Against a backdrop of Great Depression-like numbers - 33 million Americans out of work and an "official" unemployment rate of 14.7% - equity investors enjoyed a remarkably positive week, with all major indices rising by at least 2.50%, with the NASDAQ leading the way with a six percent gain.
The NASDAQ's advance was not only remarkable, but it is also ludicrous. The tech-heavy index has advanced beyond both its 50 and 200-day moving averages and is within 720 points of its all-time high. Investors in the speculative sector of the market have either divorced themselves from reality or are seeing something the rest of the world is missing. Money has to go somewhere, even money from the Federal Reserve, released to companies across the investing spectrum, but most of it appears to be heading toward Silicon Valley.
No doubt, chasing momentum has amplified the absurd move to the NASDAQ, which is likely a dangerous precedent. Many of the companies moving higher sport P/E ratios well above the norm, even the norm in a major bull market, a position that was shattered eight weeks ago.
Some of the standouts in the nebulous NASDAQ unicorn universe include Alphabet, parent of Google (GOOG), bottomed out at 1056.62 on March 23, and closed Friday at 1388.37.
Netflix (NFLX) fell out at 298.84 on March 16, but has since rebounded to Friday's close of 435.55.
Amazon (AMZN) reached an all-time high of 2474.00 on April 16, after dropping to 1676.61 on March 12, an amazing gain of 47.6% in just over a month. Amazon may be a superb, dynamic company, but it's arguably extremely overvalued, with a P/E of 113.
Facebook (FB) finished at 146.01 on March 16 and closed at 212.35 on Friday.
Some investors have been getting fat while the larger economy has, for the most part, imploded.
As almost all states (47 of 50 as of Saturday, May 9) have at least partially reopened their businesses and relaxed stay-at-home and other restrictions on the populace, anecdotal reports show that business is still a long distance from anything approaching normal, i.e., prior to the COVID-19 pandemic.
Wall Street is pushing a narrative that the country and the economy is all well and good, the recovery - in terms of stock prices - well underway, even as cases of coronavirus are still prevalent and rising in some cases and deaths continue at a run rate of over 1,000 a day. How well that works out for investors won't likely be known for some time. For now, investors, and the companies getting the most attention, are sitting pretty.
Crude oil continued to be under pressure from both a supply glut and slack demand, hovering in the mid-20s throughout the week. The June contract on WTI crude rose from $19.78 last Friday (May 1) to $24.74 a barrel this Friday (May 8). The contract expires within two weeks and there hasn't really been much improvement on the supply side of the equation, though demand has improved as the United States and most other countries around the world have begun getting back to business.
The treasury curve steepened over the course of the week. The entire complex is covered by 129 basis points as of Friday, up from 117 the prior week. All of the yield gains were at the long end. As money rushed out of bonds and back into stocks on Friday, the 10-year note added six basis points, to 0.69. The 30-year bond yield gained from 1.31 to 1.39.
Precious metals continued to be among the most-desired asset class since the onset of the pandemic. Both gold and silver are selling at massive premiums (up to $200 for gold, 40-80% for silver) and dealers are still experiencing supply issues with many popular items out of stock, though available to order. Delivery times have come back a bit, with gold and silver in quantity available within two weeks of placing orders.
Here are representative recent prices (5/9-5/10) on eBay for standard gold and silver coins and bars (prices include shipping):
Item: Low / High / Average / Median
1 oz silver coin: 24.45 / 38.00 / 30.58 / 30.48
1 oz silver bar: 23.00 / 30.95 / 26.77 / 26.20
1 oz gold coin: 1,750.00 / 1,946.65 / 1,854.84 / 1,841.99
1 oz gold bar: 1,799.99 / 1,871.52 / 1,843.90 / 1,851.47
In cryptocurrency-land, the Bitcoin Halving approaches. Fr those unfamiliar with the concept, the "halving" is the predetermined moment when Bitcoin’s block subsidy gets cut in half. The halving of Bitcoin’s block subsidy occurs every 210,000 blocks (approximately every four years) and is a key feature of Bitcoin. It is because of the Halving that there is a capped supply of 21 million bitcoin that will ever exist. The halving is scheduled to take place Monday at approximately 6:49 pm ET.
Bitcoin surpassed the $10,000 mark in US dollars, but fell back to the $8850 range in anticipation of the event.
And, just to throw another spanner into the works, the government of Argentina failed to reach agreement with creditors by its self-imposed Friday deadline, essentially defaulting on $65 billion worth of bonds, though talks between the two sides are continuing. Argentina will formally default on May 22, as it missed a $503 million payment last month and the grace period is expiring.
Talks were extended through Monday in hopes that Argentina could avoid its ninth sovereign default.
At this juncture, everything is at risk. According to recent economic data, the global economy is flat on its back. Most developed countries are either in a recession or about to enter one. The response to the coronavirus has ramped up unemployment and knocked down GDP estimates.
Thanks to massive infusions of capital from the Fed and other central banks to both business and individuals, the crisis has been managed to a degree, but the future remains a guessing game. Whether or not QE to infinity will save the day - and the underlying currencies - is a real gamble.
At the close, Friday, May 8, 2020:
Dow: 24,331.32, +455.43 (+1.91%)
NASDAQ: 9,121.32, +141.66 (+1.58%)
S&P 500: 2,929.80, +48.61 (+1.69%)
NYSE: 11,354.34, +232.68 (+2.09%)
For the Week:
Dow: +607.63 (+2.56%)
NASDAQ: +516.37 (+6.00%)
S&P 500: +99.09 (+3.50%)
NYSE: +295.77 (+2.67%)
Showing posts with label NFLX. Show all posts
Showing posts with label NFLX. Show all posts
Sunday, May 10, 2020
Tuesday, January 15, 2019
Stocks Rise Despite Spate Of Bad News, Brexit No-Go Vote
Some are wondering whether the market is being run by computers or human operatives, or, worse yet, humans running computers front-running the market.
What may be happening is that humans are programming computer algorithms to react to fake news and the PPT is backstopping each and every tick lower by buying futures, resulting in the altos readjusting to buy more.
There was a good deal of bad news flow in the morning... and then just after 7:00 pm London time (2:00 pm ET), there was the Brexit vote.
Here's what passed across the wires prior to the opening bell and shortly thereafter:
With all this in the cooker, stocks opened higher and took off from there. The Dow exploded to a gain of 190 points just before noon. The NASDAQ was up nearly 120 points.
After noon, the markets went into a wait-and-see mood as the Brexit vote approached. In what has to be the most convoluted, time-wasting exercise in government over-reach (possibly challenged by the partial shutdown in the US), Britain has been wrangling over just how to depart from the European Union after a referendum passed nearly two-and-a-half years ago (June 23, 2016).
With different constituents vying for complete Brexit, partial Brexit with a backstop, no Brexit, and other variants, the argument over how to implement what was voted upon by the constituency has been nothing short of a disaster and an indictment against the effectiveness of government everywhere.
Somebody should point out - we will - that with all the Brexit juggling, partial US shutdown jousting, and continuing French protesting, governments in developed nations are proving to be at least cracked, if not nearly completely broken. Besides the fact that none of them can manage to spend less than what they receive through their extreme, excessive, heavy-handed taxation - which is over the top - it seems all they're capable of doing at the highest levels is fight for positioning and power, all to the detriment of the people they're supposed to be representing. Collectively, they pass no new legislation that is of benefit to the people. Other than President Trump's efforts, government is a massive, obvious failure of human capacity.
If ever there was a time for a global revolution (not a new concept), it would be now, though nobody has any contingency plans for how to deal with the dystopian aftermath that would surely follow.
Experience teaches us that disposing of scoundrels, deposing tyrants, or overthrowing governments only makes matters seem better for a short period of time. At least in the original American revolution, the patriots were separated from their tyrannical rulers by a vast ocean which technology hadn't quite conquered.
