Feels like a broken record … and has been for a long time… but once again a shockingly low amount of daily volatility this past week, as aside from a quick jump down and then right back up Thursday, the indexes didn’t do much in terms of swings from day to day; or even intraday. The largest move on the closing print for any individual day this week was 0.22%! For the week the S&P 500 fell 0.35%.
More on the lack of volatility:
The S&P 500 has moved within a daily range of 0.5% or less for 13 straight sessions, according to Dow Jones data, the longest such streak since September 1995.
And even MORE: Here is a 20 year chart of the volatility index (VIX) – you can see only in 2007 did we approach this low of a level. Of course we know what happened shortly after THAT. But we didn’t have all the world’s major central bankers pouring money into global assets back then.
A measure of fear on Wall Street ended at its lowest level since 1993 on on Monday. The VIX closed at 9.77, off 7.6%, and marking its lowest level since Dec. 27, 1993. The metric’s historical average is 20 and it has continued to slump as stocks have reached repeated records since President Donald Trump’s Election Day victory in November, which suggests to market participants that investors are becoming too complacent.
“No one really knows what it means to have such a low VIX at a time of such high uncertainty, rising rates, high valuations, and corporate profits that aren’t particularly strong,” said Jonathan Angrist, chief investment officer of Cognios Capital. “It is very unusual.”
When Apple (AAPL) is moving like this it is difficult to knock the NASDAQ down, as it’s a massive weight in the index.
Notice a trend? Nearly all the big camp momentum favorites in the NASDAQ are seeing upward surges.
Tesla and Facebook aren’t far behind. Until that changes the NASDAQ is not going anywhere down anytime soon.
Semiconductors are also looking strong after a break of a long trend about a month ago.
Emerging markets also looking strong of late.
Economic data was sparse was the only report we highlighted in our prior recap was retail sales on Thursday which were expected to bounce to 0.6% growth in April after barely any movement in March. Instead, the print was 0.4% but not enough of a miss to move markets. Sales at department stores fell 0.2%. Yet a category that includes online retailers reported sales growth of 1.4%, the strongest of any group.
Here is the 5 day weekly “intraday” chart of the S&P 500 via Jill Mislinksi!
Earnings season is nearly in the books and there was a nice rebound there:
With more than 90% of the S&P 500 having reported quarterly results, the index is on track for earnings growth of 13.6% for the first quarter, the strongest increase since the third quarter of 2011.
I knew I should have stuck to my part time rap gig….
The week ahead…
Economic data is not of the market moving variety; earnings season is mostly over in terms of big names. While the Federal Reserve is expected to raise rates in June that’s baked in. I guess that leaves Trump!
Short term: NASDAQ continues to lead with the S&P 500 lagging some even as it rallies. The S&P 500 is battling with the high from early March.
The Russell 2000 continues it’s inability to get out out his long standing range in yellow. This should sound familiar since we’ve been saying it for over a month!
The NYSE McClellan Oscillator has turned back to red, but unlike 2016 and prior that really hasn’t hurt indexes much. Have we been lulled into ignoring it now after using it as a very helpful “warning signal” for years?
Long term: Here are 5 year charts on the major indexes; we are a broken record here but it would take a very severe selloff to change prospects here. Short term the NASDAQ is riding ABOVE this channel we’ve marked – that feels like an extreme overbought condition. We said that last week – it would take quite a bit of work to even get off the overbought condition, forget a real selloff!
Charts of interest:
Tuesday, long maligned Valeant Pharma (VRX) soared 24% after the drugmaker beat first-quarter profit expectations, although revenue came up shy. The stock rallied again Thursday, following favorable developments in patent litigation over its drug Xifaxan.
Yelp (YELP) had a horror show Wednesday after posting earnings late Tuesday. The company missed first-quarter revenue estimates and lowered its outlook for the year – never a good combination.
Nvidia Corp (NVDA) jumped 18% after the maker of graphics chips topped profit forecasts late Tuesday.
It’s hard to find good news in the retail front so we’ve resorted to chatting about takeover bids. On Wednesday, Abercrombie & Fitch (ANF) jumped 12% following a Reuters report the retailer was fielding buyout interest. So someone who bought in mid April could have made nearly 40% in a month. But finding the bottom in these suckers has chopped many fingers off of traders for a long time.
But back to reality…. Macy’s (M) finished down 17% Thursday after the retailer reported a worse-than-expected slide in revenue in the first quarter. This is what we mean about chopped fingers.
Macy’s Chief Financial Officer Karen Hoguet said pressure on gross margin from bloated inventory was compounded by weak sales in February and margin pressure in its beauty, housewares and watches, which is expected to continue.
But other than that, things are going well for the company…
And more retail carnage Friday as J.C. Penney (JCP) slumped 14% after the department-store chain reported a larger-than-expected fall in same-store sales.
Jumping outside of the retail sector Thursday saw Snap (SNAP) report it’s first quarter as a public company. That didn’t go so well.
Snap Inc. reported a $2.2 billion loss in its first quarter late Wednesday in its first quarter as a publicly traded company, sending shares of the disappearing-message company tumbling more than 21%.
Have a great week and we’ll see you back here Sunday!