Bears continue to get squashed in the infinite feedback loop that is the 2017 stock market. Relative modest moves up and down Monday thru Thursday were followed by a spike up Friday on news (now a bit over anticipatory) about a tax reform deal complete. A last-minute expansion of the child tax credit persuaded Sen. […]Continue reading
Before we talk about the stodgy ole stock market, anyone see that Bitcoin? $11K last week – $16K this week…. and as I write this bitcoin futures are up over $18K. Just another week in the life…. (here is what you need to know about bitcoin futures)
Back to your regularly scheduled program… the S&P 500 rested a bit while a small correction rolled through the massive winners of 2017 in mega cap tech land, but in the end all was well again by Friday.
“The Nasdaq Composite Index was getting a little frothy, so it’s not surprising to see that some details in the proposed tax bill that would impact tech companies turned out to be a catalyst for a selloff in these stocks over the past few sessions,” said Quincy Krosby, chief market strategist at Prudential Financial.
The retention of the corporate alternative minimum tax in the Senate version of the Republicans’ tax bill has been seen as a factor in tech-stock selling. The House’s bill repealed the corporate AMT, but in a last-minute switch before passing its bill early Saturday morning, the Senate decided to keep the provision.
Still good sailing otherwise… for the week the S&P 500 gained 0.35% while the NASDAQ fell 0.1%.
“Getting the tax plan done will still be a challenge, but it doesn’t seem as impossible as it once did, and now there’s optimism that it could happen before the end of the year, which means it could be made retroactive and change the liability for companies and individuals for this year as well as next, which would be a positive,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab.
In economic news, ISM Services fell to 57.4 in November from a 12 year high of 60.1 in October. The U.S. created 228,000 jobs in November, surpassing the 200,000 that had been expected, according to the nonfarm payroll report. The unemployment rate held at 4.1% while wages rose 0.2%.
“The report all around is pretty hard to argue with,” said Dan North, chief economist at Euler Hermes North America. “But there is one important thing that’s missing: wage growth.” Construction firms and manufacturers, for instance, both boosted hiring last month after home building and production recovered from storm-related disruptions. Builders added 23,000 new jobs and manufacturers created 31,000 new positions. Professional-related work and health-care jobs also saw strong gains again. Most other industries saw little change.
“The jobs reports highlights the Goldilocks environment: continued growth but no profit pressure of rising labor costs,” said Tina Byles Williams, chief investment officer at FIS Group.
After the NYSE McClellan Oscillator flipped back positive, we went out of our cautious stance and this week rewarded the bulls with significant gains Tuesday and Thursday. Only the guilty plea of Michael Flynn could slow down momentum, and even that was only an hour Friday morning before the bulls stampeded right back. With the tax reform plan looking very likely now, the market is rejoicing. The Dow Jones Industrial Average is now at it’s longest monthly win streak (8 in a row!) in 22 years. That said there was a bit of a hiccup in the NASDAQ Wednesday as mega cap stocks took a hit – apparently they can’t go straight to the moon forever.
Is that a potentially bearish “double top” in the Apple (AAPL) chart? Naaah – that would be a negative thing, and negative things aren’t allowed in the Trump market.Continue reading
Thanksgiving week is usually great for bulls and this last week was no exception. Gobble gobble. Most of the gain for the week was concentrated in the rally Tuesday (in the opening hour!); it was quiet otherwise. A little post Thanksgiving pop happened Friday morning as well. And that was your week folks.
News flow was SLOW. Federal Reserve minutes Wednesday were a “highlight”:
The Fed viewed a “near-term” increase in interest rates as possible but central bank officials also expressed concerns about persistently low inflation, hinting that the bank may dial back its rate increases in 2018. The language from the Fed’s Oct. 31-Nov. 1 meeting was comparatively softer than in the September discussions, reflecting worries that tepid inflation might also be a result of “developments that could prove more persistent,” according to the Fed minutes. The minutes also showed that several members worried that keeping interest rates too low could create a financial bubble.
Durable-goods orders fell 1.2% in October, well below the forecast of a 0.7% gain. Excluding transportation orders increased 0.4%.
Random Chinese software stock – congrats if you had the foresight to own it 6 weeks ago. 😀Continue reading
Monday, Tuesday, and Friday saw the now usual “no volatility” days – while bears finally saw some action on Wednesday, bulls came right back Thursday with even bigger gains. So while we have been cautious on the market for 3 weeks now all that has meant is consolidation in the market (granted the Russell 2000 has taken some hits). For the week the S&P 500 fell 0.3% while the NASDAQ gained 0.5%. Economic news was light (we cover retail sales below), and earnings are coming to their tail end so we are in a bit of a news vacuum as negotiations about the tax reform bills will take the reigns.
Retail sales slowed in October, rising only 0.2%, after a sharp gain in the prior month.
Sales rose a revised 1.9% in September, up from the prior estimate of a 1.6% gain, boosted by post-hurricane spending. Excluding autos, sales rose 0.1% after a 1.2% gain in September. Economists were expecting a 0.2% gain. Sales excluding autos and gasoline climbed 0.3% after being up 0.6% in the prior month.
While it was the first losing week in 8 for the major averages, bulls should continue to be happy as such minor losses after significant rallies are just part of a consolidation period. Tuesday was the only positive day for the week but again we are talking about a very low volatility environment, where “down days” are often in the spirit of -0.15%. That said the weakness in the Russell 2000 was interesting this past week.
While these type of quotes – now incessant it seems – should worry you, it hasn’t matter to the market….
“There is no reason for stocks to go down substantially at this point, as earnings growth is robust and global economy is improving. The path of least resistance is higher,” said Steve Chiavarone, portfolio manager at Federated Global Allocation Fund.
“I don’t really see how this bull market gets derailed,” said Maris Ogg, president at Tower Bridge Advisors.
News flow was really quiet outside of some tussling over tax reform.
The mega capitalization glamour stocks – especially in technology….Continue reading