2 is most likely, followed by 1, then 3.
Why, because I believe that the full economic devastation wrought by the virus has not yet revealed itself.
The USA is very badly impacted, and this index measures the core base of American Wealth Creating Companies.
My heart goes out to our American friends who are impacted by the 2,000 deaths per day.
Barry
April 1st, 2020 – Pre-market Update
When to Get Into Stocks During a Market Crash
Do you feel it? The FOMO.
Fear of missing out is a common phenomenon, and I imagine it is starting to creep in right about now.
The last few days have seen the market begin to claw back some of its losses, so the key question is…
When should I get back into the market?
To answer this question, you have to formulate the risk-reward situation. To do this let us establish a few “facts”.
- The S&P500 is building a trading range between 2140 and 2,700 points
- The Virus Outbreak, especially in Europe and the USA is far from over
- There is real economic damage being incurred
But the FOMO is still there, so let’s consider your options. (See the Chart)
- If you believe the market will rise from here, you have a 19% upside to the next resistance
- The market could, however, move down 17%
- Worst case scenario could be a further decline of 26% to the 2000 and 2007 Market Highs
- The total upside from here is 29%, back to the 2020 all-time high
- The total downside is 43% to the 2007 high
Risk Reward 1.4:1
It would appear for now that the market participants have priced in what they know.
I expect that the S&P500 will trade between 2,100 points and 2,700 points for the foreseeable future.
Potential options to get back into the market.
- Buy towards the bottom of the “New Trading Range”.
- Buy on a breakthrough into target 2, above 2,700 points
- Buy when price moves into the value zone below 2,100
- Start scaling in now and keep on buying into the dip using DCA (dollar cost averaging)
Do you think there is more downside risk that upside risk?
What do you plan on doing?
Let me know in the comments.
March 26th, 2020
S&P 500 – Jostling for Support With a Vicious Bear!
t seems with the huge amount of macro-economic news providing fiscal and monetary stimulus the market might be trading to establish a trading range between 2,100 and 2,600 points.
Very early to say as right now as one bounce does not make a trend.
I am surprised the massive jobless claims news today has not had more of an impact.
Market Outlook.
A previously mentioned, I set 4 targets for the S&P 500 crash.
Target 1: Break of the 2019 Bull Run Support – Achieved
Target 2: Break of the 2008 Bull Run Support – Achieved
Target 3: Retrace to 2014 Stock Market High at 2140 points – In Progress
Target 4: Deep Value Zone – This is where we move down to the 2000 and 2008 stock market peaks.
Interestingly if we were to evaluate market direction according to Dow Theory it would be.
Long Term – Uptrend
Medium Term – Sideways
Short Term – Downtrend
If this market turned around from here it would be a miracle, I don’t believe in miracles.
Outlook – Full Bear Market – Short.
March 25th, 2020, Pre-market
Is Gold a Good Safe Haven in Stock Market Crashes
Gold is widely perceived as the best safe haven for your capital as the stock market goes through a bear market correction or crash. But is this really true?
For gold to be a good hedge it would need to move in the opposite direction (have a negative correlation) to the broad market index, in this case, the S&P500.
Looking back 15 years we can see this is not the case for Gold (GLD) versus the market.
2005 to 2007
Gold out-performs the S&P500 with 52% gains compared to 25% for the S&P500
2007 to 2009
During the Financial Crisis, Gold provided a good safe haven for 7 months until it lost all of its gains.
2009 to 2020
The S&P 500 goes on a staggering bull run making 481% to January 2020
Gold makes 138% from 2009 to 2012 moving in correlation with the market, then suffers a serious crash wiping out 42% of its value. The crash and stagnation lasts 8 years.
Gold is still 13% lower than its previous all-time high.
My Observations
March 24th, 2020, Pre Market
Corona Crash, How Much Will We Lose? How Long Will It Last?
With the current stock market collapse, inevitable parallels are drawn with previous stock market crashes.
Each crash is unique in its own way, with different causes and different market and governmental responses.
The Corona Crash is unique in that it is the most violent and volatile crash so far on record. So far it is not the biggest crash, nor of course the longest crash, but the ferocity is unparalleled.
Using the prediction and measurement tools available in TradingView I have mapped the previous crashes for comparison.
Anatomy of Crashes.
- 1929 Great Depressions: Lost 83%, Crash Duration 2010 Days, Full Recovery 24 Years
- 1973/4 Oil Crisis: Lost 35%, Crash Duration 700 Days, Full Recovery 7 Years
- 1987 Black Friday: Lost 35%, Crash Duration 61 Days, Full Recovery 2 Years
- 2000 Dotcom Crash: Lost 49%, Crash Duration 944 Days, Full Recovery 7 Years
- 2007 Credit Crisis: Lost 58%, Crash Duration 485 Days, Full Recovery 7 Years
- 2020 Corona Crash: Lost 33%, Duration So Far 28 Days, Full Recovery???
So, what can we learn from the historical stock market collapses?
The quickest market recovery was 1987 Black Friday which took 2 years. The last two crashes in 2000 and 2007 took 7 years to recover.
The Corona Crash is so far most similar in nature to the 1987 Black Friday Crash. This could mean that if our governments and central banks manage monetary and fiscal policy optimally, we might be out of this disaster in 2 years.
We are heavily dependent on vaccine development and deployment and even the most optimistic estimates of delivery date are November 2020, but realistically we are talking about 12 to 18 months.
This bear market will not go away anytime soon. We may see some stabilization, but bear markets to not disappear overnight. Additionally, typical market recovery, meaning the index reaches and new high (surpassing the pre-crash high) is between 2 years and 7 years.
Stock Market Crash Statistics
- Average Duration 2 Months to 3 Years
- Average Full Recovery 2 to 7 Years
- Average Loss 35% to 58%
Not great news, but I hope this helps to prepare you mentally for what is to come in this Black Swan Event.
March 21st, 2020 Weekly Wrap
Catching a Falling Knife – Trying to Go Long on the SP-500
With our everyday lives being severely restricted, the new reality of a massive economic impact raises its ugly head.
The ferocity of the market collapse makes this different from all other market crashes we have seen before.
We have now entered target 3 and are about to wipe out 12 years of gains on the S&P500.
Breaking down through the 2000 points support will see us enter the value zone.
But what is value to you?
You could re-enter the market under 2,000 points to watch your investments deteriorate by another 25% down to the year 2000 and 2007 stock market highs at 1,500 points.
This market shows NO SIGN of stabilizing as you can see from the long-term weekly chart. The daily chart is equally as horrific.
The new support level has not been found.
I expect a fall through into the value zone and potentially to 1,500, but it all depends on how quickly we emerge from the crisis.
Don’t Try to Catch a falling knife.
NASDAQ 100 – Is the worst yet to come? Probably.
With lockdowns spreading around the world almost a quickly as the virus, the new reality is a severe recession. Seeing China start to theoretically emerge from a state of emergency gives us hope. But I say theoretically because the expulsion of foreign journalists suggests the Chinese government has something to hide.
We have now entered phase 2 of the crash which sees an imminent break of the 4-year support line at NDX 6723 points. Potentially a further break down towards the 10-year support at 5,700 points.
At below 6,000 points, I would see deep value with 10 years of gains being knocked off the market capitalization. That deep value zone stretches a long way down to 4000 points which is below the year 2000 dotcom highs.
Realistic expert estimates suggest our social lifestyle and working practices will be impacted at least through to autumn or even the end of the year.
Government commitment to support our economies are admirable, and we should expect to see a mass devaluing of currencies as more paper is printed.
Here’s hoping that humanity’s response and the response of our pharmaceutical industries are so strong we bounce back quickly.
But we must be realistic.
During this crisis, we are seeing the best and worst of humanity. The best being the bravery of our health care professionals and the acts of kindness we bestow on each other. The worst being people panic buying facemasks and stealing sanitizer from hospitals, depriving our doctors and nurses of critical products.
Some people are even people selling toilet roll and facemasks on eBay for extortionate amounts which is disgusting.
March 17th, 2020 – Pre Market Open Update
NASDAQ Could Lose 20 Years of Gains
The use of technical analysis can be extremely enlightening when trying to evaluate where a new bear market might end.
I am currently in cash, and I am working on understanding where the value zone is for stocks. The value zone is the area where the supply and demand equations shift from fear to greed.
Right now, the market is in freefall and even the Philippines has closed their exchange indefinitely.
Interestingly it took the NASDAQ 100 16 years to recover from the DOTCOM 2000 crisis.
Since then 2008 bottom is has risen an incredible 804%
So, from that meteoric rise, it is a long way down.
The NDX100 has lost 27% so far and has broken through the 2018 support and I am sure will break the 4-year support line soon.
There is a possible 32% further drop back down to the year 2000 high which would wipe out 20 years of gains.
I would see great value when the Nasdaq 100 drops under 6000.
Technical analysis comes with some caveats that many technical analysts will not discuss:
- Government intervention massively impacts the supply and demand equation.
- Drops in Interest rates and a nearly $1 Trillion Emergency fund will change the outlook.
Ultimately the governments need to protect people, protect jobs and ensure the sick are looked after. That is more important than money.
I wish all of you and your families good health and wish you all a happy lockdown as our civil societies go into isolation.
March 16th, 2020 – Pre Market Open Update
Corona Crash – The US Wakes Up to a New Reality
With lockdowns and quarantining spreading across the globe as quickly as COVID 19 there will undoubtedly be a severe economic impact as wealth as an impact on our society. With high profile sports stars, politicians and actors contracting the virus, the new reality is setting in.
I believe this will be the most volatile stock market crash in history. Panic and fear are gripping the globe and certain industries such as travel, leisure, sports, and events will all be severely impacted. Typically tourism and dining contribute to about 5% of GDP according to the Economist Magazine, so this might mean we drift into a technical recession this year, but it will hopefully be short-lived.
There is strong evidence that China is already bouncing back with the CSI 300 only registering a 5% loss in 2020 compared to the other major indices losing at least 20% so far.
The good news is that central banks and governments are reacting economically very well slashing interest rates and creating emergency response budgets to help keep businesses afloat.
The bad news is that the US response to testing and quarantine is too slow and the weaknesses of the US healthcare system are seriously exposed, which will prolong the economic impact of the virus.
This may be the most volatile crash in history, but it may also be the most short-lived and quickest recovery. It depends on the speed to deliver and deploy a vaccine, so we can all resume our normal routines again.
Systemically, we are OK, goods are still flowing, and there are no large job losses announced so far. As long as governments support the businesses and those who are suffering we should hopefully come out the other side relatively unscathed.
Market Outlook.
A previously mentioned, I set 4 targets for the S&P 500 crash.
- Target 1: Break of the 2019 Bull Run Support – Achieved
- Target 2: Break of the 2008 Bull Run Support – Achieved
- Target 3: Retrace to 2014 Stock Market High at 2140 points – In Progress
- Target 4: Deep Value Zone – This is where we move down to the 2000 and 2008 stock market peaks.
I think we will not break through Target 4 support IF we manage to deploy the vaccine and support our businesses against mass redundancies and bankruptcy.
And that is a big IF!
US Stock Market Today: Corona Crash – Target 2 Achieved – What Next?
March 11th, 2020
Update from my post on 28th Feb, target 2 is achieved.
The question is how low can it go?
Back to 2015 levels, back to 2008? Probably.
No amount of stimulus is going to make companies profitable again in the short term. The stimulus needs to target consumers, but if they cannot go out and spend it or it cannot be delivered then what?
Depending on your trading or investing style this is a great market or a terrible one.
- Trading Short Side – Brilliant
- Trading Long – Terrible
- Investing Long and still in the market – Terrible
- Pulled all money out of the market (me) – Brilliant
The smart money is waiting for the value zone, that zone will vary for specific stocks, but once COVID 19 is under control we should see a sharp bounce back.
US Stock Market Today: Corona Crash, What to Expect? What to Prepare For?
February 28th, 2020
The Coronavirus is a big macro-economic issue.
The Coronavirus is going to cause a significant dent in global output and trade.
Infection rates are rising across the globe. Countries are taking measures to curb the spread, the next steps will be closing schools and those who can work from home will work from home. But huge swathes of the population who need to go to work might be sent home to stop the spread, this will mean big corp profitability will suffer significantly.
