US - Market Direction 40 (May 17 - Feb 18)

Re: US - Market Direction 40 (May 17 - Dec 17)

Postby winston » Tue Oct 17, 2017 7:13 pm

This Chart Helps You Keep Tabs on the Market's "Health"

By D.R. BARTON, JR.

The first place I normally look is at "market breadth." That's simply a measure of how many stocks are participating in an up move.

Lots of U.S. stocks are strong and receiving broad participation.


Over the past two months – and indeed, longer – the big non-U.S. markets have actually been outperforming our outperformance.


The Bottom Line: You have to be invested right now, because if you're not, you're missing out on a bull market – bull market gains, specifically – for the ages.


Source: Money Morning

https://moneymorning.com/2017/10/17/thi ... ts-health/
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Re: US - Market Direction 40 (May 17 - Dec 17)

Postby winston » Wed Oct 18, 2017 7:32 am

MORGAN STANLEY: A stock market correction is 'looking more likely'

by Joe Ciolli

Earnings season can be a euphoric time for stocks.

It's a time when companies have the opportunity to show off growth that matches their valuations, and it can encourage investment by traders looking to put money to work.

But that may not be the case this time around, Morgan Stanley warns.

A big part of that has to do with how investors approach earnings season. When investors anticipate strong results, stocks tend to rally heading into the season only to fade as results are actually reported, the firm says.

This scenario has played out in a relatively benign way twice already this year, with the maximum loss reaching just 3%. But it's different this time around, with the benchmark S&P 500 holding roughly just half of its previous upside, according to Morgan Stanley forecasts.

"If stocks follow the pattern they have been all year, actual earnings season will be a sell the news event and we could have a decent pull back or consolidation," a group of equity strategists led by Michael J. Wilson wrote in a client note. "Near term, a correction is looking more likely."

So what could cause this decline, which the firm says could stretch further than 5%? Wilson & Co. lay out five possible negative catalysts:
1. The unwinding of the Federal Reserve's massive balance sheet
2. Tax-cut legislation proves to be more difficult than simply making promises
3. The announcement of a new Fed chief could "disrupt financial conditions"
4. The US dollar, fresh off multiyear lows, looks to be reversing to the upside
5. Leading economic indicators are hitting extremes, suggesting peaks are "more likely than not"

With all that said, Morgan Stanley is far from calling the end of the 8-1/2-year bull market. The firm is simply warning about the possibility of a relatively mild pullback from what have been record-high valuations.

In fact, the firm is the most bullish on Wall Street, with a 2,700 target on the S&P 500 by the end of first quarter 2018. That's 5.6% above the index's closing price on Monday.

As such, Wilson recommends that investors use whatever weakness results from a potential correction as an opportunity to load back up on equity exposure.

In other words, buy the dip — the unofficial slogan of the unstoppable bull market.

Source: Business Insider

https://finance.yahoo.com/news/morgan-s ... 00224.html
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Re: US - Market Direction 40 (May 17 - Dec 17)

Postby winston » Wed Oct 18, 2017 7:32 am

MORGAN STANLEY: A stock market correction is 'looking more likely'

by Joe Ciolli

Earnings season can be a euphoric time for stocks.

It's a time when companies have the opportunity to show off growth that matches their valuations, and it can encourage investment by traders looking to put money to work.

But that may not be the case this time around, Morgan Stanley warns.

A big part of that has to do with how investors approach earnings season. When investors anticipate strong results, stocks tend to rally heading into the season only to fade as results are actually reported, the firm says.

This scenario has played out in a relatively benign way twice already this year, with the maximum loss reaching just 3%. But it's different this time around, with the benchmark S&P 500 holding roughly just half of its previous upside, according to Morgan Stanley forecasts.

"If stocks follow the pattern they have been all year, actual earnings season will be a sell the news event and we could have a decent pull back or consolidation," a group of equity strategists led by Michael J. Wilson wrote in a client note. "Near term, a correction is looking more likely."

So what could cause this decline, which the firm says could stretch further than 5%? Wilson & Co. lay out five possible negative catalysts:
1. The unwinding of the Federal Reserve's massive balance sheet
2. Tax-cut legislation proves to be more difficult than simply making promises
3. The announcement of a new Fed chief could "disrupt financial conditions"
4. The US dollar, fresh off multiyear lows, looks to be reversing to the upside
5. Leading economic indicators are hitting extremes, suggesting peaks are "more likely than not"

With all that said, Morgan Stanley is far from calling the end of the 8-1/2-year bull market. The firm is simply warning about the possibility of a relatively mild pullback from what have been record-high valuations.

In fact, the firm is the most bullish on Wall Street, with a 2,700 target on the S&P 500 by the end of first quarter 2018. That's 5.6% above the index's closing price on Monday.

