Stock Market Today: June 3rd - 7th, 2019

Discussion in 'Stock Market Today' started by Stockaholic, Jun 1, 2019.

  1. Stockaholic

    Stockaholic Content Manager

    Joined:
    Mar 29, 2016
    Messages:
    13,767
    Likes Received:
    7,050
    Dow Losing Streaks; Market Internals

    The Dow Jones Industrial Average is currently riding a six-week losing streak for the first time in more than five years. In last week's Bespoke Report newsletter (read it here), we noted the chart below which shows the longest weekly losing streaks for the Dow since 1900. As you can see, it's very rare that we get to seven, with only seven prior occurrences. And there has only been one eight-week losing streak for the Dow since 1900!

    [​IMG]

    As you can imagine, a six-week losing streak for the stock market does a number on internal indicators, some of which are highlighted below.

    As shown in the top left chart, the S&P 500 has moved into extreme oversold territory relative to its 50-day moving average. The second chart on the left shows the percentage of stocks in the S&P that are overbought vs. oversold. While not at the extremes we saw at the end of 2018, the percentage of oversold stocks is definitely elevated right now at 52.8%.

    The bottom left chart shows the relative performance of stocks versus bonds over the last year. The recent rally for Treasuries coupled with the decline for stocks has left stocks underperforming bonds over the last 12 months.

    On the right-hand side of the snapshot, we first provide a number of additional market metrics, with the arrow signifying the one-week change of each reading. The second section on the right shows sector trading range levels, and here you can see that every sector except Utilities is currently oversold. Finally, the third table on the right shows that commodities are extremely oversold while Treasuries are now extremely overbought.

    [​IMG]
     
    stock1234 and OldFart like this.
  2. Stockaholic

    Stockaholic Content Manager

    Joined:
    Mar 29, 2016
    Messages:
    13,767
    Likes Received:
    7,050
    Trend Analyzer - 6/3/19 - Extreme Beginnings

    Last month's declines extended into the final days of May bringing all of the major US index ETFs deeper into oversold territory. The Micro-Cap (IWC) has gotten the most oversold as it sits over 3 standard deviations below its 50-day moving average. This comes as it fell 2.88% last week; the greatest decline of these ETFs. While the rest are not quite as extended to the downside, they are in fact all extremely oversold (2 or more standard deviations below the 50-DMA). As seen by the long tails to the right in the trading range section of our Trend Analyzer tool, some of these ETFs, particularly large caps, had been only barely oversold at the beginning of last week. But these same ones saw some of the largest losses last week bringing them to their currently extreme oversold levels. For example, the S&P 100 (OEF) and Dow (DIA) both fell 2.69% and 2.57% last week, respectively. With the exception of the previously mentioned Micro-Cap ETF (IWC), small and mid caps held up slightly better. The declines though were still steep as only the Russell Mid-Cap (IWR) fell by less than 2%.

    [​IMG]

    No sector has been safe from selling but defensives had been holding up better recently. Last week, though, this was not so much the case. Utilities (XLU) fell 2.79% last week while Consumer Staples fell 3.67%. Similarly, XLP had been overbought and has now fell through the 50-DMA into oversold territory. Energy (XLE) has also taken it on the chin as oil saw steep declines last week. XLE fell the most of all sectors last week with a 4.27% decline.

    [​IMG]
     
    stock1234 and OldFart like this.
  3. stock1234

    stock1234 2017 Stockaholics Contest Winner

    Joined:
    Apr 3, 2016
    Messages:
    5,584
    Likes Received:
    4,619
    Indexes are down but seem to be dragged down mostly by some big tech names like GOOGL, FB, and AMZN, etc. Major indexes probably would be up or just down slightly if they are not down so big today :eek:
     
    OldFart likes this.
  4. anotherdevilsadvocate

    anotherdevilsadvocate Well-Known Member

    Joined:
    Apr 3, 2016
    Messages:
    4,319
    Likes Received:
    3,375
    Yeah some big red numbers, yet Dow and SPX are flat right now.
    [​IMG]
     
    OldFart and stock1234 like this.
  5. stock1234

    stock1234 2017 Stockaholics Contest Winner

    Joined:
    Apr 3, 2016
    Messages:
    5,584
    Likes Received:
    4,619
    T0rm3nted and OldFart like this.
  6. stock1234

    stock1234 2017 Stockaholics Contest Winner

    Joined:
    Apr 3, 2016
    Messages:
    5,584
    Likes Received:
    4,619
    Tech dragging down the market into the close, not just the FANG names but those high beta and P/E tech stocks are selling off too now :eek:
     