The 11% drop in 6 days on the S&P 500 is a very violent stock market shock.
The financial crisis in 2007 lost the market 43% in 18 months.
One should prepare now for at least another 10% drop in the S&P over the next weeks.
A worst-case scenario looks to be an additional drop to the 2007 and 2000 market tops (the long red horizontal line) which would mean a further 38% drop.
This all depends on how we contain the virus. If we contain it well and soon, expect a strong bounce back. If not expect further decline.
Batten down the hatches.
The US Stock Market Today: Indexes start Thanksgiving Week with a Bang
November 25, 2019
All three large US Stock Indexes started the 2019 Thanksgiving holiday week with a Monday rally.
The Dow Jones moved past 28,000 again by rising 190.85 points; 0.68%, to close at 28,066.47 Monday. The Dow closed under 28,000 Friday at 27,875.62.
The NASDAQ Composite also rose by over 100 points to close at 8,632.49 Monday. The NASDAQ Composite moved up by 112.604 points; or 1.32%, Monday. The NASDAQ closed at 8,519.89 on Friday.
The S&P 500 rose by 23.35 points; 0.75%, to close at 3,133.54 on Monday. The S&P joined the Dow in smashing a record Monday. The S&P 500 closed at 3,110.29 on Friday.
What is Fueling the November Rally?
The motivation for investors’ optimism is hard to ascertain. However, good news from some U.S. retailers could drive the rally.
Both the luxury jeweler Tiffany & Company (NYSE: TIF) and L Brands Inc (NYSE: LB) owner of Victoria’s Secret were winners in Monday’s trading. Tiffany’s share price rose by $7.74; 6.17%, to close at $133.25 on Monday. L Brands stock rose by $1.16; 6.44%, to close at $19.17 Monday.
Rising prices for retailers such as Tiffany and L Brands shows investors think a strong holiday shopping season is beginning. The U.S. Holiday shopping season begins on November 29, 2019, with Black Friday. Black Friday is the first shopping day after Thanksgiving.
Mr. Market Expects a Happy Holiday Season
The growing demand for Tiffany and L Brands stock shows investors think spending on luxury goods could be high this holiday season. Another company potentially profiting from optimism about consumer goods is NVIDIA Corp (NASDAQ: NVDA).
NVIDIA makes the graphics processor units video games and streaming video run on. NVIDIA shares rose by $10.32; 4.89%, to close at $221.21 Monday.
Judging by the indexes and stock prices Mr. Market is expecting a happy holiday season.
The US Stock Market Today: Indexes Rally on Friday
November 22, 2019
America’s stock indexes abruptly turned around Friday, after four days of losses.
The Dow Jones Industrial Average, for instance, rose by 109.33; 0.39%, to close at 27,875.62, Friday. The Dow had fallen on Tuesday, Wednesday, and Thursday because of bad news.
It could take a while for the Dow to return to 28,000 however. The Dow closed at 27,766.29 on Thursday, 27,821.09 on Wednesday, and 27,934.02 Tuesday.
The NASDAQ Composite rose by 13.67; or 0.16%, to close at 8,519.89 on Friday. The NASDAQ closed at 8,506.21 on Wednesday.
The S&P 500 rose by 6.76; or 0.22%, to close at 3,110.29. Thus the S&P recovered from losses earlier in the week. The S&P closed at 3,103.54 on Thursday, and 3,108.46 on Wednesday.
Good News Boosts the Indexes
The markets were responding to good news about economic indicators. The indicators are the IHS Markit U.S. Composite PMI (Purchasing Managers’ Index) Output Index and the IHS Markit’s U.S. Manufacturing PMI.
The IHS Markit U.S. Composite PMI Output Index rose from 50.9% in October to 51.9% in November, Morningstar reports. The Index rise indicates an increase in American economic activity.
The IHS Markit’s U.S. Manufacturing PMI measures orders of materials and equipment by manufacturers. The IHS Markit’s U.S. Manufacturing PMI rose from 51.3% in October to 52.2% in November. An increase in the Manufacturing PMI indicates more manufacturing activity.
Retail Good News Boosts US Markets
Unexpected good news about brick and mortar retailers also boosted U.S. stocks.
Luxury department store Nordstrom’s (NYSE: JWN) share price by $3.63; 10.58%, to close at $37.95 Friday. Investors bought Nordstrom after company reported a higher than expected earnings per share (EPS).
Nordstrom reported an EPS of 81₵ cents for 3rd Quarter 2019. That beat the Zacks Consensus Estimate of 65₵, Yahoo Finance reports. Nordstrom’s revenues fell by 2% during 3rd Quarter, however.
Nordstrom’s performance; and the IHS Markit U.S. Composite PMI Output Index, show the U.S. economy could be stronger than many observers think. More good earnings reports and strong economic indicators could trigger a bull market in U.S. stocks.
The US Stock Market Today: US Indexes Keep Falling
November 21, 2019
All three big U.S. Stock Indexes slid Thursday, as trade pessimism rose to new heights.
The Dow Jones Industrial Average moved down 54.8 points; or -0.2%, closing at 27,766.29 Thursday. Thus the Dow is retreating from 28,000. The fell by -112.93 points; or -0.4%, closing at 27,821.09 Wednesday.
Thursday was the third day of losses for the Dow this week. The Dow fell by 102.2 points; -0.36%, to close at 27,934.02, on Tuesday.
Multi-day losses continue on Wall Street
The NASDAQ and the S&P 500 followed the Dow’s lead with continued losses.
The NASDAQ Composite Index fell by -20.52; or -0.24%, closing at 8,506.21 on Thursday. The NASDAQ closed at 8,526.93 on Wednesday after falling by -43.93 points; or 0.51%.
The S&P 500 fell by -4.92; or -0.16%, closing at 3,103.54 on Thursday. On Wednesday, the S&P -11.72 points; or -0.38% to close at 3,108.46.
Trade Hysteria Rising to new heights
The indexes are falling partially because trade hysteria is rising to new heights.
The World Trade Organization’s (WTO) highest dispute-resolution panel; or Appellate Body, could cease to function on December 10, 2019, Politico claims. The Appellate Body could shut down because U.S. President Donald J. Trump (R-New York) is blocking new appointments to the panel.
“Without a working appeals system, international trade disputes may never see resolution and could quickly evolve into tit-for-tat tariff wars that spiral out of control,” Politico warns. In addition, some Trump administration officials want to stop funding the WTO.
Former U.S. Secretary of State Henry Kissinger warns that a trade war between the US and China could escalate into an armed conflict worse than World War I, Fox News reports. Kissinger made the warning during a visit to Beijing on Thursday.
There could be no phase-one US-China trade deal until next year, Business Insider claims. Trump is leery of a trade deal because the Chinese are refusing make concessions on issues such as intellectual property rights. Without a phase one trade deal Trump could raise tariffs on Chinese goods in December.
Conagra falls
Mr. Market is showing little faith in the grocery sector. Packaged foods company Conagra Brands (NYSE: CAG) saw its shares fall by -$1.27; or -4.31%, to $28.22 in Thursday’s trading.
Mr. Market is skeptical of Conagra because of weak sales at U.S. super markets such as Kroger (NYSE: KR). Grocers sell many of Conagra’s products.
The US Stock Market Today: Is it a Correction?
November 20, 2019
Fears of a correction grew as all three major U.S. indexes fell Wednesday. However, there was some rare good news in the retail sector.
The NASDAQ Composite joined the plunge Wednesday by falling by -43.93 points; or 0.51%, to close at 8,526.93. Wednesday’s drop wiped out Tuesday’s NASDAQ Composite growth of 20.72 (0.24%). The NASDAQ closed at 8,570.66 Tuesday.
The S&P 500 continued dropping by falling by -11.72 points; or -0.38%, on Wednesday. The S&P 500 closed at 3,108.46, or 11.71 points below Tuesday’s close of 3,120.18.
The Dow Jones Industrial Average fell by -112.93 points; or -0.4%, to close at 27,821.09 Wednesday. This was the second day of losses for the Dow. The Dow Jones fell by 102.2 points; -0.36%, to close at 27,934.02, on Tuesday.
U.S. China Tensions Scaring Markets
Growing tensions between China and America are frightening the markets.
One source of tensions is the Hong Kong Human Rights and Democracy Act the U.S. Senate passed on Tuesday. The Act bans the export of tear gas, pepper spray, rubber bullets, stun guns and other weapons to China, Reuters reports.
The Act is symbolic but it could anger the Chinese government, The South China Morning Post observes. Tellingly, the Senate passed the Act unanimously.
Congress’s lower house; the Representatives, added fuel to the fire by passing its version of the Act by a margin of 417 to one Wednesday, CNBC reports. Therefore, the Act is heading to President Donald J. Trump’s (R-New York) desk. Trump could add to U.S./China tensions by signing the Act.
Target leads modest retail rally
Retail stocks experienced a modest rally Wednesday, after falling on Tuesday. Discounter Target Corp (NYSE: TGT) led the rally by rising $15.76; or 14.21%, to close at $126.6 on Wednesday.
I think Target’s share growth shows investors think there could be a strong holiday shopping season. Another retail favorite, home improvement giant Lowe’s (NYSE: LOW) added to retail optimism. Lowe’s share price $4.43; or 3.91%, to close at $117.83.
Lowe’s and Target’s share prices shows investors still have faith in some brick and mortar retailers.
The US Stock Market Today: The Dow Comes Back to Earth
November 19, 2019
The Dow Jones Industrial Average and the S&P 500 fell back to Earth as the NASDAQ kept growing Tuesday.
The Dow Jones erased Monday’s gains by falling 102.2 points; -0.36%, to close at 27,934.02.The Dow rose by 31.33 points; 0.11%, to close at a record 28,036.22, Monday.
Sluggish Home Depot Sales send the Dow Down
Weak earnings reports from retailers such as Home Depot (NYSE: HD) sank the Dow, Barron’s speculates. Hardware and building supply giant Home Depot cut its projection of same-store sales growth for 2019 from 4% to 3.5%, Barron’s notes.
As a result, Home Depot’s share price fell by -$12.99; or 5.44%, to close at $225.86, Tuesday. Investors fear that Home Depot’s sales are falling because American consumers are afraid to make big ticket purchases due to economic uncertainty.
Home Depot’s signature products include large appliances, barbecues, lawn mowers, lumber, plumbing, and supplies for remodeling and building projects. The sales drop at Home Depot shows consumers are afraid to spend.
S&P Falls as Retail Collapses
The S&P 500 followed the Dow down on Tuesday. The S&P fell by -1.85 points; 0.06%, to close at 3,120.18 Tuesday.
The S&P closed at a record high of 3,122.03 and finished last week with another record number of 3,120.46 on Friday.
Kohl’s reported weaker than expected 3rd Quarter earnings; and cut its earnings per share (EPS) target from $5.15 to $5.45 to $4.75 to $4.9%. We could see further drops in the S&P this week as department store owners Macy’s (NYSE: M) and Nordstrom (NYSE: JWM) report earnings.
NASDAQ Marches On
The NASDAQ Composite was immune to Tuesday’s retail jitters, however. The NASDAQ moved up by 20.72 (0.24%) to close at 8,570.66 Tuesday. The NASDAQ closed at 8,549.94, Monday.
Hardware makers; led by chip builder Advanced Micro Devices Inc. (NASDAQ: AMD), boosted the NASDAQ Tuesday. Advanced Micro Devices’ share price rose by $1.41; 3.54%, to close at $41.29 Tuesday.
One reason the NASDAQ is rising is that investors are dumping brick and mortar retail and buying tech instead.
The US Stock Market Today: Records fall as US Indexes Rocket Skyward
November 18, 2019
All three major indexes had a great day Monday as the S&P 500 rose to a record close again.
The S&P closed at 3,122.03 Monday; after rising by 1.57 points or 0.05% in daily trading. The S&P ended last week with a record high of 3,120.46.
The S&P 500 has concluded six straight weeks of high growth, Markets Insider notes. This is the longest growth streak for the iconic index in two years.
Dow and NASDAQ Start week on a high note
The S&P was not alone because the Dow Jones Industrial Average and the NASDAQ Composite also started the week on a high note.