Today's intertwined system is different, close at hand, and the scoundrels much better disguised. There isn't going to be any overthrow of anything except morals and values, people's faith and judgment, which seem to be going in the direction of all flesh. Anger, the most palpable manifestation of displeasure, is boiling over in all facets of urban life. People are becoming more and more ill-mannered, short-tempered, self-absorbed, and intolerant toward the views and objectives of others. All of this adds up to uncivil activities, flouting of the law, violence and strife. Essentially, when ordinary people lose faith in a government that they had become accustomed to relying upon, all that's left is chaos, and that seems to be the direction in which we're inexorably, sadly, headed.
... and then came the Brexit vote in Britain's Parliament. Prime Minister Teresa May's government proposal was rounded defeated by a 432-202 vote in the House of Commons. On the news, the Dow tanked... briefly, the other indices slumped shortly, and then shot back to from whence they came.
It's all fake, people. There are no more free markets. Face it. All the geese been thoroughly cooked.
What may be happening is that humans are programming computer algorithms to react to fake news and the PPT is backstopping each and every tick lower by buying futures, resulting in the altos readjusting to buy more.
There was a good deal of bad news flow in the morning... and then just after 7:00 pm London time (2:00 pm ET), there was the Brexit vote.
Here's what passed across the wires prior to the opening bell and shortly thereafter:
- Both Wells Fargo (WFC) and JP Morgan Chase (JPM) missed on both earnings per share and revenue.
- Netflix (NFLX) announced the largest price increase in its 12-year history.
- China's economy grew by 6.4%, the slowest rate in over a decade.
- PPI cane in at -0.2%, a deflationary reading.
- Delta Airlines (DAL) beat, but warned that the partial government shutdown would negatively impact earnings in the current quarter.
- The Empire State Manufacturing Survey fell to a reading of 3.9 in January from an upwardly revised reading of 11.5 in December.
- Goodyear Tire (GT) lowered its fourth quarter outlook and full year (2018) guidance.
With all this in the cooker, stocks opened higher and took off from there. The Dow exploded to a gain of 190 points just before noon. The NASDAQ was up nearly 120 points.
After noon, the markets went into a wait-and-see mood as the Brexit vote approached. In what has to be the most convoluted, time-wasting exercise in government over-reach (possibly challenged by the partial shutdown in the US), Britain has been wrangling over just how to depart from the European Union after a referendum passed nearly two-and-a-half years ago (June 23, 2016).
With different constituents vying for complete Brexit, partial Brexit with a backstop, no Brexit, and other variants, the argument over how to implement what was voted upon by the constituency has been nothing short of a disaster and an indictment against the effectiveness of government everywhere.
Somebody should point out - we will - that with all the Brexit juggling, partial US shutdown jousting, and continuing French protesting, governments in developed nations are proving to be at least cracked, if not nearly completely broken. Besides the fact that none of them can manage to spend less than what they receive through their extreme, excessive, heavy-handed taxation - which is over the top - it seems all they're capable of doing at the highest levels is fight for positioning and power, all to the detriment of the people they're supposed to be representing. Collectively, they pass no new legislation that is of benefit to the people. Other than President Trump's efforts, government is a massive, obvious failure of human capacity.
If ever there was a time for a global revolution (not a new concept), it would be now, though nobody has any contingency plans for how to deal with the dystopian aftermath that would surely follow.
Experience teaches us that disposing of scoundrels, deposing tyrants, or overthrowing governments only makes matters seem better for a short period of time. At least in the original American revolution, the patriots were separated from their tyrannical rulers by a vast ocean which technology hadn't quite conquered.
Today's intertwined system is different, close at hand, and the scoundrels much better disguised. There isn't going to be any overthrow of anything except morals and values, people's faith and judgment, which seem to be going in the direction of all flesh. Anger, the most palpable manifestation of displeasure, is boiling over in all facets of urban life. People are becoming more and more ill-mannered, short-tempered, self-absorbed, and intolerant toward the views and objectives of others. All of this adds up to uncivil activities, flouting of the law, violence and strife. Essentially, when ordinary people lose faith in a government that they had become accustomed to relying upon, all that's left is chaos, and that seems to be the direction in which we're inexorably, sadly, headed.
... and then came the Brexit vote in Britain's Parliament. Prime Minister Teresa May's government proposal was rounded defeated by a 432-202 vote in the House of Commons. On the news, the Dow tanked... briefly, the other indices slumped shortly, and then shot back to from whence they came.
It's all fake, people. There are no more free markets. Face it. All the geese been thoroughly cooked.
Dow Jones Industrial Average January Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 1/2/19 | 23,346.24 | +18.78 | +18.78 |
| 1/3/19 | 22,686.22 | -660.02 | -641.24 |
| 1/4/19 | 23,433.16 | +746.94 | +105.70 |
| 1/7/19 | 23,531.35 | +98.19 | +203.89 |
| 1/8/19 | 23,787.45 | +256.10 | +459.99 |
| 1/9/19 | 23,879.12 | +91.67 | +551.66 |
| 1/10/19 | 24,001.92 | +122.80 | +674.46 |
| 1/11/19 | 23,995.95 | -5.97 | +669.49 |
| 1/14/19 | 23,909.84 | -86.11 | +583.38 |
| 1/15/19 | 24,065.59 | +155.75 | +739.13 |
At the Close, Tuesday, January 15, 2019:
Dow Jones Industrial Average: 24,065.59, +155.75 (+0.65%)
NASDAQ: 7,023.83, +117.92 (+1.71%)
S&P 500: 2,610.30, +27.69 (+1.07%)
NYSE Composite: 11,868.68, +69.57 (+0.59%)
Tuesday, January 1, 2019
The Year That Was: Investors Bid 2018 GOOD RIDDANCE; Worst Year Since 2008
Should all acquaintance be forgot and never brought to mind,
Should all acquaintance be forgot and the days of auld lang syne.
For auld lang syne, my dear, for auld lang syne,
We'll take a cup of kindness yet for the sake of auld lang syne.
Let's have a drink or maybe two or maybe three or four
Or five or six or seven or eight or maybe even more.
A cup of kindness, indeed. It's what some investors would have liked in December, or October, or maybe February or March.
Those were the worst months for stocks.
Dow loss, February, 2018: -1120.19
March, 2018: -926.09
October, 2018: -1341.55
December, 2018: -2211.10
As the year wore on, conditions proceeded to deteriorate for holders of US large cap equities. On the S&P and the NASDAQ, some stocks suffered losses of 30, 40, 50% or more.
Facebook (FB) was the poster child for tech stocks breaking bad. On July 25, the famous brainchild of Mark Zuckerberg topped out at 217.50. As of December 24, it bottomed out at a closing price of 124.06, a 43% loss. It wasn't a very merry Christmas for Facebook. Still, Zuckerberg is still one of the richest persons in the world, just not quite as rich as he used to be.
Netflix (NFLX) was another one being hammered in the second half of the year. Closing at 418.97 on July 9, the streaming video service lost 44% by December 24, closing that session at 233.88.
Stocks weren't the only asset class that was sucker-punched during the year. One standout of the commodities class was crude oil, where the price of a barrel of West Texas Intermediate (WTI) shot up from $60 to $76 in October - coincidentally, on the same day the Dow peaked - before retreating to under $45 nearing the end of December, striking a low of $42.53 on Christmas Day.
In similar manner, precious metals were abused during the year. Gold spent the early part of the year fluctuating in the $1300-1350 per ounce range, never closing above $1352. By June, signs of weakness were appearing, with the metal of kings dipping into the $1200 range, eventually bottoming out at $1178 by August. With stocks on the decline in the fourth quarter, gold was the beneficiary, ending the year at $1278 per ounce.
Silver was damaged more severely. Peaking at $17.52 per ounce on January 25, silver slumped all the way to 13.97 in November. December was the best month of the year for gentleman's coin, as it closed at a five-month high on December 31, with a price of $15.46. Both gold and silver ended the year on high notes, suggesting that they are due for a long-overdue rally.