    #26 stock1234, Jun 3, 2019
    Last edited: Jun 3, 2019
    OldFart and Stockaholic like this.
  7. stock1234

    stock1234 2017 Stockaholics Contest Winner

    Joined:
    Apr 3, 2016
    Messages:
    5,584
    Likes Received:
    4,619
    NASDAQ is correction territory, let’s see if the other major indexes will get there at some point soon too :p
     
    Stockaholic and OldFart like this.
  8. OldFart

    OldFart Well-Known Member

    Joined:
    Apr 3, 2016
    Messages:
    1,959
    Likes Received:
    1,813
    Awesome....lol
     
    stock1234 and Stockaholic like this.
  9. Stockaholic

    Stockaholic Content Manager

    Joined:
    Mar 29, 2016
    Messages:
    13,767
    Likes Received:
    7,050
    Equalweights Triumph

    As if all the talk of tariffs hasn't been enough, with Washington appearing to take aim at some of the largest US companies (Apple, Alphabet, Amazon.com, and Facebook), the market cap weighted S&P 500 is suggesting a much weaker equity market environment than you would get by looking at the performance of individual stocks today. We'll have to see how things shake out into the close, but the equal-weighted S&P 500 (where each stock has a weighting of 0.2% compared) is outperforming the S&P 500 (where each stock's weighting is based on market cap) by nearly a full percentage point. Performance disparities in favor of the equal-weighted index that are this wide are not very common. In fact, the last time we saw a wider one day performance disparity was ten years and two days ago on 6/1/09.

    The chart below shows the daily performance spread between the two indices going all the way back 20 years. From 1999 through 2002, as the tech bubble was bursting, these types of occurrences were commonplace. Then again during the Financial Crisis, their frequency began to increase. But after the last occurrence in June 2009, there has only been one day where we have seen even close to a performance gap that was this wide, and that was a week after the election on 11/14/16. If these types of moves become more common, it will suggest a much weaker equity environment going forward.

    [​IMG]
     
    OldFart likes this.
  10. Stockaholic

    Stockaholic Content Manager

    Joined:
    Mar 29, 2016
    Messages:
    13,767
    Likes Received:
    7,050
  11. anotherdevilsadvocate

    anotherdevilsadvocate Well-Known Member

    Joined:
    Apr 3, 2016
    Messages:
    4,319
    Likes Received:
    3,375
    TTD moving strongly. Wonder if it has to do with the investigation of GOOGL.
     
  12. anotherdevilsadvocate

    anotherdevilsadvocate Well-Known Member

    Joined:
    Apr 3, 2016
    Messages:
    4,319
    Likes Received:
    3,375
    SPX up to 2784. If we rally through 2800 we'll be above a pretty important pivot.
    [​IMG]
     
    stock1234 and T0rm3nted like this.
  13. Stockaholic

    Stockaholic Content Manager

    Joined:
    Mar 29, 2016
    Messages:
    13,767
    Likes Received:
    7,050
    S&P 500 and 10-Year Treasury Yields Converge

    One of the most bullish cases for equities now is the fact that the S&P 500's dividend yield and the yield on the 10-Year Treasury Note have fully converged. In early Q4 2018, "risk-free" yields on the 10-Year were at 3.23% versus a dividend yield of just 1.9% for the S&P 500. With the yield on the 10-year falling more than 110 basis points since its peak in early November 2018, it makes the stock market significantly more attractive relative to risk-free rates at this juncture.

    [​IMG]

    "Internationals" Catch A Break

    With the US dollar taking a breather in the last couple of days, our index of Internationals has caught a bid in the early going today as it attempts to stabilize from a drop of just under 10% since late April. For those unfamiliar with our Internationals index, using our International Revenues Database, we classify any S&P 500 company which derives more than 50% of their revenues from outside the United States as part of the Internationals index, while any S&P 500 company which derives more than 90% of their revenues in the United States is part of our Domestics index.

    The chart below shows the performance of both indices over the last 12 months, and given the relative weakness of the rest of the world's economy versus the US, our Domestics index has consistently outperformed the Internationals. Since late May, though, the gap really widened as Internationals fell sharply in response to heightened concerns regarding global trade and possible retaliation from China and other countries in response to US tariffs on imports. Through the early going on Tuesday, the Domestics index is up 7.9% over the last year and down less than 2.5% from its recent high. The Internationals index, meanwhile, is down 2.91% over the last year and nearly 10% from its high less than six weeks ago.