The Dow Jones rose by 31.33 points; 0.11%, to close at a record 28,036.22, Monday. The Dow closed at a record 28,004.89 on Friday.
Tech stocks boosted the NASDAQ Composite by 9.11 points; 0.11%, to close at 8,549.94 Monday. The NASDAQ closed at 8,540.83 Friday.
Is the Trade War Over?
Speculation that President Donald J. Trump (R-New York) is quietly ending his trade war with China could be fueling the rally.
Trump has abandoned his policy of trying to pressure China to change its policies with tariffs, Business Insider speculated on Sunday, November 17, 2019. Instead, Trump is trying to restore the trade status quo that existed under his predecessor Barack Obama (D-Illinois).
Trump could change policy because he fears the economic hardships the trade war creates could cost him next year’s presidential election. U.S. factory activity fell to its lowest level since the Great Recession in September 2019, CNN reports.
In detail, the Institute of Supply Management’s manufacturing index fell to 47.8% on September 30, 2019. Economists consider any level on that index below 50% indicates a contracting economy. Thus, Trump could fear recession and is trying to avoid it. Mr. Market responds by sending indexes up.
NVIDIA Boosts NASDAQ
Graphics processing units (GPUs); the chips that power gaming systems, are driving the NASDAQ bull rally.
The biggest gain for a stock on Monday was for GPU and artificial intelligence maker NVIDIA Corp (NASDAQ: NVDA). NVIDIA shares rose by $8.09, or 3.96%, to close at $212.28 Monday. NVIDIA’s stock shows Mr. Market thinks video games and AI will make money in 2020.
The US Stock Market Today: The Bull is running, Dow rises by 222.93 points
November 15, 2019
The bulls ran wild Friday as the Dow Jones Industrial Average rose by 222.93 points; or 0.8%.
The Dow closed at 28,004.89 Friday. Thus the Dow cleared a thousand point milestone for the first time since July 11, 2019. The Dow slightly closed at 27,781.196 on Thursday.
Observers credited Apple (NASDAQ: AAPL) for boosting the Dow. Apple’s shares rose by $3.12; or 1.19%, to close at $265.79 on Friday. The Wall Street Journal claims Apple added 424 points to the Dow Friday.
NASDAQ Composite and S&P Follow Dow Up
The NASDAQ Composite followed the Dow by rising 61.81; 0.73%, to close at 8,540.83 Friday. The NASDAQ closed at 8,479.02 on Thursday.
The S&P 500 rose to a record high of 3,120.46, by moving up 23.83 points; 0.77%. This was the third record high for the S&P 500 this week. The S&P shattered records on Wednesday and Thursday.
The S&P hit 3,094.04 on Wednesday and 3,096.63 Thursday. Investor faith in tech giants like Apple and Alphabet Inc. (NASDAQ: GOOGL), boosted both the Dow and the S&P. Alphabet shares rose by $24.39; or 1.86%, to close at $1,333.54 on Friday.
Are Health Insurance Companies driving the Bull Rally?
I think health insurers could be responsible for the S&P and the Dow’s performance. Three health insurance giants had a good day Friday.
First, Anthem Inc. (NYSE: ANTM) shares rose by $15.81; or 5.61%, to close at $297.82 Friday. Second, Human Inc. (NYSE: HUM) shares rose by $17.55; or 5.52%, to close at $335.55 Friday. Finally, UnitedHealthGroup (NYSE: UNH) rose by $13.57; or 5.3%, to close at $269.40, Friday.
American health insurers are thriving because of an aging population; federal laws that require employers to offer health insurance, and generous government subsidies. Federal tax dollars subsidize Medicare Advantage; a popular private health insurance program for senior citizens, for instance, Propublica reports.
The US Stock Market Today: S&P Moves up, Dow and NASDAQ Retreat
November 14, 2019
The S&P 500 moved up to a record close, Thursday. Meanwhile, the Dow Jones and NASDAQ Composite retreated from Wednesday’s highs.
The S&P 500 closed at 3,096.63 Thursday, nearly two points over Wednesday’s record high of 3,094.04. The S&P moved 2.59 points; or 0.084%, during Thursday’s trading.
The Dow Jones Industrial Average fell slightly to close at 27,781.196. During Thursday’s trading the Dow fell by 1.63 points; or 0.01%. The Dow rose to a record high of 27,783.59 in Wednesday’s trading.
The NASDAQ Composite fell by -3.08; or -0.04%, to close at 8,479.02 Thursday. This was the third day of drops for the NASDAQ, the Composite fell from 8,486.09 on Tuesday to 8,482.10 Wednesday.
Investors Skeptical about US retail
Investors are skeptical about American brick and mortar retail’s ability to compete in the Age of Amazon.
Walmart (NYSE: WMT) shares fell by $3.95; to close at $120.65 on Thursday. Investors ignored a good Walmart 3rd Quarter earnings report Thursday.
The world’s largest retailer reported a total revenue increase of 2.5% in the 3rd Quarter. Walmart also reported a 41% growth in US ecommerce sales and a 6.1% growth in U.S. store sales for 3rd Quarter.
Walmart’s price drop shows that investors are still skeptical of Walmart’s ability to keep with Amazon (NASDAQ: AMZN) and expand its ecommerce and delivery operations. Walmart announced two new delivery programs, Delivery Unlimited and InHome Delivery Thursday.
Are Investors Skeptical of the American Economy?
Walmart’s performance and the drops in the NASDAQ and the Dow Jones show investors are skeptical of the American economy.
I think investors are afraid of big losses at American retailers during the Christmas shopping seasons. Such losses; and the collapse of a major retailer, could send the U.S. economy into recession.
Investors need to watch holiday retail sales figures closely because they could be a preview of next year’s stock market performance.
The US Stock Market Today: S&P and Dow rise to New Records
November 13, 2019
Records kept breaking Wednesday as the Dow Jones Industrial Average and S&P 500 rose to new record highs.
The Dow Jones rose by 92.10 points; or 0.33% to 27,783.59 in Wednesday’s trading. That marked a record high for the second week in a row. The Dow set another record last Tuesday, November 5, 2019.
The Dow’s performance contrasts with a rare day of no gains Tuesday. The Dow closed at 27,691.49 both Monday and Tuesday.
The S&P 500 rose by 2.20; or 0.071%, to close at 3,094.04. That broke Friday’s record close of 3,093.08. The S&P closed at 3,091.84 on Tuesday.
The NASDAQ Composite flight slightly, Wednesday, dropping by -3.99 points; or 0.0047%, to close at 8,482.10. The NASDAQ closed at 8,486.09 on Tuesday.
US Exports to China Dropping
The bullish indexes are ignoring more gloomy trade news. American exports to China are falling off.
US exports to China leaving America’s largest port; Los Angeles, fell by 19.2% between October 2018 and October 2019, CNBC estimates. Port of Los Angeles exports to China fell for six months straight.
CNBC blames Chinese retaliatory tariffs that cover 96.6% of US exports that travel through the Port of Los Angeles. The energy industry could be the biggest loser in the tariff wars. CNBC estimates the US produced 20% of the crude oil China imported in January 2018, but just 1.2% of the crude China imported in August 2019.
Disney has a magical day in the Markets
The old Disney magic was working in the markets Wednesday. Entertainment giant Walt Disney Company’s (NYSE: DIS) shares rose by $10.14; or 7.31%, to close at $148.72 in Wednesday’s trading.
Reports that 10 million people have signed up for Disney’s new Disney+ video streaming service boosted Disney stock, Deadline speculates. Disney+ is so popular its website crashed during Tuesday’s launch.
Mr. Market believes Disney can win the streaming wars with its huge arsenal of popular programming. Disney+ draws upon such popular entertainment brands as Star Wars, Marvel, The Simpsons, Pixar, and Disney’s own productions.
The US Stock Market Today: Dow 0, NASDAQ 21.814, S&P 4.83
November 12, 2019
The Dow Jones Industrial moved 0 or 0.00% Tuesday. Incredibly, the Dow closed at 27,691.49 both Monday and Tuesday.
Thus, the Dow had a rare day of no change Tuesday. The NASDAQ Composite and S&P; however, recovered from Monday’s losses.
The NASDAQ Composite rose by 21.81; 0.26%, to close at 8,486.09 Tuesday. The NASDAQ Composite was still below Friday’s close of 8,476.31, however.
The S&P 500 rose by 4.83; or 0.16%, to close at 3,091.84. Thus the S&P 500 is approaching Friday’s record high of 3,093.08 again.
Tuesday’s sluggish performance shows the markets are acclimating to the financial and political turmoil in Asia.
Can the Markets Survive Trade War 2.0?
Greater financial turbulence could be right around the corner, however. President Donald J. Trump (R-New York) is threatening to escalate his trade war with China. The Financial Times reports Trump threatened that U.S. tariffs on Chinese imports will be “raised very substantially” if there is no trade deal.
Trump made the threat at a meeting of the Economic Club of New York on Tuesday. However, Trump also claimed “significant phase one deal with China” remained “close” and “could happen soon.”
Trump’s administration has placed 25% tariffs on $250 billion worth of Chinese goods. Trump; furthermore, is threatening to put 15% tariffs on $156 billion worth of Chinese products in December.
“I tell it to everybody: If we don’t make a deal, we’re going to substantially raise those tariffs, they are going to be raised very substantially,” Trump warns.
Thus the Trade War is alive and well and could enter a dangerous new phase next month. I think a trade war escalation could cause all three U.S. indexes to drop.
Tyson Foods Goes Up
Mr. Market is betting that America’s appetite for meat substitutes will grow. Shares of poultry and meat producer Tyson Foods rose by $6.15; or 7.43%, to close at $88.88.
Investors were responding to Tyson’s claim its plant-based nuggets created by Raised & Rooted are being sold in 7,000 stores in October, MarketWatch speculates. The plant-based nuggets were in 4,000 stores in September.
The US Stock Market Today: US Dollar, NASDAQ, and S&P fall on Bad News from Asia
November 11, 2019
A weak US dollar, falling Asian markets, Hong Kong violence, and growing doubts about a US-China trade deal sent the S&P 500 and NASDAQ Composite tumbling Monday.
The NASDAQ Composite fell by 11.03 points; or 0.13%, to close at 8,464.28 Monday. The NASDAQ closed at 8,476.31 Friday after hitting record highs earlier in the week.
Meanwhile, the S&P 500 fell from Friday’s record high of 3,093.08 to close at 3,087.01 on Monday. During Monday’s trading the S&P fell by 6.07; or -0.20%.
The Dow Jones Industrial Average; however, bucked the trend by rising 10.25; or 0.04%, to close at 27,691.49 on Monday. The Dow closed at 27,681.24 on Friday, well below last Wednesday’s record high of 27,493.
Bad News from Asia hits S&P and NASDAQ Composite
Hong Kong violence escalated as police shot a protester Monday, The Associated Press reports. Pro-democracy protesters disrupted the city by blocking subway lines and streets during rush hour.
Mr. Market fears the violence could spread throughout the People’s Republic of China and disrupt the world’s largest economy. Asian Markets fell in response to the violence. The Nikkei fell by -0.26%, Hong Kong’s Hang Seng Index fell by 2.62%, and the Shanghai Shanghai Composite fell by 1.8%, The Associated Press reports.
In related news, Consumer Inflation in China rose to an eight-year high. China’s National Bureau of Statistics reported the nation’s consumer price index rose by 3.8% between October 2018 and October 2019.
Bad news from China hits the S&P and NASDAQ had because many companies on those indexes depend on Chinese markets and manufacturing.
US Dollar Falls
Bad news from Asia also sent the US dollar dropping. The dollar fell from 109.28 Japanese yen on Friday to 108.95 Yen on Monday, The Japan Times reports.
Observers blame President Donald J. Trump’s (R-New York) failure to confirm rumors of a U.S/China trade deal last week for the falling dollar.
Investors need to watch the dollar, because a weak US dollar could boost US exports and manufacturers. In particular, a weak dollar could make US goods cheaper and more competitive in international markets.
LBO Rumors Boost Walgreens
The biggest gainer Monday was drugstore giant Walgreens Boots Alliance (NASDAQ: WBA). Walgreens shares gained $3.01; or 5.08%, to close at $62.25 Monday.