Bonds were perhaps the most entertaining of the financial assets, with investors watching for an inversion in the treasury yield curve between the two and 10-year notes. While that did not materialize, a smaller inversion between 2 and three-year and the five-year yield presented itself in December, but only persisted for three weeks. The five-year was actually yielding less than both the 2s and 3s on December 4, but corrected back to normalcy - with yields rising over duration - on December 21. Still, it was a wake-up call to investors fearing a recession in 2019 and may have contributed to some of the panic selling during the final month of 2018.
Yield on the barometric 10-year note ended the year at an 11-month low, checking in at 2.69% on New Year's Eve. The 30-year was also pushed lower. By year's end, it was yielding a mere 3.02%, all of this occurring in the face of four quarterly federal funds rate hikes over the course of the annum. Surely, the bond vigilantes are out in force, and as the year of 2018 comes to a close, fear is winning out over greed in rather obvious manner.
What 2019 will bring is anyone's guess, considering the continuing dysfunction coming out of the nation's capitol. Republicans and Democrats are at war, leaving the American people to fend as best they can as casualties or collaterally-damaged bystanders. Rhetoric from both sides of the aisle has been inflamed to a combustible state, and, with the partial government shutdown already in its second week, when the Democrats seize control of the House of Representatives on January 3, chaos will reign.
Despite honest effort from President Trump, nothing good will come out of Washington this year, unless one considers complete rejection of government by the people to be constructive, because that is precisely where the swamp dwellers inside the beltway - with ample assistance from a media that operates as a free press in name only - are taking the country.
2019 may be a year worse than the one preceding it, perhaps much worse, as the political leaders of the greatest nation on the planet can do no better than bicker, posture, and fail in their duties.
Until and unless Washington changes its ways, the financial picture will be clouded by the politicians, whose only aim seems to be one of destroying anything good in the country. While the Democrats can largely be blamed for inciting division, Republicans in the Senate share nearly equal responsibility for not standing up for the public.
Sadly, Washington has made it clear that it wants to be all-important, all the time. The cost will be borne by the people in ways that exceed mere finance.
Dow Jones Industrial Average December Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 12/3/18 | 25,826.43 | +287.97 | +287.97 |
| 12/4/18 | 25,027.07 | -799.36 | -511.39 |
| 12/6/18 | 24,947.67 | -79.40 | -590.79 |
| 12/7/18 | 24,388.95 | -558.72 | -1149.51 |
| 12/10/18 | 24,423.26 | +34.31 | -1115.20 |
| 12/11/18 | 24,370.24 | -53.02 | -1168.22 |
| 12/12/18 | 24,527.27 | +157.03 | -1011.19 |
| 12/13/18 | 24,597.38 | +70.11 | -941.08 |
| 12/14/18 | 24,100.51 | -496.87 | -1437.95 |
| 12/17/18 | 23,592.98 | -507.53 | -1945.58 |
| 12/18/18 | 23,675.64 | +82.66 | -1862.92 |
| 12/19/18 | 23,323.66 | -351.98 | -2214.90 |
| 12/20/18 | 22,859.60 | -464.06 | -2678.96 |
| 12/21/18 | 22,445.37 | -414.23 | -3093.19 |
| 12/24/18 | 21,792.20 | -653.17 | -3746.36 |
| 12/26/18 | 22,878.45 | +1086.25 | -2660.11 |
| 12/27/18 | 22,878.45 | +260.37 | -2399.74 |
| 12/28/18 | 23,062.40 | -76.42 | -2476.16 |
| 12/31/18 | 23,327.46 | +265.06 | -2211.10 |
At the Close, Monday, December 31, 2019:
Dow Jones Industrial Average: 23,327.46, +265.06 (+1.15%)
NASDAQ: 6,635.28, +50.76 (+0.77%)
S&P 500: 2,506.85, +21.11 (+0.85%)
NYSE Composite: 11,374.39, +83.44 (+0.74%)
Monday, September 17, 2018
Apple Leads Dow, Stocks Lower On Valuation, Dividend Yield Concerns
It's not like Apple (AAPL) isn't a rock-solid stock. The Cupertino, California-based company which has given the world smartphones, smart watches and really zippy computers isn't the world's largest company by market cap for nothing.
The issue is more one of value over speculation. Apple is fully-capitalized, has doubled in price in less than two years, but the kicker might be the dividend of 2.92 is less than one-and-a-half percent (1.30%), while the 10-year treasury note is currently yielding three percent and probably is going to be higher in coming months.
Those numbers have to give serious investors pause to reflect on whether the tech giant - a mature company, not an instant start-up by any means - can continue to provide appreciation value in excess to their dividend. T-bills offer yield with nearly zero risk. All stocks carry risk to the downside, and Apple may have peaked a few weeks ago when it hit an all-time high of 228.35 at the September 4 closing bell.
Investing isn't a game of chasing winners, it's a matter of timing, though most advisors will deny the thought of market-timing. Proper discipline would have one buying Apple when it looks like it's cheap. With a P/E of just under 20, it's close to being expensive, so some players are obviously taking chips off the table while the gains are fresh and probably taxed at the long-term capital rate. It would make sense to do so. There are other stocks which may perform better in the near future and the allure of risk-free money at three percent is strong.
Whatever the reason, Apple has been leveling off, but the selling got serious on Monday, with volume above 36 million shares, about 10 million higher than average. The stock closed down 5.96 points (-2.66%), leading all Dow components as the Dow and NASDAQ suffered outsized losses, the NASDAQ especially, down nearly 1.5%.
Google (GOOG) also took a pretty big hit on Monday, losing 16.48 (1.41%), as did tech darling, Netflix (NFLX), which was broadly sold, -14.21 (3.90%), to 350.35.
The Dow Jones Industrial Average saw an even split with 15 gainers to 15 losers, but of the six stocks that trade for more than 200 per share, five of them declined, led by Apple. The others were Boeing (BA), UnitedHealth (UNH), Goldman Sachs (GS) and Home Depot (HD). The sole 200+ share price winner was 3M (MMM), which finished at 209.53, up 1.65 points (+0.79%).
Markets overall took a bit of a beating on Monday, though it wasn't enough for anybody to start yelling 'fire' on Wall Street. That may come when the Fed meets next week (September 24-25) and announces the third rate hike of 2018. That may prove to be more this market can bear.
Dow Jones Industrial Average September Scorecard:
At the Close, Monday, September 17, 2018:
Dow Jones Industrial Average: 26,062.12, -92.55 (-0.35%)
NASDAQ: 7,895.79, -114.25 (-1.43%)
S&P 500: 2,888.80, -16.18 (-0.56%)
NYSE Composite: 13,031.91, -18.61 (-0.14%)
The issue is more one of value over speculation. Apple is fully-capitalized, has doubled in price in less than two years, but the kicker might be the dividend of 2.92 is less than one-and-a-half percent (1.30%), while the 10-year treasury note is currently yielding three percent and probably is going to be higher in coming months.
Those numbers have to give serious investors pause to reflect on whether the tech giant - a mature company, not an instant start-up by any means - can continue to provide appreciation value in excess to their dividend. T-bills offer yield with nearly zero risk. All stocks carry risk to the downside, and Apple may have peaked a few weeks ago when it hit an all-time high of 228.35 at the September 4 closing bell.
Investing isn't a game of chasing winners, it's a matter of timing, though most advisors will deny the thought of market-timing. Proper discipline would have one buying Apple when it looks like it's cheap. With a P/E of just under 20, it's close to being expensive, so some players are obviously taking chips off the table while the gains are fresh and probably taxed at the long-term capital rate. It would make sense to do so. There are other stocks which may perform better in the near future and the allure of risk-free money at three percent is strong.
Whatever the reason, Apple has been leveling off, but the selling got serious on Monday, with volume above 36 million shares, about 10 million higher than average. The stock closed down 5.96 points (-2.66%), leading all Dow components as the Dow and NASDAQ suffered outsized losses, the NASDAQ especially, down nearly 1.5%.
Google (GOOG) also took a pretty big hit on Monday, losing 16.48 (1.41%), as did tech darling, Netflix (NFLX), which was broadly sold, -14.21 (3.90%), to 350.35.