As such, Wilson recommends that investors use whatever weakness results from a potential correction as an opportunity to load back up on equity exposure.

In other words, buy the dip — the unofficial slogan of the unstoppable bull market.

Source: Business Insider

https://finance.yahoo.com/news/morgan-s ... 00224.html
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Re: US - Market Direction 40 (May 17 - Dec 17)

Postby winston » Wed Oct 18, 2017 6:34 pm

Bank of America: 'This is kind of how bull markets end'

"What we're in right now is this sort of euphoria around stocks that's been missing for this entire bull market."

However, Subramanian said she feels the tone is shifting. Wall Street pros like her are moving more money to equities, companies are starting to pull back on share repurchases as stocks get more expensive, and investors are demanding more from companies when they report earnings.

"People are starting to buy the dream that stocks can go up," she said. "This is what I worry about. It's not the age of the bull market, cause bull markets don't die of old age. It's just a lot of the things we're looking at look very late-cycle."

One of the main things Subramanian pointed to was investor reaction to quarterly earnings reports.

Heading into this week, 81 percent of S&P 500 companies had beaten profit expectations, after 73 percent had done so in the second quarter.

In both quarters, investors have had muted reactions to earnings beats. Where shares of those outperforming companies would be expected to rise, they have had almost no reaction.

In fact, companies that beat earnings in the second quarter actually averaged a slight decline in the two days after reporting.

"There has been no reward for earnings beats, which is a little bit weird," Subramanian said. "The bar's getting higher. Investors are expecting good news. When they got good news, it's already in the stocks."

Investor behavior and sentiment have shown additional signs of optimism.

Cash balances for fund managers have fallen to 4.7 percent, the lowest in two and a half years.

At the same time, investors have poured $236.7 billion into stock-based funds, with last week's inflows of $11.6 billion the most in 17 weeks.

Investors even put $2 billion into mutual funds, the first time in 11 weeks that active strategies have attracted money, according to BofAML and EPFR data.

The flows reflect how much more optimistic professional investors have turned.

Bulls in the latest Investors Intelligence survey are up to 60.4 percent, which editor John Gray considers the "danger zone."

Moreover, he said current patterns are starting to look a lot like 1987 as the market nears the 30th anniversary of Black Monday.

Specifically, he said bulls peaked above 60 percent that year, fell, then moved above 60 again later in the year as the market was about to crash.

"That scenario suggests potential significant danger for Oct/Nov 2017!" Gray wrote.

BofAML has been among the most cautious firms on Wall Street, holding a 2,450 S&P 500 price target that would represent a 4 percent decline from the current level.

Generally speaking, Subramanian said she finds it "very unsettling, the fact that fundamentals aren't driving the bus."

Source: CNBC

https://finance.yahoo.com/news/rally-co ... 42899.html
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Re: US - Market Direction 40 (May 17 - Dec 17)

Postby winston » Thu Oct 19, 2017 6:48 am

Smart money and dumb money are moving in opposite directions

By Stephen McBride

Professional traders are taking a record amount of short positions against the Dow Jones Industrial Average

There’s a strong negative correlation between commercial traders’ short positions and the Dow Jones Industrial Average, as the below chart shows.

When short positions increase, the DJIA usually falls … perfect timing!


GS: By just about every measure, stocks are expensive today.

DB: “We’re in a period of very elevated global asset prices — possibly the most elevated in history.”

In September, Buffett’s Berkshire Hathaway BRK.B, +0.25% had $99.7 billion in cash on the sidelines.

Klarman’s Baupost Group held 42% of its portfolio in cash, the largest single position.


Source: Market Watch

http://www.marketwatch.com/story/smart- ... yptr=yahoo
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Re: US - Market Direction 40 (May 17 - Dec 17)

Postby winston » Mon Oct 23, 2017 8:22 am

MONDAY

Earnings: Thus far the responses have not been huge, but they have not hurt the market. Financial earnings were not well received but those stocks held and are now moving higher, e.g. GS, WSM. NASDAQ is not too much worse for the wear.

You always have to watch the Monday following an up expiration -- it tends to trade lower on the Monday -- but with this market that has been a buying opportunity.

Therefore, looking at upside plays again, but are confronted with the same issues from the prior week: finding quality new plays is difficult after this kind of upside. Many stocks are still extended. There are some testing and setting up and we will look at those as vehicles to play a
further rally with new plays, but we are less than wild about the possibilities these present.

Source: Investment House
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Re: US - Market Direction 40 (May 17 - Dec 17)

Postby winston » Mon Oct 23, 2017 8:45 am

THE MARKET

The upside accelerated on expiration Friday with upside gaps sending SP500, DJ30 to impressive new highs. SP400 was most impressive as it came from a quiet, flat consolidation to a gap breakout and new high. Again, no sellers, all bids.