Walgreens buyers were responding to reports that private equity giant KKR & Co is making a $70 billion leveraged buyout (LBO) offer for the world’s largest drugstore operator.
The US Stock Market Today: Are the Bulls are Running?
November 8, 2019
The bulls kept running Friday as all three major US indexes rose. Not even trade pessimism from President Donald J. Trump (R-New York) could slow the bulls.
The Dow Jones Industrial Average led the bull run by rising 6.44 points; or 0.22%, to close at 27,681.24 Friday. However, the Dow is still well below Wednesday’s record high of 27,493. The Dow closed at 27,674.80 on Thursday.
The NASDAQ Composite rose by 40.80; or 0.48%, to close at 8,476.31. The NASDAQ had a superb day rising from 4,835, on Thursday.
The S&P 500 rose by 7.9; or 0.26%, to close at 3,093.08. That number set a record by smashing Thursday’s record close of 3,085.18. This was the third record-breaking day for the S&P 500 this week. The S&P also broke a record Tuesday.
Trump Casts Doubt on Trade Deal
The President cast doubt on Thursday’s trade deal rumors Friday, by telling reporters he has not signed off on a trade deal.
“I haven’t agreed to anything,” Trump admitted to CNN on Friday afternoon. Hence, Trump contradicted Chinese Commerce Ministry Spokesman Gao Feng who claimed negotiators agreed to a tariff rollback Thursday.
Gao told reporters that the United States and China had agreed to a partial tariff rollback. However, Gao did not say what tariffs the two countries plan to rollback.
Investors like Noble Energy
Oil & gas producer Noble Energy (NYSE: NBL) could lead an energy sector rally.
Noble’s shares rose by 87₵; or 4.23%, to close at $21.43 on Friday. Investors do not mind the small; $17 million, quarterly profit, Noble reported Thursday.
Not even a 90% drop in profits over the past year dampened investor faith in Noble, The Houston Chronicle reports. The Chronicle speculates Noble’s announcement that its gigantic Leviathan gas project off the coast of Israel is 96% complete. Noble expects the Leviathan project to produce gas in December.
The US Stock Market Today: Records Break as Trade Optimism Grows on Wall Street
November 7, 2019
Vague hints of a trade deal were enough to send the Dow Jones and the S&P 500 to new highs Thursday.
The Dow Jones Industrial Average moved by 182.24; or 0.66%, to close at 27,674.80 Thursday. That number broke Tuesday’s record Dow closing high of 27,492.63. The Dow closed at roughly 27,493, on Wednesday.
The S&P 500 moved up 8.4 points; or 0.27%, to close at 3,085.18, Thursday. That number crashed through Monday’s record close of 3,078.27. The S&P 500 closed at 3,076.78 on Wednesday.
The NASDAQ Composite went up by 23.89; or 0.28%, to close at 8,435, Thursday. That number was close to Tuesday’s record NASDAQ Composite close of 8,424.68. The NASDAQ Composite closed at 8,410.63 Wednesday.
Trade Deal Claims Boost Markets
China’s Commerce Ministry sparked Thursday’s record index performance by claiming a “phase one” trade agreement is close.
“Both sides have agreed to cancel additional tariffs in different phases, as both sides make progress in their negotiations,” Chinese Commerce Ministry Spokesman told Gao Feng told reporters. Reuters reports Gao made the statement at a regular press conference, Thursday in Beijing.
Gao did not say what additional tariffs America and China will cancel. In addition, Gao did not explain what “phase one” means.
“There is no specific agreement for a phased rollback of the tariffs,” Michael Pillsbury told Reuters. Reuters describes Pillsbury as an “outside adviser” to U.S. President Donald J. Trump (R-New York).
Reuters speculates that the “additional tariffs” could include $156 billion in duties on Chinese imports; such as smartphones, laptops, and toys. Trump scheduled those tariffs to start on December 15, 2019.
US Investors bet on Luxury again
Investors once again showed their faith in luxury brands, Thursday. Fashion maker Ralph Lauren Corp’s (NYSE: RL) share price rose by $14.79; or 14.66%, to $115.67, Thursday.
Ralph Lauren’s price growth shows many investors believe Americans will spend more on luxury goods. Thus, investors think income inequality will keep growing in America.
The US Stock Market Today: S&P rebounds, Dow stands still and NASDAQ falls
November 6, 2019
The S&P 500 rebounded Wednesday, as the Dow Jones stood still, and the NASDAQ Composite fell.
The S&P 500 moved up 2.16 points; 0.07%, to close at 3,076.78. Thus, the S&P is still below Monday’s record close of 3,078.27. However, the S&P is above Tuesday’s 3,074.62 close.
The NASDAQ Composite, in contrast, fell by -24.05 points; or -0.29%, to close at 8,410.63 Wednesday. The NASDAQ Composite closed at a record 8,424.68 on Tuesday.
The Dow Jones Industrial Average almost stood still Wednesday, falling by -0.07; or 0.00%, to close at 27,492.56. The Dow Jones went nowhere Wednesday, because it closed at 27,492.63 on Tuesday.
American Productivity Falls as S&P rises
The productivity of US workers unexpectedly fell by 0.3% during 3rd Quarter 2019, the U.S. Labor Department estimates.
That was the first drop in American worker productivity four years, Fortune claims. Rising worker productivity is an indicator of rising living standards so the productivity report could depress stocks.
Investors could regard falling worker productivity as a sign that income inequality, and wage stagnation could grow in the United States. Likewise, consumers’ income and buying power could fall.
American hourly wages; however, rose by 3.2% between September 2018 and September 2019, The U.S. Labor Department estimates. Yet American men’s earnings fell by 10% between 1979 and 2019, The Brookings Institution calculates.
I think the mixed performance of U.S. indexes shows Mr. Market is skeptical of future U.S. economic growth prospects.
Drugstore Prospers amid Weak Productivity
American health care could be immune to weak productivity growth. The share price of CVS Health Corp (NYSE: CVS) grew by $3.61; or 5.36%, to $70.93 on Wednesday.
CVS owns the health insurance provider Cigna; over 9,900 drugstores, and 1,100 clinics. CVS also owns medical benefit plans that serve 22 million people.
Investors like CVS Health because of growing revenues and income. CVS reported its revenues grew by 36.5% to $64.8 million and its operating income grew by 48.9% to $3.9 billion.
I expect American investors will keep pouring money into sectors they perceive as safe from weak productivity growth. Health care appears to be one of those sectors.
The US Stock Market Today: Indexes Keep Smashing Records
November 5, 2019
America’s stock indexes kept smashing records, Tuesday, as the rally continued.
The Dow Jones Industrial Average moved 30.52 points; or 0.11%, to close at 27,492.63 Tuesday. The Dow broke Monday’s record of 27,462.11 with that performance.
The NASDAQ Composite broke Monday’s record of 8,433.20, by moving 0.02%; or 1.48 points, to 8,424.68 Tuesday.
The S&P 500; however, closed below Monday’s record close of 3,078.27.The S&P 500 fell by 0.12%; or -3.65, to close at 3,074.62 Tuesday.
Retailers Boost the Dow
Unexpectedly good market performances by retailers; like grocer Kroger (NYSE: KR) and department store Macy’s (NYSE: M), boosted the Dow.
Kroger’s share price rose by $2.84; or 11.36%, to close at $27.83 on Tuesday. Macy’s rose by $1.13; or 7.25%, to close at $16.71, Tuesday.
Poor performances from pharmaceutical makers; such as Mylan NV (NASDAQ: MYL) and oil companies including Occidental Petroleum (NYSE: OXY), drove the S&P down. Mylan fell by $1.95; or -9.88%, to close at $17.79, Tuesday. Occidental Petroleum fell by $2.32; or -5.25%, to close at $41.91, on Tuesday.
Non-Manufacturing Growth Hurts the S&P 500
Reports of strong growth in America’s non-manufacturing sectors increased faith the Dow and the NASDAQ up Tuesday. The same reports undermined Mr. Market’s faith in the S&P 500.
American non-manufacturing economic activity grew in October 2019 was 2.1% higher than in September 2019, the National Institute for Supply Management estimates. Moreover, the Institute’s Non-Manufacturing Business Activity Index increased to 57 percent, 1.8 percentage points higher than the September reading of 55.2%.
Manufacturing could grow in coming months because the New Orders Index registered 55.6% in October; 1.9 percentage points than the reading of 53.7% in September 2019.
American investors think economic activity will increase in coming months. Thus, stock indexes could keep smashing records.
The US Stock Market Today: Is it a Bull Market?
November 4, 2019
Friday’s rally took on the appearance of a bull market Monday. All three big US indexes rose to record highs during Monday’s trading.
The Dow Jones Industrial Average led the bull rally by breaking its July 15 record. The Dow rose by 114.75; or 0.42%, to close at 27,462.11. The Dow closed at 27,347.36 on Friday.
The NASDAQ Composite rose by 46.80, or 0.56%, to close at 8,433.20 on Monday. The NASDAQ Composite closed at a record high of 8,386.4 on Friday.
The S&P 500 closed at a record high of 3,078.27, after rising by 11.27; or 0.37%, on Monday. The S&P 500 smashed Friday’s record close of 3,066.91 on Monday.
What is Driving the Bull Market?
The exact cause of the ongoing bull rally is a mystery. The media speculated that a Bloomberg interview with U.S. Commerce Secretary Wilbur Ross drove part of the rally.
Ross expressed optimism that the United States and the People’s Republic of China will soon reach “phase one” of a trade deal, in the interview. Under, the deal the Chinese could increase purchases of American agricultural goods, keep their currency stable, and open financial service markets to U.S. companies, Ross claimed.
Negotiators; however, do not have a meeting place for the next round of trade talks. Chile’s government canceled the November 16 to 17 Asia-Pacific Economic Cooperation summit because of riots, Reuters reports. Ross thinks new they could hold new talks in Alaska or Hawaii.
FedEx Rallies on Trade Optimism
Delivery giant FedEx (NYSE: FDX) led Monday’s rally by rising $8.32; or 5.32, to close at $162.50.
I think trade optimism drove the FedEx rally because the delivery company delivers many products they make in China.
The US Stock Market Today: Jobs Report Triggers record day for NASDAQ & S&P 500
November 1, 2019
The NASDAQ Composite and S&P 500 enjoyed record days Friday thanks to a good jobs report.
The NASDAQ Composite closed at a record high of 8,386.4 smashing its July 24, 2019, record of 8,321.50. The NASDAQ rose by 94.04; or 1.113%, to close at 8,386.40. The NASDAQ Composite closed at 8,292 on Thursday.
The S&P 500 smashed Wednesday’s record of 3,046.77 to close at 3,066.91 on Friday. The S&P moved by 29.35; or 0.97%, in the day’s trading. The S&P closed at 3,038 on Thursday.
The Dow Jones Industrial Average closed at 27,347.36, Friday. That number was 12 points short of the Dow’s July record high of 27,359.
The Dow recorded the biggest gains Friday, moving by 301.13; or 1.13%. The Dow closed at 27,046 on Thursday.
Good Jobs Numbers Boost the Markets
Mr. Market was responding to a better-than-average employment report on Friday.
America’s total non-farm payroll employment grew by 128,000 jobs in October 2019, the US Bureau of Labor Statistics estimates. Importantly, America’s unemployment rate remained low 3.6% in October.
The unemployment was lower for adults at 3.2%. In addition, the number of people marginally attached to the labor force last month fell by 262,000 in companion with October 2018. Hence, the data indicates more Americans are working full time.
Investors like the jobs report because it shows the US economy is growing, despite all the trade fears. I expect more good jobs data to boost the market in November and December, as retail hiring picks up for the Christmas shopping rush.
Hershey’s has a Sour Day on Wall Street
Iconic chocolate maker Hershey’s (NYSE: HSY) had a bad day, Friday. Hershey’s shares fell by -$3.80; or 2.59%, to close at $143.07.
News reports that CEO Michele Buck sold 9,164 shares of Hersey on October 10, 2019, prompted the sell off. Buck, however, still owns 153,929 shares of Hershey’s, the Mitchell Messenger claims.
The US Stock Market Today: Interest Rate Rally Dies Fast
October 31, 2019
Trade worries put a fear into the market on Halloween as Wednesday’s interest-rate rally died fast Thursday.