The Dow Jones Industrial Average saw an even split with 15 gainers to 15 losers, but of the six stocks that trade for more than 200 per share, five of them declined, led by Apple. The others were Boeing (BA), UnitedHealth (UNH), Goldman Sachs (GS) and Home Depot (HD). The sole 200+ share price winner was 3M (MMM), which finished at 209.53, up 1.65 points (+0.79%).
Markets overall took a bit of a beating on Monday, though it wasn't enough for anybody to start yelling 'fire' on Wall Street. That may come when the Fed meets next week (September 24-25) and announces the third rate hike of 2018. That may prove to be more this market can bear.
Dow Jones Industrial Average September Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 9/4/18 | 25,952.48 | -12.34 | -12.34 |
| 9/5/18 | 25,974.99 | +22.51 | +10.17 |
| 9/6/18 | 25,995.87 | +20.88 | +31.05 |
| 9/7/18 | 25,916.54 | -79.33 | -48.28 |
| 9/10/18 | 25,857.07 | -59.47 | -107.75 |
| 9/11/18 | 25,971.06 | +113.99 | +6.24 |
| 9/12/18 | 25,998.92 | +27.86 | +34.10 |
| 9/13/18 | 26,145.99 | +147.07 | +181.17 |
| 9/14/18 | 26,154.67 | +8.68 | +189.85 |
| 9/17/18 | 26,062.12 | -92.55 | +97.30 |
At the Close, Monday, September 17, 2018:
Dow Jones Industrial Average: 26,062.12, -92.55 (-0.35%)
NASDAQ: 7,895.79, -114.25 (-1.43%)
S&P 500: 2,888.80, -16.18 (-0.56%)
NYSE Composite: 13,031.91, -18.61 (-0.14%)
Wednesday, September 5, 2018
FAANGs Whacked Again As Investors Pull Back From Tech Space
Netflix was murdered in trading on Wednesday as investors reacted to a report by Morgan Stanley analyst Katy Huberty that Apple plans to launch a competing video service though the company has to date made no announcement.
It was enough to take seriously, and money flowed out of Netflix (NFLX) to the tune of a 22.42-point decline, off a whopping 6.17% at the close. Apple's stock barely budged, but in fact was down 1.49 (-0.65%).
A day after topping $1 trillion in market cap, Amazon (AMZN) shed 44 points to close at 1994.82, a solid two-percent decline.
Alphabet (GOOG), parent of Google was lower by 10.82 (-0.88%), and Tesla lost nearly three percent, closing at 280.74, reaching its lowest closing point since May 25.
Facebook lost nearly four points to finish the day at 167.18, a four-month low.
All of this trading occurred while tech executives were brought before congress to testify in a wide-ranging probe of the unregulated social media space. Facebook’s Sheryl Sandberg and Twitter’s Jack Dorsey faced congressional scrutiny before a select committee of senators and House representatives. It's political theater at its very best, with lawmakers preening and getting in good soundbites in the lead to the midterm elections in two months.
Wishing for nothing less than to regulate free speech on the internet, congress is unlikely to have much impact upon the operation of the social media behemoths. As private enterprises, these mammoth companies are free to do as they please, from banning users who upset their dilettante views to promoting largely socialist idealism.
While the hearings make for some useful political jabbing, the congress shows by its naive use of forums such as these that they are as much a part of the problem as the companies themselves. Since most politicians use social media platforms to promote their particular agendas, dragging big company executives to Capitol Hill is more red herring than serious hearings.
While congress browbeats, investors are keenly aware that some of these companies are seriously overvalued. Tesla, for instance, is down 100 points in less than a month's time, exceeding a 25% decline. Facebook is off 50 points since July 25 and is likewise trading under bear market conditions, down nearly 24% over the last six weeks.
With the current round of tech profit-taking having a serious effect on investor confidence in the space, the staid stocks of the Dow gained slightly on the day, barely moving the needle. Elsewhere, stocks were roiled worldwide, as emerging market conditions continue to deteriorate.
The September swoon is gathering momentum and a more severe decline may be dead ahead for US stocks despite a booming economy and low unemployment. The main problems are rising interest rates and fundamental overvaluation issues.
Dow Jones Industrial Average September Scorecard:
At the Close, Wednesday, September 5, 2018:
Dow Jones Industrial Average: 25,974.99, +22.51 (+0.09%)
NASDAQ: 7,995.17, -96.07 (-1.19%)
S&P 500: 2,888.60, -8.12 (-0.28%)
NYSE Composite: 12,968.55, -1.31 (-0.01%)
It was enough to take seriously, and money flowed out of Netflix (NFLX) to the tune of a 22.42-point decline, off a whopping 6.17% at the close. Apple's stock barely budged, but in fact was down 1.49 (-0.65%).
A day after topping $1 trillion in market cap, Amazon (AMZN) shed 44 points to close at 1994.82, a solid two-percent decline.
Alphabet (GOOG), parent of Google was lower by 10.82 (-0.88%), and Tesla lost nearly three percent, closing at 280.74, reaching its lowest closing point since May 25.
Facebook lost nearly four points to finish the day at 167.18, a four-month low.
All of this trading occurred while tech executives were brought before congress to testify in a wide-ranging probe of the unregulated social media space. Facebook’s Sheryl Sandberg and Twitter’s Jack Dorsey faced congressional scrutiny before a select committee of senators and House representatives. It's political theater at its very best, with lawmakers preening and getting in good soundbites in the lead to the midterm elections in two months.
Wishing for nothing less than to regulate free speech on the internet, congress is unlikely to have much impact upon the operation of the social media behemoths. As private enterprises, these mammoth companies are free to do as they please, from banning users who upset their dilettante views to promoting largely socialist idealism.
While the hearings make for some useful political jabbing, the congress shows by its naive use of forums such as these that they are as much a part of the problem as the companies themselves. Since most politicians use social media platforms to promote their particular agendas, dragging big company executives to Capitol Hill is more red herring than serious hearings.
While congress browbeats, investors are keenly aware that some of these companies are seriously overvalued. Tesla, for instance, is down 100 points in less than a month's time, exceeding a 25% decline. Facebook is off 50 points since July 25 and is likewise trading under bear market conditions, down nearly 24% over the last six weeks.
With the current round of tech profit-taking having a serious effect on investor confidence in the space, the staid stocks of the Dow gained slightly on the day, barely moving the needle. Elsewhere, stocks were roiled worldwide, as emerging market conditions continue to deteriorate.
The September swoon is gathering momentum and a more severe decline may be dead ahead for US stocks despite a booming economy and low unemployment. The main problems are rising interest rates and fundamental overvaluation issues.
Dow Jones Industrial Average September Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 9/4/18 | 25,952.48 | -12.34 | -12.34 |
| 9/5/18 | 25,974.99 | +22.51 | +10.17 |
At the Close, Wednesday, September 5, 2018:
Dow Jones Industrial Average: 25,974.99, +22.51 (+0.09%)
NASDAQ: 7,995.17, -96.07 (-1.19%)
S&P 500: 2,888.60, -8.12 (-0.28%)
NYSE Composite: 12,968.55, -1.31 (-0.01%)
Sunday, August 19, 2018
Change of Sentiment; Something Bad In Tech-land
As of a week ago, the leading index was the NASDAQ, up more than 11 percent on the year, as opposed to the Dow Industrials, which had been lagging. Prior to this week, the Dow was up less than four percent and it was down for the year much of the time between February and early July.
Something snapped in the minds of investors this week. Maybe it was the high valuations on some of the more speculative stocks sporting the NASDAQ. Perhaps, in the search for yield, investors sought the safety of dividend producers on the Dow. Whatever the case, the Dow, this past week, was up 1.41%, while the NASDAQ shed 0.29%. It was a radical shift that appeared, magically, Wednesday morning, when the Dow was trading below 24,000.
In a matter of less than three trading session, the Dow tacked on a whopping 687 points, much of it at the open on Thursday, when the Dow popped higher and stayed well into the green the rest of the day.
