As Jim Cramer would say, it’s just another boo yah after boo yah for bulls. Earnings season continues and indexes continue to hit highs. Gains were not huge for the week but Friday’s whiplash higher surely was felt by bears.
“Earnings remain a solid tailwind for equity prices,” said Robert Doll, chief equity strategist at Nuveen Asset Management LLC, in a note. “Just over 20% of S&P 500 companies have announced third-quarter results. Earnings are beating expectations by 4.5% and revenues by 1.0%. This compares to the long-term historical average of 4.7% and 0.3%, respectively. Earnings per share are on track to rise 8% for the quarter.”
President Trump on Tuesday asked Senate Republicans who should be the next Fed boss, and Stanford University economist John Taylor reportedly beat out Fed Gov. Jerome Powell.
The House of Representatives narrowly passed a budget bill on Thursday, which paves the way for the Senate to later pass a tax-reform package with a simple majority, instead of 60 votes.
Durable-goods orders rose 2.2% in September, beating the forecast of a 0.7% gain. Excluding transportation, orders increased 0.7%. Remember the rally we cited in the housing stocks last week??? Well this week it was reported new home sales ran at a 667,000 annual pace in September, an 18.9% increase compared with August, and a 17% increase compared with a year ago.
The U.S. economy expanded at a solid 3% annual pace for a second straight quarter despite damages from two hurricanes.
Late Thursday, four of the most valuable tech companies in the world – Amazon (AMZN), Alphabet (i.e. Google), Microsoft (MSFT) and Intel (INTC) —posted better-than-expected third-quarter reports. Alphabet, Intel and Microsoft closed at record levels. DID I MENTION BOO YAH?
The tech sector now makes up nearly 25% of the S&P 500.
Here is the 5 day weekly “intraday” chart of the S&P 500 .. NOT via Jill Mislinski.
The week ahead…
The Federal Open Market Committee, which begins its two-day policy meeting on Tuesday, is widely expected to hold off raising its target interest rates until its December meeting.
Non farm payrolls hit Friday. Both ISM indicators (Wed/Fri) also hit next week.
The Trump announcement on a new chair could hit next week (I sound like a broken record here).
Short term: The draw down Wednesday was tricky, especially with the NYSE McClellan Oscillator negative so we are not going to pretend it was realistic to have a cautious stance going into Friday’s rally. The “FANG” rally Friday was decimating for the bears. $NYMO remains negative so it still seems right to have a cautious stance despite the “all time highs”!
The Russell 2000 lost some leadership to the senior indexes here of late.
The NYSE McClellan Oscillator continues to show weakness, which would put us in a cautious (raise cash) stance. Granted, Friday spit into the face of this idea.
Long term: This NASDAQ weekly chart is amazing – the indexes are riding the upper end of this channel on a WEEKLY basis with almost no relent, for quarters on end. Damn.
Charts of interest / Big Movers:
Monday, Seagate Technology (STX) soared 13% after the company handily beat earnings estimates for its fiscal first quarter.
Hasbro (HAS) plunged 8.6% Monday after providing a downbeat sales outlook. But it regained MOST of that as the week wore on.
Tuesday, Whirpool (WHR) fell 11% a day after the appliance manufacturer posted weaker-than-anticipated results and lowered its outlook, and Sears reportedly plans to stop selling Whirlpool appliances in its stores.
Wednesday, Chipotle (CMG) slumped 15% after posting weaker-than-expected earnings late Tuesday.
Thursday, Twitter (TWTR) surged 18.5%, booking their best daily performance since September 2016, after the social-media group reported narrower losses. But Twitter also admitted to overstating users for years.
We noted Celgene (CELG) had a rough week in our prior weekly round up. That continues this past week as the stock plummeted 16.4% after the company reported a third-quarter profit beat and revenue miss and lowered its 2017 profit and revenue outlook.
Buffalo Wild Wings (BWLD) soared 19.6% Thursday after a big profit boost due to a switch to boneless wings for one of its signature promotions.
Also Thursday, Nokia (NOK) tumbled 21% after the Finnish telecommunications company said its loss widened in the third quarter. For those of you under 30, this was once considered a “can’t miss” stock. Amazing how times have changed.
Have a great week and we’ll see you back here Sunday!