The Dow Jones erased Wednesday’s rally by going down -140.46 points; or -0.52% Thursday. The Dow moved up by 15.27; or 0.43.%, to close at 27,186.69 Wednesday. The Dow closed at 27,046.23 on Thursday.
The S&P 500 also erased all of Wednesday’s record gains on Thursday. The S&P closed at 3,037 on Tuesday and 3,037.56 on Thursday.
The S&P closed at a record high of 3,046.77 Wednesday. The S&P 500 lost the record gains by moving -09.21; or 0.3%, in Halloween Day trading.
The NASDAQ Composite closed at 8,292.36 on Thursday. That number was down from 8,303.98 on Wednesday.
The NASDAQ Composite; however, was still above the 8,277 Tuesday close. The NASDAQ moved by -11.61; or 0.14%, on Thursday. Thus, the NASDAQ Composite’s losses were lower than those on the S&P and the Dow.
Trade Jitters End Interest-Rate Rally
U.S. Indexes rose on Wednesday because the Federal Reserve’s policy committee voted to raise the overnight lending rate by a quarter of a percentage point.
The interest rate rally was not strong enough to overcome growing trade war fears. The U.S./China Trade War is already proving fatal for American agriculture.
The number of U.S. farm bankruptcies grew by 24% in the first nine months of 2019, the American Farm Bureau Federation estimates. On Thursday, Markets Insider reported that farm bankruptcies are at their highest level since 2011.
Farm Bureau Chief Economist John Newton blames “unfair retaliatory tariffs” for the epidemic of farm bankruptcies. In addition, Newton estimates 40% of American farmers’ income now comes from government aid.
American agriculture could be in recession; or depression, because of the trade war, if Newton is correct. Thus, it is easy to see why Mr. Market is so scared.
Kraft Heinz has a Good Day
Winners in Wednesday’s trading include Warren Buffett favorite Kraft Heinz Co. (NASDAQ: KHC). Kraft Heinz share price grew by $3.83; or 13.44%, to close at $32.22 on Halloween.
An earnings report that exceeded analysts’ expectations drove Kraft Heinz shares up. In particular, Kraft Heinz reported earnings of 69₵, analysts predicted 50₵.
Kraft Heinz’s earnings justify Buffett’s faith in the food maker. Berkshire Hathaway (NYSE: BRK.B) owns 26.7% of Kraft Heinz, Reuters estimates.
The US Stock Market Today: Stimulus Works Interest Rate Cut boosts Markets
October 30, 2019
Stimulus worked Wednesday as all three of the major US indexes rose after the Federal Reserve cut the overnight lending rate by a quarter of a percentage point.
America’s central bank took the action because of weakness in some parts of the US economy particularly manufacturing, Reuters reports. Wednesday’s action reduces the overnight lending rate to 1.5% to 1.75%.
S&P Smashes Record for Second Time this Week
The S&P 500 closed at a record high of 3,046.77. That close was higher than Monday’s intraday trading record of 3,044.08.
The S&P also broke Monday’s record close of 3,044.08. During the day the S&P moved by 9.88 points; or 0.33%. The S&P closed at 3,037 on Tuesday.
The Dow Jones Industrial Average responded to the rate cut by moving 115.27; or 0.43.%, to close at 27,186.69. The Dow closed at 27,071 on Tuesday.
The NASDAQ moved by 27.12; or 0.33%, to close at 8,303.98 Wednesday. The NASDAQ closed at 8,277 on Tuesday.
The markets justified the risk the Fed took by making its third interest rate in 2019. At least Fed Policy Committee members think the Fed made the wrong move.
Two Fed members Kansas City Fed President Esther George and Boston Fed President Eric Rosengren voted against the cut. George and Rosenbergen think the rate was unnecessary.
General Electric Bounces Back
General Electric (NYSE: GE) bounced back because of strong results at the manufacturer’s aerospace unit.
GE’s share price grew by $1.04 Wednesday; or 11.47%, to close at $10.11. The iconic company has been struggling to convince investors it can turnaround and reduce debt for some time.
One reason for Mr. Market’s optimism about GE is news reports the company delivered its first flight-compliant GE9X jet engine. The GE9X is the world’s biggest jet engine, Investors’ Business Daily claims.
Boeing (NYSE: BA) is testing the GE9X at a factory in Everett, Washington, Aviation Week reports. Boeing hopes to install the GE9X on the 777X, the world’s largest airliner. Problems with a compressor in the GE9X are delaying the 777X’s test flight.
Successful tests of the GE9X could boost GE’s stock price.
The US Stock Market Today: Pessimism Returns to Wall Street
October 29, 2019
Pessimism made a comeback Tuesday, as all three big U.S. indexes moved down.
The Dow Jones Industrial Average led the downward trend with a -19.26; or -0.07%, movement. The Dow Closed at 27,071.46 Tuesday, below Monday’s 27,091.
The S&P 500 moved down by -2.53; or -0.08%, to close at 3,036.89. That number was below Monday’s record high close of 3,039.42.
The NASDAQ Composite fell by 49.14; or -0.59%, to close at 8,276.85 on Tuesday. The NASDAQ Composite closed at 8,826 Monday.
Why are Investors Pessimistic?
The source of the pessimism is unknown but speculation about the Federal Reserve could drive markets down.
Several media outlets; including The New York Times, speculated weak economic data will force the Fed to cut interest rates on Wednesday. USA Today added to the gloom by speculating rate cuts will not “head off a potential recession.”
Weak economic that could prompt an interest rate cut includes job growth. Markets Insider notes that September 2019 jobs numbers missed economists projections.
The ADP Research Institute estimates the American economic added 135,000 jobs in September. Economists surveyed by Bloomberg projected the U.S. economy would add 140,000 jobs in September.
I think such stories spook some investors. However, we could see major index movements tomorrow because the Federal Reserve’s policy committee has a meeting scheduled.
XEROX has a good day as Indexes Fall
Some individual stocks defied the pessimism by having a good day Tuesday.
Copier maker Xerox Holdings Corp (NYSE: XRX) shares rose by $3.63, or 11.79%, to close at $34.42 Tuesday. Stronger than expected earnings drove interest in Xerox.
A net income increase of $221 million, in particular, impressed Xerox investors. I think Xerox’s price increase shows investors are skeptical of the recession predictions.
THe Xerox investors bet against the pessimists by predicting American companies will buy more copiers and printers next year.
The US Stock Market Today: S&P 500 Sets Record
October 28, 2019
Good earnings news drove the S&P 500 to a record high in intraday trading, Monday. The S&P hit a record intraday high of 3,044.08, MarketWatch reports.
The S&P closed at 3,039.42 on Monday, which beat the previous record of 3,027.98 set on July 28, 2019. The S&P 500 moved by 16.97; or 0.56%, in all-day trading. The S&P closed at 3,023 on Friday. MarketWatch credits good earnings reports at companies like AT&T (NYSE: T) for the S&P’s record high.
The Dow Jones Industrial Average also had a good day, Monday. The Dow moved by 132.66; or 0.49%, to close at 27,090.72. The Dow closed at 26,958 on Friday.
NASDAQ beats S&P despite Record Day
The NASDAQ Composite had a better day than the Dow or the S&P, Monday. The NASDAQ moved by 82.87; or 1.01%, to close at 8,235.99, Monday. The NASDAQ closed at 8,243 on Friday.
I think Amazon (NASDAQ: AMZN) drove the NASDAQ’s resurgence Monday. Amazon bounced back Monday after being hammered by earnings doubts on Friday.
Amazon’s share price rose by $15.75; or 0.89%, Monday to close at $1,777.08. Amazon fell to $1,696.58 on Friday morning because of bad news. In particular, Amazon lost the JEDI cloud infrastructure contract for the U.S. military to Microsoft (NASDAQ: MSFT) Friday.
Amazon, however, bounced quickly from the bad news. Amazon closed at $1,761.33 on Friday. Mr. Market still has faith in Jeff Bezos, even though the analysts have doubts.
Investors bet on Luxury at Tiffany & Company
Investors are betting big on luxury and conspicuous consumption. The biggest share price gain Monday was the high-end jeweler, Tiffany & Co. (NYSE: TIF).
Tiffany’s share price grew by $31.17; or 31.63%, to close at $129.72 Monday. I think Tiffany’s growths shows investors think income inequality will grow in America and other countries.
Investors think the rich will get richer and have more money to spend on expensive jewelry. Thus, Tiffany & Co. could make more money.
Tiffany’s gain, came after the U.S. Census Bureau reported American income inequality reached its highest level in at least. NPR reports, the U.S. Bureau estimates U.S. income inequality was “significantly higher” in 2018 than in 2017. Income inequality could be bad for America but good for Tiffany & Co. stockholders.
The US Stock Market Today: S&P 500 nearly breaks Record
October 25, 2019
The S&P 500 almost broke its July 26 record high of 3,027.98 at midday Friday.
The S&P 500 briefly traded at 3,027.35, MarketWatch reports. However, the S&P fell about five points to close at 3,022.55. The S&P closed at 3,010 on Thursday.
In total, the S&P 500 moved by 12.26 points; 0.41%, Friday. It is not clear if this is the beginning of a bull run because the S&P’s Friday movements were smaller than the other indexes.
The Dow Jones Industrial Average; for instance, moved by 0.57%; or 152.53, 50 close at 26,958.06. The Dow closed at 26,806 on Thursday.
The NASDAQ Composite moved by 0.70%; or 57.32 points, to close at 8,243.12 on Friday. The NASDAQ closed at 8,186 on Thursday.
Is it Trade or American Optimism boosting the S&P 500?
CNN Business speculates reports of “phase one progress” on a US-China deal boosted the S&P 500.
The S&P 500 contains many companies with heavy exposures to China. Those companies include retailers, railroads, and many manufacturers.
US trade officials claim they are close to finishing some parts of an agreement with Beijing, The South China Morning Post claims. No details of the deal are available; but The Post speculates China could increase purchases of US farm products.
In exchange, the US could cancel some tariffs. News articles did not say what tariffs they could cancel. One possibility for the S&P’s rise is traders could believe President Donald J. Trump (R-New York) could call off the trade war.
Trump could end the trade war because he will need farm state votes in next year’s presidential election. Trump could also fear an economic downturn during an election year.
Another possibility is traders could believe an upturn in some areas of the US economy is underway. Mr. Market could suspect a strong holiday retail season is coming for 2019-2020.
Intel has a Good Day
Wall Street’s biggest gains are still occurring in tech, rather than the old industries on the S&P 500. Chip maker Intel Corp’s (NASDAQ: INTEL) share price rose by $4.23; or $8.10, to $56.46 on Friday.
Intel’s growth shows many investors still have more faith in Silicon Valley than the overall U.S. economy.
The US Stock Market Today: Strange Day on Wall Street
October 24, 2019
It was a strange day on Wall Street Thursday; the Dow moved down, while the S&P and NASDAQ Composite went up.
The Dow Jones Industrial Average fell by -28.42; -0.11%, to finish at 26,805.53. The Dow closed at 26,834 on Wednesday.
The NASDAQ Composite moved up by 66 points; or 0.81%, to close at 8,185.50 on Thursday. On Wednesday, the NASDAQ closed at 8,120.
The S&P 500 moved up by 5.77; or 0.19%, to close at 3,010.29 Thursday. The S&P closed at 3,005 on Wednesday.
What is dragging the Dow Down?
Observers blamed paper and chemical products maker 3M Corp (NYSE: MMM) for dragging down the Dow.
Shares of 3M; the maker of office products like Scotch tape and Post-It notes fell by $6.87, or 4.07% Thursday. 3M closed at $161.89 on Thursday.
Weak sales to car makers and China are cutting into 3M’s profits, The Wall Street Journal speculates. Another possibility is that there is less demand for 3M’s products in today’s digital world.
Tech goes up as Dow Goes Down
Semiconductor maker Applied Materials, Inc. (NASDAQ: AMAT) saw its shares go up by $4.54; or 8.98%, Thursday. Applied Materials’ stock closed at $55.07.
Investors, apparently think semiconductor makers have a brighter future than office products manufacturers. I think this is part of a larger trend.
Investors think the digital economy is the future, while the old industrial economy symbolized by the Dow Jones industrials is the past. Thus, the tech-heavy NASDAQ goes up while the Dow goes down.