Skeptics of the market will point to the radical rise on Wednesday and Thursday as proof of manipulation, or even - everybody's favorite word this season - collusion, by central banks and their ancillary brokers, to boost the share prices of the staid and steady heavy industrials. Such speculation cannot be bought off easily in this environment. It's apparent to just about everybody that the Federal Reserve and their counterparts in Japan, China, and the European Union will not stomach a severe downturn, at least not at this time. The bull market is just a few trading days from becoming the longest in American history, something the head honchos at the Fed wish to pin on their beanies before they ride triumphantly into some economic sunset.
The shifting sentiment was stunning, however. As the Dow soared, the NASDAQ soured. Many of the grand tech bonanza stocks like Netflix (NFLX) and Telsa (TSLA) were down hard for the week. Netflix dropped nearly 10%, from 345 per share to 316 at the close of business Friday. From its peak just a month ago (July 11), Netflix is down more than 100 points.
Tesla is another story altogether. The darling little electric engine that could is rapidly approaching bear territory, down to 305 at the close Friday from 379 on August 7, a span of just nine trading sessions.
Facebook, everybody's favorite ranting and raving lunatic asylum, is already in bear territory, dropping from a high of 217.50 on July 25, to a close of 173.80 Friday afternoon. That's precisely a 20.1% decline. Be sure to post to your friends, family, and anybody who gives a hoot, rat's behind, or beaver dam.
None dare call is collusion, so maybe collision is the correct word for what happened on Wall Street this week. It was nothing short of a collision of rational thinking and emotional yield-chasing.
Next week may be more or less intriguing, but after Labor Day, this market is going to become very interesting indeed.
Dow Jones Industrial Average August Scorecard:
At the Close, Friday, August 17, 2018:
Dow Jones Industrial Average: 25,669.32, +110.59 (+0.43%)
NASDAQ: 7,816.33, +9.81 (+0.13%)
S&P 500: 2,850.13, +9.44 (+0.33%)
NYSE Composite: 12,908.26, +66.98 (+0.52%)
For the Week:
Dow: +356.18 (+1.41%)
NASDAQ: -22.78 (-0.29%)
S&P 500: +16.85 (+0.59%)
NYSE Composite: +64.77 (+0.50%)
Something snapped in the minds of investors this week. Maybe it was the high valuations on some of the more speculative stocks sporting the NASDAQ. Perhaps, in the search for yield, investors sought the safety of dividend producers on the Dow. Whatever the case, the Dow, this past week, was up 1.41%, while the NASDAQ shed 0.29%. It was a radical shift that appeared, magically, Wednesday morning, when the Dow was trading below 24,000.
In a matter of less than three trading session, the Dow tacked on a whopping 687 points, much of it at the open on Thursday, when the Dow popped higher and stayed well into the green the rest of the day.
Skeptics of the market will point to the radical rise on Wednesday and Thursday as proof of manipulation, or even - everybody's favorite word this season - collusion, by central banks and their ancillary brokers, to boost the share prices of the staid and steady heavy industrials. Such speculation cannot be bought off easily in this environment. It's apparent to just about everybody that the Federal Reserve and their counterparts in Japan, China, and the European Union will not stomach a severe downturn, at least not at this time. The bull market is just a few trading days from becoming the longest in American history, something the head honchos at the Fed wish to pin on their beanies before they ride triumphantly into some economic sunset.
The shifting sentiment was stunning, however. As the Dow soared, the NASDAQ soured. Many of the grand tech bonanza stocks like Netflix (NFLX) and Telsa (TSLA) were down hard for the week. Netflix dropped nearly 10%, from 345 per share to 316 at the close of business Friday. From its peak just a month ago (July 11), Netflix is down more than 100 points.
Tesla is another story altogether. The darling little electric engine that could is rapidly approaching bear territory, down to 305 at the close Friday from 379 on August 7, a span of just nine trading sessions.
Facebook, everybody's favorite ranting and raving lunatic asylum, is already in bear territory, dropping from a high of 217.50 on July 25, to a close of 173.80 Friday afternoon. That's precisely a 20.1% decline. Be sure to post to your friends, family, and anybody who gives a hoot, rat's behind, or beaver dam.
None dare call is collusion, so maybe collision is the correct word for what happened on Wall Street this week. It was nothing short of a collision of rational thinking and emotional yield-chasing.
Next week may be more or less intriguing, but after Labor Day, this market is going to become very interesting indeed.
Dow Jones Industrial Average August Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 8/1/18 | 25,333.82 | -81.37 | -81.37 |
| 8/2/18 | 25,326.16 | -7.66 | -89.03 |
| 8/3/18 | 25,462.58 | +136.42 | +55.05 |
| 8/6/18 | 25,502.18 | +39.60 | +94.65 |
| 8/7/18 | 25,628.91 | +126.73 | +221.38 |
| 8/8/18 | 25,583.75 | -45.16 | +176.22 |
| 8/9/18 | 25,509.23 | -74.52 | +101.70 |
| 8/10/18 | 25,313.14 | -196.09 | -94.39 |
| 8/13/18 | 25,187.70 | -125.44 | -219.83 |
| 8/14/18 | 25,299.92 | +112.22 | -107.61 |
| 8/15/18 | 25,162.41 | -137.51 | -245.12 |
| 8/16/18 | 25,558.73 | +396.32 | +151.20 |
| 8/17/18 | 25,669.32 | +110.59 | +261.79 |
At the Close, Friday, August 17, 2018:
Dow Jones Industrial Average: 25,669.32, +110.59 (+0.43%)
NASDAQ: 7,816.33, +9.81 (+0.13%)
S&P 500: 2,850.13, +9.44 (+0.33%)
NYSE Composite: 12,908.26, +66.98 (+0.52%)
For the Week:
Dow: +356.18 (+1.41%)
NASDAQ: -22.78 (-0.29%)
S&P 500: +16.85 (+0.59%)
NYSE Composite: +64.77 (+0.50%)
Monday, June 25, 2018
Dow, NASDAQ Hammered As Investors Continue Flight, FAANGs Pounded; What a Mess!
How's this for a healthy economy?
Facebook (FB): 196.35, -5.39 (-2.67%)
Amazon (AMZN): 1,663.15, -52.52 (-3.06%)
Apple (AAPL): 182.17, -2.75 (-1.49%)
Netflix (NFLX): 384.48, -26.61 (-6.47%)
Google (Alphabet, GOOG): 1,124.81, -30.67 (-2.65%)
...and, for good measure,
Tesla (TSLA): 333.01, -0.62 (-0.19%)
Tesla gets special consideration because its demise will be swift, painful and awe-inspiring for a variety of reasons. First, the company is run by a person (Elon Musk) who is almost certainly bi-polar, meaning he's brilliant, but eventually a nut-case, like a Pee Wee Herman on steroids. Second, the company has mountains of debt which will not likely be serviced in an orderly manner. Third, the cars keep bursting into flames. Fourth, and possibly most important, the competition in the eVehicle category is fierce and will swallow up the upstart. Everybody from Porsche, to BMW, to Jaguar has invested heavily in battery powered vehicles and these companies have more expertise and money than little Tesla.
Telsa is one of those companies that is wildly overvalued and ripe for a fall. It was spared today because nobody has any nterest in selling it just yet. They're all along for the ride (pardon the pun). When the bugs start getting squashed on the windshield, so to speak, it will be epic. Tesla's EPS is a humorous (if you're not an investor) -13.97 per share. Yep, they're losing money on every car they sell, and they don't make it up on volume. This one's a definite long-term short.
As for the rest of the market, one can only assume that seasoned veterans of the investing business see what's ahead. Trade wars don't help, but they're certainly not the only cause. Stock buybacks will prove to be disastrous once the price drops become permanent (soon, within months or weeks). The FAANGs in particular have been responsible for up to 75% of the recent gains on the NASDAQ, and they're based on nothing more than herd behavior. The stocks were hot, everybody got in. When everybody tries to get out, days like today are the result. Expect more of them over the next 3-5 months.