    In the second chart, we show a comparison between the Bloomberg US Dollar Index and the performance spread between the Domestics and Internationals indices over the last year. Typically, when the dollar is strong, Domestics outperform the Internationals and vice versa. That's exactly what we are seeing now, as both the Dollar Index and the outperformance of Domestics relative to Internationals are right near 52-week highs. Going forward, any signs this week from the litany of Fed speakers that they are coming around to the market's view of cutting rates sooner rather than later would likely pressure the dollar and lead to a boost for the Internationals. We could be seeing some early signs of that today as the Internationals index is bouncing from very oversold levels and trading higher by 1.7% compared to a gain of just 0.8% for the Domestics.

    [​IMG]

    Trend Analyzer - 6/4/19 - Mid-Caps Bouncing

    As US tech giants are put under the microscope with Facebook (FB), Alphabet (GOOGL), and Apple (AAPL) all now under investigation, the Nasdaq (QQQ) fell over 2% yesterday. These declines have brought it to the deepest oversold levels of all the major index ETFs. QQQ is also now down the most over the past 5 days having shed 4.51%. While every other ETF in this group is still also extremely oversold, mid-caps have begun to bounce off of these extreme levels. The Core S&P Mid-Cap ETF (IJH), Russell Mid-Cap ETF (IWR), and S&P MidCap 400 ETF (MDY) have all managed small gains over the past couple sessions and are outperforming their peers. IWR is perhaps the most interesting of these three as the past two session's gains have come after the ETF found support at the 200-DMA. Additionally, it now sits with the largest YTD gain of 13.54%

    [​IMG]

    Turning over to commodities, the rout of oil has continued and the ETFs tracking oil are about as oversold as it gets in our Trend Analyzer. In the past week, the United States Oil Fund (USO) and DB Oil Fund (DBO) have lost 10.14% and 9.46%, respectively. While holding up slightly better, the DB Energy Fund (DBE) has also fallen considerably, down 8.2% in the same time. Along with the DB Commodity Index (DBC), these three all closed over 3 standard deviations from the 50-DMA. On the other hand, while equities have slid, gold has gotten bid up as the DB Gold Fund (DGL), Gold Trust (IAU), and Gold Shares (GLD) now all sit over 3% higher from last week. Each of these gold ETFs now sit deep into overbought territory. Another interesting point to make on gold is that this recent run higher has brought the metal out of its short term downtrend, but on a longer term it is still moving sideways. The DB Precious Metals ETF (DBP) and silver (SLV) have similarly seen strong gains of 2.77% and 1.97 %, respectively.

    [​IMG]
     
    stock1234 likes this.
  14. stock1234

    stock1234 2017 Stockaholics Contest Winner

    Joined:
    Apr 3, 2016
    Messages:
    5,584
    Likes Received:
    4,619
    Stockaholic likes this.
  15. Stockaholic

    Stockaholic Content Manager

    Joined:
    Mar 29, 2016
    Messages:
    13,767
    Likes Received:
    7,050
     
    stock1234 likes this.
  16. anotherdevilsadvocate

    anotherdevilsadvocate Well-Known Member

    Joined:
    Apr 3, 2016
    Messages:
    4,319
    Likes Received:
    3,375
    SNAP up almost 10%. Initial explanations may focus on benefits from FB investigation; but also they're working on some new features beyond dog ears.
     
    stock1234 likes this.
  17. anotherdevilsadvocate

    anotherdevilsadvocate Well-Known Member

    Joined:
    Apr 3, 2016
    Messages:
    4,319
    Likes Received:
    3,375
    Value stocks managed to go up yesterday, and even today they are outperforming growth stocks.
    Which is really shocking, because quite a few growth stocks are making +10% gains today.
    [​IMG]

    Ratio of growth/earnings ETFs, showing reversal of performance the last 2 days.
    [​IMG]
     
    stock1234 likes this.
  18. Stockaholic

    Stockaholic Content Manager

    Joined:
    Mar 29, 2016
    Messages:
    13,767
    Likes Received:
    7,050
    looking like we'll close right around that 2800 on the cash spx that marcy pointed out earlier...it's amazing to me that we're still talking about this being a key level after a year and a half :p
     
    stock1234 likes this.
  19. Stockaholic

    Stockaholic Content Manager

    Joined:
    Mar 29, 2016
    Messages:
    13,767
    Likes Received:
    7,050
  20. Ken34

    Ken34 2017 Stock Picking Contest Winner

    Joined:
    Apr 4, 2016
    Messages:
    1,039
    Likes Received:
    723
    are we going to experience another one of those "V" recoveries after breaking the 200? lol
     

Share This Page