Another possibility is that investors believe American industry cannot compete with China. Investors could also believe that Silicon Valley is still competitive.
The US Stock Market Today: Rally Continues despite Trade Woes
October 23, 2019
American stocks continued a slight rally, Wednesday, despite growing trade hysteria.
The Dow Jones Industrial Average moved by 45.85; or 0.17%, to 26,833.95. The Dow closed at 26,788 on Tuesday.
The NASDAQ Composite moved by 15.5 points; or 0.19%, to 8,119.79 Wednesday. The NASDAQ closed at 8,104 on Tuesday.
The S&P 500 moved by 8.53 points; or 0.28%, to 3,004.52 on Wednesday. The S&P closed at 2,996 on Tuesday.
Trade Hysteria Grips Wall Street
The indexes’ slight movements defied the trade-war hysteria gripping Wall Street.
“President Trump’s trade war is doing significant damage to the US and global economies,” Moody’s Chief Economist Mark Zandi tells CNN Business. “The higher tariffs act like a tax increase on businesses and their customers.”
Zandi estimates tariffs President Donald J. Trump (R-New York) threatens to implement in December are the equivalent of an over $100 billion tax increase. CNN Business speculates trade-war fears are driving down profits at companies such as heavy-equipment maker Caterpillar (NYSE: CAT).
Caterpillar exports bulldozers and other machines to China. However, Caterpillar’s stock rose by $1.61; or 1.2%, to $135.34 on Wednesday. I think investors who doubt the trade war hype drove up CAT’s price by buying its shares.
Do Average People Believe in the Trade War?
I think Caterpillar’s movement shows ordinary investors doubt the trade-war hysteria.
I believe average Americans think an economic upturn and a bull market is coming. Major investors like Bridgewater Associates CEO Ray Dalio disagree with popular wisdom, however.
Dalio reveals he thinks the trade war will heat up and China will win in a widely quoted LinkedIn essay. Dalio hysterically compares current relations between the US and China with the relationship between the United States and Japan before World War II.
Dalio fears that the Chinese challenge to American hegemony could trigger intense economic warfare that could destroy the US economy. Dalio believes China is better equipped for economic warfare than America.
Only time will tell if Dalio or ordinary investors are right. Mr. Market, however, favors ordinary investors.
The US Stock Market Today: Mixed Earnings Reports send Markets Down
October 22, 2019
Mixed earnings reports from consumer sector companies sent U.S. indices down Tuesday.
The S&P 500 Index fell by 10.73; -0.36%, to close at 2,995.99. The S&P closed at 3,007 on Monday during a slight rally.
The Dow Jones Industrial Average fell by 39.54; or -0.15%, to close at 26,788.10. The Dow closed at 26,828 on Monday.
The NASDAQ Composite suffered the biggest loss of the day, Tuesday. The NASDAQ Composite fell by 58.69; or -0.72%, to close at 8,104.30. The NASDAQ closed at 8,163 on Monday.
Earnings Reports Send Mixed Signals
The indexes were responding to mixed signals sent by consumer sector earnings reports, Tuesday.
McDonald’s (NYSE: MCD) share price fell by $10.57; -5.04%, to close at $199.27 Tuesday. Investors dumped McDonald’s because of a gloomy earnings report.
McDonald’s net income fell by 2% and its revenue rose by just 1% during 3rd Quarter 2019, CNN Business reports. McDonald’s disappointed investors by not meeting analysts’ earnings expectations.
Analysts hoped McDonald’s earnings from US restaurants could increase by 5.7% in 3rd quarter. McDonald’s earnings from established American locations rose by just 2.4%.
A very different; but equally iconic, American consumer brand motorcycle maker Harley-Davidson Inc. (NYSE: HOG) had a good day on Tuesday. Harley-Davidson’s share price grew by $2.96 (7.98%) to $40.04.
Harley-Davidson’s share price grew despite a 24% drop in earnings during 3rd Quarter 2019. USA Today estimates Harley Davidson’s earnings fell from $113.9 million in 3rd Quarter 2018 to $86.5 million in 3rd Quarter 2019.
Is Income Inequality Affecting American Stocks?
Growing income inequality in America could explain Mr. Market’s willingness to take a risk on companies that sell big-tickets items to the upper class like Harley-Davidson. The US Census Bureau estimates American income inequality is at the highest level in 50 years, NBC News reports.
Investors could think upper income Americans could have more money to spend on motorcades because of income inequality. Investors could also think lower-income Americans could have less cash to spend at McDonald’s.
The US Stock Market Today: Stocks start Week with Rally
October 21, 2019
US markets shrugged off trade fears by starting the week with a small rally on Monday.
Good news in earnings from companies like railway Kansas City Southern (NYSE: KSU) boosted the market. The KSU reported a 7% revenue growth rate for 3rd Quarter 2019 on October 18, 2019.
The NASDAQ Composite followed by moving 71.84 points; or 0.91%, to 7,940.33 Monday. The NASDAQ opened at 7,911.58 and closed at 7,940.33.
The S&P 500 rose by moving 20.52 points; or 0.69% Monday. The S&P closed at 3,006.72 but fell to a daily low of 2,995.35.
The Trade War Continues
The trade war heated up Monday, as China asked the World Trade Organization (WTO) for $2.4 billion in retaliatory sanctions against the U.S.
The Chinese government the money as a judgment in a July case; in which the WTO found the US non-compliance with an earlier case, Reuters reports. Monday’s trading shows Mr. Market ignored the latest trade war tactic.
President Donald J. Trump (R-New York); however, claims trade negotiations with China are going very well, MarketWatch reports. At a cabinet meeting Monday, Trump said he thinks China will make a new trade deal because its supply chain is “going down the tubes.”
The President presented no evidence to support his claims. They have scheduled next round of US-China trade talks for November 16 and 17 in Chile.
Market shows faith in US Consumer Spending
The market’s confidence in American consumer spending is high. Monday’s big gainers include luxury beauty products and fragrance maker Coty Inc. (NYSE: COTY).
Coty’s share price grew by $1.36; or 13.44%, to $11.48 in Monday’s trading. Coty’s rise shows investors believe Americans could increase consumer products spending.
US Indexes Rally
The Dow Jones Industrial Average led the rally by moving 57.44 points; or 0.21%, Monday. The Dow opened at 26,806.41 and closed at 26,827.64 Monday.
The US Stock Market Today: Ugly Friday for Indexes
October 18, 2019
All three big US stock indices lost most of the week’s gains in an ugly trading session Friday.
The Dow Jones Industrial Average fell by 255.88; or -0.95%, to finish at 26,770.20 Friday. The Dow finished the week, lower. The Dow Jones opened at 26,766.64 on Monday.
The NASDAQ Composite finished the week a little higher. The NASDAQ opened at 7,834.74 on Monday and closed at 7,868.49 Friday. The Dow fell by 73.65; or -0.93%, in Friday’s trading.
Trade War Fears Hurt Markets
My impression is that fear of a long trade war is dragging the market down. Investors could think the trade war will lower economic and agriculture activity in the American heartland.
China can hurt the economy in America’s heartland by buying fewer agricultural products. Reuters reports that Chinese traders are increasing their purchases of Brazilian soybeans. Soybeans are one of America’s largest exports to China.
The Chinese have purchased $173 million worth of Brazilian soybeans this week, Reuters claims. Meanwhile, there have been no US soybean sales to China since last week’s trade talks in Washington, the US Department of Agriculture reports.
It appears that the trade war with China is on, and there is no trade deal between Beijing and Washington. If the lack of Chinese agricultural purchases continues, U.S. indices could fall farther next week.
American Railroad Gains
The most surprising winner in Friday’s trading was the Kansas City Southern (NYSE: KSU), a railroad.
Kansas City Southern’s share price grew by $9.83; or 7.26% in Friday’s trading. Kansas City Southern’s high price could indicate investors think trade between the US and Mexico could expand. The Kansas City Southern operates a rail line between the American Midwest and Mexico.
The US Stock Market Today: Indexes up Slightly
October 17, 2019
Mr. Market could acclimatize to the “trade war.” All three major US indexes gained slightly despite a new hard line position on trade from Beijing.
The S&P 500 Index grew by 0.28%: or 8.26, from 2,990 to 2,997.95 Thursday. The NASDAQ composite rose by 0.4%; or 32.67, to 8,146.85 from 8,124. The Dow Jones Index rose by 0.99%; or 23.90 Thursday, to 27,025.88 from 27,002.
I think the gains show traders and investors are a little less afraid of a trade war. Another possibility is that Mr. Market is learning to live with trade tensions that could last until after next year’s Presidential election.
Beijing Takes Hard Line on Trade
A trade war resolution is unlikely because of the hard line from Beijing.
The only trade deal that the People’s Republic of China will accept is the end of all additional tariffs, Ministry of Commerce spokesman Gao Feng told reporters Thursday. Feng did not say if his government plans more trade negotiations with Washington, CNBC reports.
Thus it is unclear if Beijing will follow up on last week’s negotiations in Washington D.C. There is a strong possibility the Chinese will suspend negotiations until after next year’s U.S. elections.
The Chinese could wait to see if there will be a new President and Congressional leadership in January 2021. Thus, there could be no negotiations until mid-November 2020. The U.S. national elections will occur on November 3, 2020.
IBM shares hurt by European Weakness
Historic computer maker IBM’s (NYSE: IBM) share price fell by $7.85, or -5.52%, to $134.26 Thursday.
The price collapse could end an 18.11% year-to-date growth rate at IBM. Reuters blames weak demand for data center products in European markets for IBM’s drop. IBM also missed most analysts’ earnings projections.
IBM’s problems show that a downturn could have begun in Europe. The European weakness could send the technology-heavy NASDAQ down, if it continues.
The US Stock Market Today: Trade Sinks US Markets Again
October 16, 2019
America’s stock indices fell Wednesday as tensions over Hong Kong squashed trade deal hopes.
The US House of Representatives; and not President Donald J. Trump (R-New York), soured US-China relations Wednesday. The lower house of the US Congress passed a bill that could lead to sanctions against Hong Kong’s government, The South China Morning Post reports.
Beijing brands the Hong Kong Human Rights and Democracy Act of 2019 an effort to interfere in China’s internal affairs. If passed the Act could end Hong Kong’s current status as a separate trading entity under US law.
The act is far from becoming law. To become law, the act will need to pass the US Senate and receive the President’s signature.
US China Tensions Drive Markets Down
All three major US stock indices fell Wednesday as news of the House’s action spread.
The Dow Jones Industrial Average fell by -22.82; or -0.08%, to 27,001.98. The Dow closed at 27,025 on Tuesday.
The NASDAQ Composite fell by -24.51; or -0.30%, to 8,124.18, Wednesday. The NASDAQ Composite; which contains many companies that manufacture products in China, closed at 8,149 Tuesday.
The S&P 500 Index fell by -5.99; or -0.20% to 2,989.69, Wednesday. The S&P closed at 2,996 on Tuesday.
Wednesday’s drop shows any tensions between the US and China can panic Mr. Market. Investors need to prepare for more drops as the 2020 US election season opens. American politicians will try to outdo each other by being tough on China, leading to more tensions.
Trucking Company Gains on Wednesday
Mr. Market was bullish on trucking Wednesday. The big gainers included JB Hunt Transport Services Inc. (NASDAQ: JBHT).
Hunt’s share price grew by $4.05 or 3.53% to $115.65 Wednesday. Hunt operates a huge fleet of trucks that delivers goods to American businesses.
Hunt’s share price gains could indicate American investors think the US economy will continue to grow in 2020.
The US Stock Market Today: Indexes up Slightly
October 15, 2019
America’s indices experienced a slight growth Tuesday as the markets struggled to absorb the trade war and political turmoil.
The NASDAQ Composite opened at 8.074.85 and closed at 8,148.71. That resulted in a growth of 100.06, or 1.64%. In contrast, the NASDAQ Composite fell by 8.39, or -0.14%, on Monday.
The Dow Jones Industrial Average opened at 26,811.20 and closed at 27,024.80. The Dow Jones grew by 237.44; or 0.89%, on Tuesday. Dow Jones Industrial fell by 29.23; or 0.11%, on Monday.