Lest one needs reminding, the Dow confirmed bear market conditions on April 9, and that HAS NOT CHANGED. Nor will it. Stocks will continue to be out of favor for the foreseeable future. Selected, mostly-defensive stocks will fare better than the recent high-flyers, but most money managers who can are turning aggressively to cash because they see no way out of an end-of-cycle bust scenario.
The market decline, top to bottom, could take another 12 to 18 months, having begun in February of this year and we haven't even hit recession yet, which is likely to occur in the fourth quarter of this year or the Q1 2019, though a third quarter negative read is not yet off the table, though unlikely.
The initial panic phase caused by the February correction on the Dow was only the beginning. The Dow is closing in on a second correction at 23,954. It will have to fall below 21,292 to be officially called a bear market (-20%), but by then, it's probably too late for many, who will be forced to take the ride down to wherever it finally rests. Anybody paying attention has already been on alert and hopefully divesting with profits.
While the next market bear bottom will be substantially lower than where it is today, it is unlikely to be the end of the world, though to many, it will seem like it. The current phase is slower and more grinding, such as witnessed over the past two weeks. The Dow has only seen one close to the upside in the last 10 sessions, and this was the largest decline since May 29 (-391.64), though there have been more than enough triple-digit declines and gains in the interim and surely more to come.
Today's drop on the Dow wiped out all of June's gains and is within 140 points of flushing the gains from April (+50) and May (+252), which would make the second quarter a loser, just like the first, although, with nothing to backstop markets here, still be not equal than the losses experienced in the first quarter. There's only four more trading days left in the quarter and the scramble is underway to shed losers and find safe havens.
Good luck with that.
Next stop for the Dow, on the downside, is somewhere between 22,700 and 23,300. It should get a bounce of maybe 400-600 points from there, but the trend is surely to the downside for the near and long term.
The treasury yield curve flattened just a touch on the day, with two particularly interesting flavors. The 5s-10s spread is now a measly 12 basis points (2.75%, 2.87%). That's not much of a premium on the benchmark 10-year note over the five. Why wait an additional five years to get your money back at basically the same rate? The 10s-30s spread is only 16 bips (3.02%). That's flat. As a pancake. If the 5s-10s invert, all hell breaks loose, and it's not out of the question that it could happen, soon, possibly within weeks.
Anybody holding gold or silver should be selling if not altogether out by now. The PMs have been a poor choice since 2012, but the silver lining is that they will be even cheaper in coming months. The metals, through the magic of rampant manipulation by central banks, are mirroring stocks presently, and, as they did during the GFC of 2008-09, will be ripped lower on redemptions and hustles for cash, but will likely be the first to recover.
It's advisable to sell out of PMs now and buy them back at a lower price come later this year. Gold may hit $950, and silver $13.50 before any bounce.
Invest wisely. Drink Kambucha. Drive a Porsche.
Dow Jones Industrial Average June Scorecard:
At the Close, Monday, June 25, 2018:
Dow Jones Industrial Average: 24,252.80, -328.09 (-1.33%)
NASDAQ: 7,532.01, -160.81 (-2.09%)
S&P 500: 2,717.07, -37.81 (-1.37%)
NYSE Composite: 12,481.60, -157.97 (-1.25%)
Facebook (FB): 196.35, -5.39 (-2.67%)
Amazon (AMZN): 1,663.15, -52.52 (-3.06%)
Apple (AAPL): 182.17, -2.75 (-1.49%)
Netflix (NFLX): 384.48, -26.61 (-6.47%)
Google (Alphabet, GOOG): 1,124.81, -30.67 (-2.65%)
...and, for good measure,
Tesla (TSLA): 333.01, -0.62 (-0.19%)
Tesla gets special consideration because its demise will be swift, painful and awe-inspiring for a variety of reasons. First, the company is run by a person (Elon Musk) who is almost certainly bi-polar, meaning he's brilliant, but eventually a nut-case, like a Pee Wee Herman on steroids. Second, the company has mountains of debt which will not likely be serviced in an orderly manner. Third, the cars keep bursting into flames. Fourth, and possibly most important, the competition in the eVehicle category is fierce and will swallow up the upstart. Everybody from Porsche, to BMW, to Jaguar has invested heavily in battery powered vehicles and these companies have more expertise and money than little Tesla.
Telsa is one of those companies that is wildly overvalued and ripe for a fall. It was spared today because nobody has any nterest in selling it just yet. They're all along for the ride (pardon the pun). When the bugs start getting squashed on the windshield, so to speak, it will be epic. Tesla's EPS is a humorous (if you're not an investor) -13.97 per share. Yep, they're losing money on every car they sell, and they don't make it up on volume. This one's a definite long-term short.
As for the rest of the market, one can only assume that seasoned veterans of the investing business see what's ahead. Trade wars don't help, but they're certainly not the only cause. Stock buybacks will prove to be disastrous once the price drops become permanent (soon, within months or weeks). The FAANGs in particular have been responsible for up to 75% of the recent gains on the NASDAQ, and they're based on nothing more than herd behavior. The stocks were hot, everybody got in. When everybody tries to get out, days like today are the result. Expect more of them over the next 3-5 months.
Lest one needs reminding, the Dow confirmed bear market conditions on April 9, and that HAS NOT CHANGED. Nor will it. Stocks will continue to be out of favor for the foreseeable future. Selected, mostly-defensive stocks will fare better than the recent high-flyers, but most money managers who can are turning aggressively to cash because they see no way out of an end-of-cycle bust scenario.
The market decline, top to bottom, could take another 12 to 18 months, having begun in February of this year and we haven't even hit recession yet, which is likely to occur in the fourth quarter of this year or the Q1 2019, though a third quarter negative read is not yet off the table, though unlikely.
The initial panic phase caused by the February correction on the Dow was only the beginning. The Dow is closing in on a second correction at 23,954. It will have to fall below 21,292 to be officially called a bear market (-20%), but by then, it's probably too late for many, who will be forced to take the ride down to wherever it finally rests. Anybody paying attention has already been on alert and hopefully divesting with profits.
While the next market bear bottom will be substantially lower than where it is today, it is unlikely to be the end of the world, though to many, it will seem like it. The current phase is slower and more grinding, such as witnessed over the past two weeks. The Dow has only seen one close to the upside in the last 10 sessions, and this was the largest decline since May 29 (-391.64), though there have been more than enough triple-digit declines and gains in the interim and surely more to come.
Today's drop on the Dow wiped out all of June's gains and is within 140 points of flushing the gains from April (+50) and May (+252), which would make the second quarter a loser, just like the first, although, with nothing to backstop markets here, still be not equal than the losses experienced in the first quarter. There's only four more trading days left in the quarter and the scramble is underway to shed losers and find safe havens.
Good luck with that.
Next stop for the Dow, on the downside, is somewhere between 22,700 and 23,300. It should get a bounce of maybe 400-600 points from there, but the trend is surely to the downside for the near and long term.
The treasury yield curve flattened just a touch on the day, with two particularly interesting flavors. The 5s-10s spread is now a measly 12 basis points (2.75%, 2.87%). That's not much of a premium on the benchmark 10-year note over the five. Why wait an additional five years to get your money back at basically the same rate? The 10s-30s spread is only 16 bips (3.02%). That's flat. As a pancake. If the 5s-10s invert, all hell breaks loose, and it's not out of the question that it could happen, soon, possibly within weeks.
Anybody holding gold or silver should be selling if not altogether out by now. The PMs have been a poor choice since 2012, but the silver lining is that they will be even cheaper in coming months. The metals, through the magic of rampant manipulation by central banks, are mirroring stocks presently, and, as they did during the GFC of 2008-09, will be ripped lower on redemptions and hustles for cash, but will likely be the first to recover.
It's advisable to sell out of PMs now and buy them back at a lower price come later this year. Gold may hit $950, and silver $13.50 before any bounce.
Invest wisely. Drink Kambucha. Drive a Porsche.