DJ30: Gapped higher Wednesday to a new high on no volume, sold off on stronger volume Thursday but managed a recovery, then gapped and rallied to a higher new high Friday. Now an impressive 6-week run to a series of new highs. You can argue it is extended near term and it is, but that does not matter when there are no sellers.

SP500: same action on SP500 with a gap after selling to test below the 10 day EMA Thursday. Gapped and rallied to close near the high and at a new high.

NASDAQ: after falling to test the 20 day EMA on the Thursday low and rebounding that session to cut the losses, NASDAQ gapped to a new closing high Friday. Obviously more sluggish than the NYSE large cap index.

Source: Investment House
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Re: US - Market Direction 40 (May 17 - Dec 17)

Postby winston » Mon Oct 23, 2017 7:35 pm

NEW HIGHS OF NOTE LAST WEEK

Facebook (FB)... "FANG" stock
Netflix (NFLX)... "FANG" stock
Adobe Systems (ADBE)... Acrobat, Illustrator, Photoshop
Nvidia (NVDA)... chipmaker
Intel (INTC)... chipmaker
Lam Research (LRCX)... chipmaker equipment
Interactive Brokers (IBKR)... online brokerage
Square (SQ)... mobile payments
Bank of America (BAC)... financial-services giant
JPMorgan Chase (JPM)... financial-services giant
Morgan Stanley (MS)... financial-services giant
American Express (AXP)... credit cards
MetLife (MET)... health insurance
UnitedHealth (UNH)... health insurance
AbbVie (ABBV)... prescription drugs
Biogen (BIIB)... biotech
Johnson & Johnson (JNJ)... Band-Aids, Tylenol, Listerine
Abbott Laboratories (ABT)... Pedialyte, Ensure
Dollar General (DG)... discount retailer
Dollar Tree (DLTR)... discount retailer
McDonald's (MCD)... burgers, chicken nuggets, fries
Restaurant Brands (QSR)... Burger King, Tim Hortons
NVR (NVR)... homebuilder
Toll Brothers (TOL)... homebuilder
United Rentals (URI)... equipment rental
Cummins (CMI)... diesel engines
Chevron (CVX)... Big Oil
CF Industries (CF)... agricultural fertilizer
Rollins (ROL)... pest control

NEW LOWS OF NOTE LAST WEEK

Party City (PRTY)... party supplies
Bed Bath & Beyond (BBBY)... home goods
Sears Holdings (SHLD)... clothes, tools, appliances
d**k's Sporting Goods (DKS)... athletic goods
Foot Locker (FL)... athletic apparel
Harley-Davidson (HOG)... motorcycles

Source: Daily Wealth
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Re: US - Market Direction 40 (May 17 - Dec 17)

Postby winston » Tue Oct 24, 2017 8:40 pm

Here’s why one chart watcher says the stock market is finally ready for a pullback

By Anora M. Gaudiano

Mind the ‘gap’ on the S&P 500 daily chart: BTIG’s Stockton

“Prolonged overbought conditions on their own do not indicate anything other than being overbought, and markets can stay overbought for some time,” said Stockton.

“But when such a gap appears after prolonged overbought conditions, it is exhaustive in nature and suggests that the short-term momentum is likely to waiver,” Stockton said.


The initial support level is at approximately 2,448, according to Stockton —that’s when the S&P 500 hit a record and stumbled during August. Stockton expects the market to fall more than 3%.


Source: Market Watch

http://www.marketwatch.com/story/heres- ... yptr=yahoo
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Re: US - Market Direction 40 (May 17 - Dec 17)

Postby winston » Thu Oct 26, 2017 6:14 am

The Dow May Have Hit a High, but There Are Bearish Signals Elsewhere

By GUY ORTMANN

The SPX gave a bearish stochastic crossover signal, along with the MID.

Another issue is the All Exchange cumulative advance/decline line, which made a lower low, joining the Nasdaq in turning its trend to negative.

As well, the 10-year Treasury yield hit its highest point since May and above resistance at 2.41%.

Also, we find it curious that the VIX actually closed higher on Monday at 11.04. Given the markets advance, one would have expected it to decline.

The OEX Put/Call Ratio, however, is bearish at 1.76.

Forward valuation of the SPX at a 15-year high of an 18.8 forward multiple of forward expected earnings is notable as well.

Forward 12-month earnings estimates for the SPX from Bloomberg of $136.79 leave a 5.33% forward earnings yield on an 18.8 forward multiple -- a decade high.


Source: Real Money

https://realmoney.thestreet.com/article ... yptr=yahoo
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