The S&P 500 opened at 2,966.15 and closed at 2,995.68 on Tuesday. The S&P grew by 29.53; or 1%, Tuesday. The S&P feel by 41.2, or -0.14%, on Monday.
Will Politics Sink the Market?
The markets are drifting because of the political confusion in Washington DC.
Democrats in the US House of Representatives had made no decision on an impeachment inquiry vote as of 4 p.m. Mountain Time on Tuesday, CNN reports. Thus gridlock and to the trade dispute with China will continue.
The Chinese are unlikely to make a deal with an administration that could soon leave. Instead of a trade deal, Beijing will offer limited concessions such as agreements to buy American agricultural goods.
The impeachment is expanding because several officials including Vice President Mike Pence (R-Indiana) are refusing to answer Congressional subpoenas. The subpoenas ask Pence and Secretary of Defense to turn over a variety of documents. More action is likely because Congress is back in session after a two-week break.
Health Insurance Giant has Great Day
The biggest winner on Wall Street Tuesday was health insurance giant UnitedHealth Group Inc. (NYSE: UNH).
UnitedHealth’s share price grew by $18, or 8.16% in Tuesday’s trading. UnitedHealth started the day at $220.59 and finished at $238.69.
I think investors like UNH because much of its business is unaffected by the larger economy. Employers and the federal government pay most health insurance premiums in America. Therefore, UnitedHealth could make money in a recession.
The US Stock Market Today: Trade Optimism Fades
October 14, 2019
The major American stock indices fell slightly Monday as optimism about Friday’s US-Chinese trade deal faded.
Traders are skeptical because the deal between President Donald J. Trump (R-New York) and Chinese Vice Premier Liu Hue does not lower trade barriers. Instead, of lowering barriers the Chinese will double purchases of US agricultural products, Axios reports.
In exchange, Trump will delay 30% tariffs on Chinese goods. Trump had scheduled the tariffs to start on October 15, 2019, Tuesday. Plus, the Chinese could make unspecified concessions on intellectual property rights.
Trade Deal Doubts Hurt Indexes
Mr. Market thinks the trade war is on because there is no trade deal. The losses were slight, however, showing traders are waiting to see what will happen with trade.
The Dow Jones Industrial fell by 29.23; or 0.11%, Monday to close at 26,787.36. The Dow closed at 26,817 on Friday October 11.
Losses on the S&P 500 were slightly higher, probably because that index has more exposure to China. The S&P feel by 41.2, or -0.14%, Monday to close at 2,966.15. The S&P closed at 2,970 Friday.
The NASDAQ Composite fell by 8.39, or -0.14%, Monday to close at 8,048.66. The NASDAQ Composite closed at 8,057 on Friday.
I think US traders are waiting for more details of the trade deal. The markets’ sluggish performance indicates Wall Street’s skepticism of Trump’s ability to negotiate a trade deal is growing.
Hewlett Packard gains
Mr. Market is bullish on information technology (IT) and the cloud. The Hewlett Packard Enterprise Company’s (NYSE: HPE) share price rose by 4.18, or 60₵ Monday to finish at $14.95.
Hewlett Packard’s performance shows that traders believe corporate America will increase its IT spending. A strong possibility is that investors think US corporations will spend more on cloud computing solutions next year. Thus, Wall Street is optimistic about the overall US economy, but skeptical of Trump and trade.
The U.S. Stock Market Today: Mr. Market likes US China Trade Truce
October 11, 2019
Investors like President Donald J. Trump’s (R-New York) possible trade truce with Chinese Vice Premier Liu He, Friday. Liu dropped by the White House and worked out a partial settlement on several trade issues.
Details of the truce are scarce but Reuters speculates it could cover intellectual property, tariffs, and agricultural products. However, even trade peace rumors were enough to boost the U.S. indices.
The Dow gained 319.92 points; or 1.21%, Friday to close at 26,816.59. Thus, the Dow recovered from losses earlier in the week. The Dow lost 409.7 points on Monday and Tuesday, but gained 653 points in the last three days of the week.
Are American Stocks Recovering?
The Dow is now close to the 27,182.45 it reached on September 12, 2019. Thus the Dow is recovering from September’s losses.
The NASDAQ Composite gained 106.26 points, or 1.34%, to finish at 8,057. The NASDAQ Composite was trading at 7,860.43 on Monday morning, and 7,951 at Thursday’s close. Like the Dow, the NASDAQ is close to the 8,194.47 reported on September 12, 2019.
The S&P 500 grew by 32.14; or 1.09%, in Friday’s trading to finish at 2,920.27. The S&P closed at 2,938 on Thursday and 2,944.23 on Monday morning. The S&P is close to the 3,009.57 level it reached on September 12, 2019.
I don’t think American stocks are recovering, but trade war hysteria is abating for now. However, Trump can restart the trade war, if he needs to drum up votes for next year’s presidential election.
Industrial parts distributor Fastenal wins big
The week’s big winner was Fastenal Co (NASDAQL FAST); which sells everything from garbage cans to fasteners to commercial clients. Fastenal’s share price grew by $5.32 or 17.15% on Friday.
The likely reason for Fastenal’s growth is the trade truce. They make most of the products Fastenal sells in China. Fastenal line of products includes tape, gloves, electric motors, pumps, tools, and paint brushes.
Investors could think tariffs will not increase prices and hurt Fastenal’s sales. Fastenal’s share price shows many investors are bullish on the US economy. Fastenal’s clients include manufacturers and distributors.
The US Stock Market Today: Small Gains in a Chaotic Week
October 10, 2019
All three big U.S. indices experienced small gains Thursday, as trade war fears continued to generate chaos.
President Donald J. Trump (R-New York) and Chinese Vice Liu Hue could boost markets with a meeting Friday, USA Today reports. No agenda for the meeting is available, but Liu leads a team of Chinese trade negotiators.
Trump could try to boost US stocks with the meeting. It is not clear if Trump’s announcement late in the day affected the indexes.
US Indexes Rise slightly
The Dow Jones rose by 0.57%; or 150.66, to 26,496.67 Thursday. The Dow closed at 26,346 on Wednesday.
The NASDAQ Composite grew by 0.6%, or 47.04, to 7,950.78 Thursday. The Dow closed at 7,904 on Wednesday.
The S&P 500 rose increased by 0.64%, or 18.73, to 2,938.13 on Thursday. The S&P 600 closed at 2,919 on Wednesday.
I think the markets are drifting because the trade situation is confusing investors. Investors cannot tell if there will be trade war.
The uncertainty means investors are afraid to sell but scared to buy. Instead, Mr. Market is waiting to see if the trade situation and the Middle East settle down before deciding.
Netflix has a Very Good Day
Investor favorite Netflix (NASDAQ: NFLX) had a very good day Thursday. Netflix’s share price grew by 4.84% or $12.95 to $280.48 during Thursday’s trading.
I think Netflix’s gains show Mr. Market has faith in the U.S. economy. Investors think Americans will continue to have the extra cash to pay Netflix subscription.
A conflicting opinion is that Americans lack the cash for amusements outside the home. Yet, American families can afford the $12.99 Netflix subscription.
The US Stock Market Today: Indices Bounce back in a Crazy Week
October 9, 2019
America’s indices bounced back, Wednesday, as trade and war fears eased. However, the indexes did not return to last week’s level.
The S&P 500, for instance, rose by 0.91%; or 26.34, to 2,919.40. The S&P closed at 2,952.01 on October 4, 2019.
The Dow Jones grew by 0.7%; or 181.97, to 26,346 in Monday’s trading. The Dow is still over 200 below the 26,573.72 it closed at on Friday.
The NASDAQ Composite grew by 1.02%: or 79.96, to 7,903.74 on Wednesday. The NASDAQ closed at 7,982.47.
All three indexes will need a few more good days to recover from last weeks’ losses.
Why did American Stocks Recover Slightly?
The most likely reason for the slight recovery is that the market is getting used to a torrent of bad news.
Wednesday’s headlines were grim and hysterical. Turkey began airstrikes against Kurdish forces in Syria. Plus a 2.5 magnitude earthquake, power outages, and wildfire fears were reported in Northern California.
The Guardian reports federal agents arrested an unidentified Defense Intelligence Agency (DIA) employee for allegedly leaking information to journalists. News reports did not say whether the employee is the shadowy figure who sparked the current U.S. impeachment crisis.
Mr. Market, like average Americans, is coming to regard the hysteria as background noise. Disruptive news could send the markets back down, however.
Is Apple resistant to Trade War Fears?
Apple Inc. (NASDAQ: AAPL) had a good day on Wednesday. Apple shares rose by 1.17% or 2.63 to $227.03 in Wednesday’s trading.
Politico reported that Apple CEO Tim Cook has a good relationship with U.S. President Donald J. Trump (R-New York) in June. Cook is trying to engage Trump to exempt Apple from the President’s proposed 25% tariffs on some Chinese products.
Investors believe those tariffs could affect iPhones. Some investors could also believe Cook can get Apple exempted from the tariffs.
The US Stock Market Today: Indexes keep sliding
October 8, 2019
Losses on American indices grew fast Tuesday as trade jitters added to the anxiety caused by war fears and political turmoil.
The Dow’s Tuesday losses were over three times larger than Monday’s drop. The Dow Jones fell by -313.98 points or 1.19% to 26,164.04 on Tuesday. In contrast, the Dow Jones fell by 95.7 points; or -0.36%, to 26,478 in Monday’s trading.
The NASDAQ Composite took the biggest hit Tuesday, falling by -1.67% or 132.52 points to 7,823.78. On Monday, the NASDAQ Composite fell by 26.18; or 0.33%, to 7,956.29.
The S&P 500 proved just as vulnerable to Tuesday’s downturn. On October 8, 2019, the S&P 500 fell by -1.56%; or 45.73, to 2,983.06. The S&P 500 fell by 13.22 points; or -0.45%, to 2,938.79 on Monday.
China Fears Drive US stocks down
Fears of a growing conflict with China are probably driving US indices down.
The Trump administration ratcheted up trade tensions on Tuesday by adding Chinese artificial intelligence companies to its trade blacklist, Reuters reports. In retaliation, the Chinese government gave Washington a sharp rebuke.
Wall Street could fear that President Donald J. Trump (R-New York) will use tough trade action to strengthen his position for the upcoming US presidential election. Trump needs the votes of American nationalists; who are hostile to China, to win both the Republican primary and next year’s general election.
A related fear is that the Chinese may put all trade negotiations on hold until after the election. Thus trade tensions could rise and American exports to China could fall for the next year.
The trade fears add to the political turmoil generated by the impeachment crisis in Washington and war fears in the Middle East.
Downturn pushes Gold Miner Up
One stock that went up Tuesday was the gold miner Newmont Goldcorp (NYSE: NEM). Newmont’s share price grew by 1.78% Tuesday to finish at $38.92. Newmont’s price growth could indicate investors think economic and political turmoil will drive up gold prices.
The US Stock Market Today: Stocks Down because of Syria
Friday’s gains were lost as all three major US stock indices fell on Monday, October 7, 2019.
The Dow Jones fell by 95.7 points or -0.36% to 26,478 in Monday’s trading. The Dow closed at 26,573.72 on Friday.
The S&P 500 fell by 13.22 points or -0.45% to 2,938.79 Monday. The S&P closed at 2,952.01 on Friday.
However, Monday’s drops were still lower than Friday’s gains. The Dow gained 1.42% on Friday; the S&P 500 gained 41.38 points or 1.42% on Friday, and the NASDAQ Composite grew by 110.21 points or 1.4% on Friday.
War Scare Hits US Stocks
Another war score in the Middle East seemed to rattle the market.
President Donald J. Trump’s (R-New York) decision to withdraw some U.S. troops from Syria and a threat to “totally destroy and obliterate the Economy of Turkey” could have frightened traders. The Syrian Democratic Forces’ warning that Trump’s actions will help ISIS added to the fears, Al Jazeera reported.
Trump’s latest actions come as the level of tension between the U.S. and Iran remains high. Trump’s actions are hurting Turkey’s economy. Turkish dollar bonds fell by 1.3₵ and the Turkish lira dropped to a one-month low. The lira fell by 1.6% to 5.795 to the dollar in Monday’s trading.