Dow Jones Industrial Average June Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 6/1/18 | 24,635.21 | +219.37 | +219.37 |
| 6/4/18 | 24,813.69 | +178.48 | +397.85 |
| 6/5/18 | 24,799.98 | -13.71 | +384.14 |
| 6/6/18 | 25,146.39 | +346.41 | +730.55 |
| 6/7/18 | 25,241.41 | +95.02 | +825.57 |
| 6/8/18 | 25,316.53 | +75.12 | +900.69 |
| 6/11/18 | 25,322.31 | +5.78 | +906.47 |
| 6/12/18 | 25,320.73 | -1.58 | +904.89 |
| 6/13/18 | 25,201.20 | -119.53 | +785.36 |
| 6/14/18 | 25,175.31 | -25.89 | +759.47 |
| 6/15/18 | 25,090.48 | -84.83 | +674.64 |
| 6/18/18 | 24,987.47 | -103.01 | +571.63 |
| 6/19/18 | 24,700.21 | -287.26 | +284.37 |
| 6/20/18 | 24,657.80 | -42.41 | +241.96 |
| 6/21/18 | 24,461.70 | -196.10 | +45.86 |
| 6/22/18 | 24,580.89 | +119.19 | +165.05 |
| 6/25/18 | 24,252.80 | -328.09 | -163.04 |
At the Close, Monday, June 25, 2018:
Dow Jones Industrial Average: 24,252.80, -328.09 (-1.33%)
NASDAQ: 7,532.01, -160.81 (-2.09%)
S&P 500: 2,717.07, -37.81 (-1.37%)
NYSE Composite: 12,481.60, -157.97 (-1.25%)
Tuesday, December 5, 2017
FAANGs, NASDAQ Under Assault as Investors Book Profits
Profit-taking in tech stocks continued on Monday as high-flying, high-p/e companies known affectionately as the FAANGs (Facebook, Apple, Amazon, Netflix, and Google) were subjected to relentless, high-volume selling.
For the record, here's how these tech darlings fared on Monday:
Facebook (FB) 171.47, -3.63 (-2.07%)
Apple (AAPL) 169.80, -1.25 (-0.73%)
Amazon (AMZN) 1,133.95, -28.40 (-2.44%)
Netflix (NFLX) 184.04, -2.78 (-1.49%)
Alphabet (Google, GOOG) 998.68, -11.49 (-1.14%)
General holders of these stocks are not yet alarmed over the losses which began a week ago, following the last-gasp ramping over Black Friday and Cyber Monday, because the companies have been among the best performers since January.
What is apparent is that investors are taking profits made in these stocks - none of which, other than Apple, offers dividends - and investing largely in Dow companies, all of which provide dividends to shareholders.
There's nothing unusual about what analysts typically call "sector rotation," except that the movement is quite pronounced. The S&P and Dow have outperformed the NASDAQ for six straight sessions.
With the markets less than two hours from the opening bell on Tuesday, futures are diverging wildly, with Dow futures up in the range of 130 points, while NASDAQ futures are falling by 90 points or greater.
At the Close, Monday, December 4, 2017:
Dow: 24,290.05, +58.46 (+0.24%)
NASDAQ: 6,775.37, -72.22 (-1.05%)
S&P 500: 2,639.44, -2.78 (-0.11%)
NYSE Composite: 12,634.89, +20.33 (+0.16%)
For the record, here's how these tech darlings fared on Monday:
Facebook (FB) 171.47, -3.63 (-2.07%)
Apple (AAPL) 169.80, -1.25 (-0.73%)
Amazon (AMZN) 1,133.95, -28.40 (-2.44%)
Netflix (NFLX) 184.04, -2.78 (-1.49%)
Alphabet (Google, GOOG) 998.68, -11.49 (-1.14%)
General holders of these stocks are not yet alarmed over the losses which began a week ago, following the last-gasp ramping over Black Friday and Cyber Monday, because the companies have been among the best performers since January.
What is apparent is that investors are taking profits made in these stocks - none of which, other than Apple, offers dividends - and investing largely in Dow companies, all of which provide dividends to shareholders.
There's nothing unusual about what analysts typically call "sector rotation," except that the movement is quite pronounced. The S&P and Dow have outperformed the NASDAQ for six straight sessions.
With the markets less than two hours from the opening bell on Tuesday, futures are diverging wildly, with Dow futures up in the range of 130 points, while NASDAQ futures are falling by 90 points or greater.
At the Close, Monday, December 4, 2017:
Dow: 24,290.05, +58.46 (+0.24%)
NASDAQ: 6,775.37, -72.22 (-1.05%)
S&P 500: 2,639.44, -2.78 (-0.11%)
NYSE Composite: 12,634.89, +20.33 (+0.16%)
Monday, December 4, 2017
Dow Posts Best Week Of Year; NASDAQ Falls
Confused?
In what was the best performance week of the year for the Dow (a nearly three percent gain), the NASDAQ lost more than one half percent.
The math is fairly simple. Outside of Apple (AAPL), which is a component of Dow 30 stock, the FAANGs (Facebook, Apple, Amazon, Netflix and Google) all got beaten down.
Facebook (FB) lost 1.78%.
Netflix (NFLX) was down 0.41%.
Amazon (AMZN) fell 1.44%, and Google (GOOG) dropped 1.10%. Additionally, another of the high-fliers, Tesla (TSLA) shed 0.75%.
Those stocks make up a mammoth portion of the total volume on the NASDAQ, thus nullifying any gains by all other stocks on the index.
Fear not, however, holders of high P/E paper, because since the Senate tax legislation was cleared Saturday morning by a narrow margin, all is well in the land of the free. Monday morning futures are pointing to a moon shot open.
For the Week Ending December 1, 2017:
Dow: +673.60 (+2.86%)
NASDAQ: -41.57 (-0.60%)
S&P 500: +39.80 (+1.53%)
NYSE Composite: +192.63 (+1.55%)
In what was the best performance week of the year for the Dow (a nearly three percent gain), the NASDAQ lost more than one half percent.
The math is fairly simple. Outside of Apple (AAPL), which is a component of Dow 30 stock, the FAANGs (Facebook, Apple, Amazon, Netflix and Google) all got beaten down.
Facebook (FB) lost 1.78%.
Netflix (NFLX) was down 0.41%.
Amazon (AMZN) fell 1.44%, and Google (GOOG) dropped 1.10%. Additionally, another of the high-fliers, Tesla (TSLA) shed 0.75%.
Those stocks make up a mammoth portion of the total volume on the NASDAQ, thus nullifying any gains by all other stocks on the index.
Fear not, however, holders of high P/E paper, because since the Senate tax legislation was cleared Saturday morning by a narrow margin, all is well in the land of the free. Monday morning futures are pointing to a moon shot open.
For the Week Ending December 1, 2017:
Dow: +673.60 (+2.86%)
NASDAQ: -41.57 (-0.60%)
S&P 500: +39.80 (+1.53%)
NYSE Composite: +192.63 (+1.55%)
Monday, June 12, 2017
What Happened Friday? A Shaky Trend Is Developing
Strangely enough, the skyrocketing NASDAQ took a serve turn for the worse on Friday, dropping a massive 113 points at the same time the Dow was setting a new record with an 89-point gain and the NYSE Composite tacked on 65 points.
What drove the NASDAQ to its knees on Friday were the stocks known as FAANGs - Facebook, Apple, Amazon, Netflix, and Google - taking hits to their massively-overvalued share prices.
Here's the ugly reality
Facebook (FB) -5.11 (-3.30%); Apple (AAPL) -6.01 (-3.88%); Amazon (AMZN) -31.96 (-3.16%); Netflix (NFLX) -7.85 (-4.73%); Alphabet (parent of Google) (GOOG) -33.58 (-3.41%).
One-day, three-to-five-percent declines in any equity is usually a big deal. Having all of these institutionally-widely held stocks take a nosedive like that on a single day is a large, red, flashing warning sign that something is fundamentally wrong with the market, the economy, maybe even the world.
These shares weren't dumped all at once because somebody was taking profits. Volume was three times normal. Everybody was booking gains, and probably with good reason. The price/earning ratios for these tech darlings are unsustainable. Netflix leads the way with a P/E of 204, followed by Amazon, at 184, according to Yahoo Finance. Google seems modest by comparison, at 32. Facebook is 38, and Apple looks downright cheap with a P/E around 17.