Mr. Market could fear an economic crisis in Turkey that could spread to other economies including Western Europe. A major danger is that ISIS could reestablish its bases in Syria and launch new terror attacks against Western Europe and the United States.
Department Store gains in Monday’s Trading
The most interesting winner in Monday’s market was discount department store operator Kohl’s Corp (NYSE: KSS). Kohl’s shares rose by 2.5% or $1.18 to $48.36 in Monday’s trading.
Traders could think America’s retail apocalypse is ending. Another possibility is that traders like Kohl’s partnerships with fast growing retailers. Kohl’s lets customers return Amazon (NASDAQ: AMZN) orders in its stores, Forbes reports. Kohl’s is also sharing store space with the fast-growing discount grocer Aldi, Winsight Grocery Business reports.
Kohl’s gain shows Mr. Market still has faith in traditional retailers.
Stock Market Today: American Stocks Rebound
October 4, 2019
American stocks bounced back slightly after a volatile week. The Dow Jones had a good day Friday but did not recoup the week’s losses.
The Dow Jones began the week at 26,852.33 at 9:30 a.m. on Monday September 30, 2019, and finished at 26,569 on Friday, October 4, 2019. Hence the Dow finished the week 256.33 points lower. On Friday, the Dow rose by 1.42% or 372.68 from 26,288.32 60 26,573.72.
The NASDAQ composite also rebounded by rising by 110.21 or 1.40% on Friday. The NASDAQ opened at 7,908 and finished at 7,982.47 on Friday October 4, 2019. The NASDAQ composite showed a bit of stability, it began the week with 7,964.09 at 9:30 a.m. on September 30, 2019, and finished at 7,982.47.
The S&P 500 showed the most volatility. The S&P started the week at 2,967.07 at 9:30 a.m. on Monday September 30, 2019 and finished at 2,952.01 on Friday, October 4, 2019. In Friday’s trading the S&P went from 2,919.57 to 2,952.01. That made for a gain of 41.38 or 1.42%.
Are Americans Regaining Confidence in the Market?
I think American investors are regaining some confidence in the market after a week of scary headlines. Investors are no longer spooked by political turmoil and some scary economic numbers.
New mortgage applications fell by 10.1% in the two weeks ending on September 25, 2019, the Mortgage Bankers Association estimates. Observers blame the drop in mortgage applications on rising interest rates.
I think falling consumer confidence could be scaring people away from big ticket purchases. Overall mortgage applications were still 9% higher than in September 2019 which shows consumer confidence was high to begin with.
Insurance is now a sector to watch. Insurer and reinsurer Chubb Limited’s (NYSE: CB) rose by 3.59% or $5.16 on Friday. Chubb’s price has grown by over one-fourth or 25.45% in year-to-date trading. Chubb’s growth could mean investors are looking for safer cash-rich stocks in a volatile economy.
The US Stock Market Today: American Political Turmoil Hits Stock Market
October 3, 2019
Political turmoil in the United States fueled volatility in the US markets on October 3, 2019. Oddly, stocks fell early in the morning but rebounded by day’s end.
The Dow Jones opened at 26,039.02 but fell to 25,788.11 around 10 a.m. and closed at 26,176.62. By my calculation the Dow lost 635.73 points between Monday September 30, 2019, and Thursday, October 3, 2019. The Dow Opened at 26,809.69 on September 30, 2019.
Meanwhile, the S&P 500 opened at 2,887.61 and closed at 2,910.92 on October 3, 2019. I calculate the S&P 500 has lost 56.15 points this week. The S&P 500 opened at 2,967.07 on Monday September 30, 2019.
The NASDAQ Composite opened at 7,787.02, fell 25,757.88 at 10:10 a.m. and closed at 26,173.96. By my calculation the NASDAQ Composite lost 635.73 points in four days of trading. The NASDAQ opened at 26,809.69 on Monday September 30, 2019.
Is Political Turmoil Driving American Stocks Down?
The most likely cause of the roller cause of American Indices’ roller coaster ride is political turmoil.
On Monday, the US House of Representatives opened an impeachment inquiry into President Donald J. Trump’s (R-New York). On Wednesday, number two Democratic presidential candidate U.S. Senator Bernie Sanders (I-Vermont) suspended campaign activities because of heart surgery.
Sanders suspension creates turmoil because it throws the outcome of the Democratic presidential primary into doubt. Sanders’ health raises concerns about three other candidates; Trump, U.S. Senator Liz Warren (D-Massachusetts), and Joe Biden (D-Delaware). All three are over 70 years of age.
On Thursday, Trump demanded that the Chinese government investigate the business activities of Biden and his son Hunter. Trump’s action increases turmoil by accusing Biden of corruption. That helps Biden’s rivals in the Democratic primary.
Boeing surges
The biggest winner in Thursday’s stock market turmoil was Boeing (NYSE: BA) which saw its share price increase by 1.28% or $4.71. Boeing began trading at $366.21 and closed at $372.22.
The price increase indicates investors have forgiven Boeing the 737 Max crashes.
The US Stock Market Today – Investor Confidence Falls, Casinos Gain
October 2, 2019
Investor confidence in American stocks fell again on October 2, 2019. All three major US indices had a bad day
The Dow Jones fell by -494.2 or 1.86% to 26,078.62. The S&P 500 dropped by -52.64 or -1.79% to 2,887.61, and the NASDAQ fell by -123.439 or 1.56% to 7,785.25.
The biggest story of the day is that investor confidence in tech stocks appears to be falling. The NASDAQ’s 1.56% drop shows stockholders have less faith in Silicon Valley’s ability to avoid a downturn.
One reason for the loss of confidence in tech could be Facebook (NASDAQ: FB) CEO Mark Zuckerberg’s admission he is afraid of U.S. Senator Elizabeth Warren (D-Massachusetts). In audio of a Facebook management meeting “leaked” to The Verge Zuckerberg reportedly says, “I mean, if she (Warren) gets elected president, then I would bet that we will have a legal challenge.”
Recent polls show the left-wing Warren could overtake pro-business moderate Joe Biden (D-Delaware) as the leader in the Democratic primary race. The primary winner will challenge President Donald J. Trump (R-New York) in next year’s election.
The strangest stock of the day on October 2, 2019, was casino operator Wynn Resorts Limited (NASDAQ: WYNN). Wynn shares were up by 1.16% or $1.27 in the daily trading. Wynn’s share value has grown by 12.42% so far in 2019.10.2
Wynn’s growth shows that investors believe America’s rich will keep getting richer. Wynn is famous for serving Whales, casino slang for wealthy gamblers.
Strangely, Wynn’s share growth shows American investors could have more faith in China’s economic growth than the American economy. Wynn Resorts operates luxury casinos in Macau on the Chinese coast, Las Vegas, and Boston Harbor.
Some Americans think Wynn will make money from increasingly affluent Chinese bettors.
The U.S. Stock Market Today: Scary Headlines
October 1, 2019
The long-anticipated US stock market correction is continuing with drops in all the major indices.
The Dow Jones took the biggest hit falling by 322.88 points or 1.19% by early afternoon. However, the S&P 500 wasn’t far behind at 1.17% or 35.24 points. The NASDAQ did a little better by just 1.09% or 86.97 points.
Scary headlines are the apparent cause of the correction. In particular, claims that U.S. manufacturing had its worst reading in a decade and hysteria about war with Iran and oil prices. The hysteria about Trump’s impeachment coming from Washington is adding to investor panic.
Another cause of political uncertainty is the unsettled Democratic presidential primary. Speculation that left-wing U.S. Senator Elizabeth Warren (D-Massachusetts) is the Democratic front runner scares some investors. Warren’s reputation as anti-business and support for higher taxes is adding to the political uncertainty.
Outside events like Saudi Crown Prince Mohammed bin Salman’s hysterical warnings about “unimaginable rises in oil prices” on American television add to the confusion.
Market optimism is still high in some sectors, however. The slightly better NASDAQ performance indicates some investors believe tech stocks are more resistant to political turmoil than industry and retail.
Better than expected iPhone sales could be boosting the NASDAQ. JP Morgan analysts speculate Apple (NASDAQ: AAPL) could sell one million more iPhones than analysts forecast. Apple’s share price went from $217.53 on Friday September 27, 2019, to $225.35 on Tuesday, October 1, 2019.
I see no indication that better iPhone sales will boost the rest of the NASDAQ, however. The NASDAQ Composite slide continued despite Apple’s good fortune.
I think the correction will continue because of media emphasis on political uncertainty, impeachment, Iran, and oil prices. The S&P 500 and Dow Jones will keep dropping because investors view those indices as heavily exposed to uncertainty.
The U.S. Stock Market Today: Nasdaq 100 Index – The Best Performing Index – By Far
April 12th, 2019
I have long known that the Nasdaq 100 out-performs all indices and benchmarks. In fact, during the completion of the liberatedstocktrader.com crash detector system which I refined over many years, I have learned that the 20-year return of the NDX-100 is 604% (from 1998 to present), compare that to the S&P500 which netted only 200%.
If you are going to buy and hold any index, it has to be the Nasdaq 100 as the returns are superior. Don’t just by any ETF or index tracking fund, buy the one that continually provides the best returns. No other broad market index has managed to beat 200% over the last 20 years.
Additionally, in the chart above we can see the last 16 weeks of Nasdaq 100 have brought us 15 up weeks with only 1 down week. But will that change?
The index is approaching again it’s all-time high and we should expect some strong resistance coming up. Also, we have earnings season starting again and that will decide if we break-through to new highs or fade away. Ultimately right now there is no reason (technically) to expect a market turnaround. Resistance YES, bear market NO. There have been no shock alerts since December 2018, and the market is in a solid bull run.
Outlook:
Short-term Trend (Days to Weeks) – Up
Medium-term Trend (Weeks to Months) – Up
Long-term Trend (Months to Years) – Sideways
The Stock Market Today: S&P500 – Don’t Give Me That Bull! No Long-Term Bull Signs Yet
January 8th, 2019
Well, happy new year and all that. Where have I been you may ask? Thanks for asking, I was recording my latest set of stock market training podcasts and enjoying Christmas and New Year with family and friends. I did not have to worry about the stock market as I moved to cash in November as mentioned previously in my updates.
The joy of being a trained stock market analyst is that you can see the medium to long-term trends fairly easily. Whereas the market for the year is down 6%, I am up 80% on my portfolio. How is that possible? Easy, I sold everything in November based on solid technical analysis.
On to the analysis.
Yes it was a great few days, and the easy money is saying to themselves yes, here is the turnaround, I need to get back in. Rushing to get back in without real confirmation is what makes you lose money.
To be fair an inexperienced trader, might look at this weekly chart and say to themselves, “3 weeks of positive uptrend means the bulls are back”.
But if you look at the underlying supply and demand we see there is no indication of a turnaround yet. We are in an incredibly volatile market suitable only for day traders.
The Relative Strength Index (RSI), Rate of Change (ROC) and Cumulative Money Flow (CMF) all confirm the downtrend will remain as the underlying supply is still outstripping demand.
Yes, the market is looking oversold but that is no guarantee of a turnaround.
There is a long way to go before entering the Ichimoku Cloud and the start of a new uptrend
The Stock Market Today: Netflix – Worth Watching. The Shows & The Stock
January 8th, 2019
Of all the streaming services we have, Netflix is deemed uncancellable by my wife and daughter. As well as watching the shows it is also worth watching the stock.
On this weekly chart, we can see Netflix has been pummeled and successfully completed the head and shoulders top as indicated in the chart. (I flagged this in October)
Also in the chart, you can see I flagged a negative divergence in ROC and CMF dating back to the start of the head and shoulders in April 2018.
In technical analysis, the theory goes that the fall after the head and shoulders top will be as deep as the shoulders are wide. That remains to be seen with Netflix.
Interestingly what we do see is the small positive divergence occurring after yesterdays big spike. This indicates a potential early entry point.
It is early days yet, so enter at your own risk, but it could be a good sign.
As we everything, if the market continues strongly bearish, then NFLX could be dragged down with it.
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Video: Learn About The State of the Stock Market Today & The Real Statistics
I don’t understand why people think the stock market’s volatility is “crazy”. It isn’t. Volatility right now is higher than in 2017, but there have been many years in history when volatility was this high. That being said, the S&P is still being supported on its 200 sma.