So, only two of these stocks are wickedly overpriced, using standard metrics, but they all suffer some similar characteristics: They are all tech companies, based on the West coast, run by billionaire founders (excepting Apple, though Tim Cook was surely an heir apparent to Steve Jobs). The only other company that comes to mind with these characteristics is Microsoft (MSFT). The company founded by Bill Gates took a pretty good hit on Friday, down 1.63 (-2.27%).
Does this suggest that the "big one" is about to shake out the left coast, battering California from LA to San Jose with aftershocks up the coast to Seattle? And just how would anybody know that? OK, that theory falls into the category of tin-foil hat conspiracy theory, but, if Cali shakes, rattles and rolls someday soon, Money Daily will take credit for calling it (that's a joke, son).
Outside of Friday's tumult, general economic data has not been encouraging. First quarter GDP was 1.2% (second estimate), which is pretty close to stall speed. The US - and largely the global - economy has been anything but robust since the Great Financial Crisis (GFC) of 2008-09. Captains of finance at places like the World Bank, the Fed, ECB, and elsewhere have been touting "recovery" for eight years, wherein none, in fact, has occurred, unless one peers only at stock charts all day. While stocks have soared on easy money accommodation, he same cannot be said of Main Street's outlook. Retail stores are closing everywhere in America, small business has already been dumped into the trash bin of history, and new company creation has hit a 27-year low. Additionally, the Fed is hell-bent on raising rates for the second time this year when the FOMC meets on Tuesday and Wednesday of this week.
What's troubling about the fall of the FAANGs is that these companies have largely benefitted off the backs of consumers, monopolizing markets and cannibalizing profits to the C-suite executives. Now, the largest shareholders - pension, mutual, and hedge funds - may be taking their money elsewhere, either to cash, bonds, or, maybe just to more stolid, established, dividend-paying stocks. It's tough to know, groupthink among the elites being difficult to gauge or define.
Whatever the case, with the smallish losses on the Dow and S&P earlier in the week followed by a fallout in the most speculative stocks establishes a trend, which, for now, we can only identify as "shaky."
With most stocks and indices hovering near all-time highs, shaky is not a word one would normally associate with risk-taking. The time to run is when the avalanche is first seen at the top of the mountain, not when it barrels into the lodge.
At the Close, 6/9/17:
Dow: 21,271.97, +89.44 (0.42%)
NASDAQ 6,207.92, -113.85 (-1.80%)
S&P 500 2,431.77, -2.02 (-0.08%)
NYSE Composite: 11,744.73, +65.78 (0.56%)
For the Week:
Dow: +65.68 (0.31%)
NASDAQ: -97.88 (-1.55%)
S&P 500: -7.30 (-0.30%)
NYSE Composite: +26.03 (0.22%)
What drove the NASDAQ to its knees on Friday were the stocks known as FAANGs - Facebook, Apple, Amazon, Netflix, and Google - taking hits to their massively-overvalued share prices.
Here's the ugly reality
Facebook (FB) -5.11 (-3.30%); Apple (AAPL) -6.01 (-3.88%); Amazon (AMZN) -31.96 (-3.16%); Netflix (NFLX) -7.85 (-4.73%); Alphabet (parent of Google) (GOOG) -33.58 (-3.41%).
One-day, three-to-five-percent declines in any equity is usually a big deal. Having all of these institutionally-widely held stocks take a nosedive like that on a single day is a large, red, flashing warning sign that something is fundamentally wrong with the market, the economy, maybe even the world.
These shares weren't dumped all at once because somebody was taking profits. Volume was three times normal. Everybody was booking gains, and probably with good reason. The price/earning ratios for these tech darlings are unsustainable. Netflix leads the way with a P/E of 204, followed by Amazon, at 184, according to Yahoo Finance. Google seems modest by comparison, at 32. Facebook is 38, and Apple looks downright cheap with a P/E around 17.
So, only two of these stocks are wickedly overpriced, using standard metrics, but they all suffer some similar characteristics: They are all tech companies, based on the West coast, run by billionaire founders (excepting Apple, though Tim Cook was surely an heir apparent to Steve Jobs). The only other company that comes to mind with these characteristics is Microsoft (MSFT). The company founded by Bill Gates took a pretty good hit on Friday, down 1.63 (-2.27%).
Does this suggest that the "big one" is about to shake out the left coast, battering California from LA to San Jose with aftershocks up the coast to Seattle? And just how would anybody know that? OK, that theory falls into the category of tin-foil hat conspiracy theory, but, if Cali shakes, rattles and rolls someday soon, Money Daily will take credit for calling it (that's a joke, son).
Outside of Friday's tumult, general economic data has not been encouraging. First quarter GDP was 1.2% (second estimate), which is pretty close to stall speed. The US - and largely the global - economy has been anything but robust since the Great Financial Crisis (GFC) of 2008-09. Captains of finance at places like the World Bank, the Fed, ECB, and elsewhere have been touting "recovery" for eight years, wherein none, in fact, has occurred, unless one peers only at stock charts all day. While stocks have soared on easy money accommodation, he same cannot be said of Main Street's outlook. Retail stores are closing everywhere in America, small business has already been dumped into the trash bin of history, and new company creation has hit a 27-year low. Additionally, the Fed is hell-bent on raising rates for the second time this year when the FOMC meets on Tuesday and Wednesday of this week.
What's troubling about the fall of the FAANGs is that these companies have largely benefitted off the backs of consumers, monopolizing markets and cannibalizing profits to the C-suite executives. Now, the largest shareholders - pension, mutual, and hedge funds - may be taking their money elsewhere, either to cash, bonds, or, maybe just to more stolid, established, dividend-paying stocks. It's tough to know, groupthink among the elites being difficult to gauge or define.
Whatever the case, with the smallish losses on the Dow and S&P earlier in the week followed by a fallout in the most speculative stocks establishes a trend, which, for now, we can only identify as "shaky."
With most stocks and indices hovering near all-time highs, shaky is not a word one would normally associate with risk-taking. The time to run is when the avalanche is first seen at the top of the mountain, not when it barrels into the lodge.
At the Close, 6/9/17:
Dow: 21,271.97, +89.44 (0.42%)
NASDAQ 6,207.92, -113.85 (-1.80%)
S&P 500 2,431.77, -2.02 (-0.08%)
NYSE Composite: 11,744.73, +65.78 (0.56%)
For the Week:
Dow: +65.68 (0.31%)
NASDAQ: -97.88 (-1.55%)
S&P 500: -7.30 (-0.30%)
NYSE Composite: +26.03 (0.22%)
Thursday, January 14, 2016
Rally Falls Short in Final Hour; NASDAQ Still Down for the Week; Investors Not Biting on FANGs
Of the hardest hit stocks, many of them, including some of the tech all-stars, such as Facebook (FB), Amazon.com (AMZN), Netflix (NFLX), and Alphabet (Google, GOOG), otherwise known as the FANGs have been mercilessly sold off since December, and, likely, for good reason.
Overall, their price-earnings ratios are stratospheric, they don't actually make anything, Amazon, in particular, rarely turns a profit, and they don't offer dividends, only appreciation in stock price as their sole saving grace.
Take away the increasing stock price and what have you got? Losses as far as the eye can see, and traders have recently shied and run away from these four horsemen of the internet.
The big winner today was Facebook, which gained nearly three percent, but is still down close to 10% overall. The others didn't fare quite so well. Amazon gained close to 2%, though it is still down over 12% since December 30. Netflix added back just 0.5%, and is down close to 20% since highs made the first week of December. Google, the best of the bunch, with regular profits and solid earnings quarter after quarter, gained 2% and is only down about 8% since after Christmas.
Fourth quarter earnings are coming due for the bunch of them, and market participants will be eager to note any difficulties experienced during the holiday period, though Amazon could surprise, as more and more people flocked to the web for holiday shopping in the past year.
Otherwise, it was a hopeful day on Wall Street, though the massive rally sparked by St. Louis Fed governor James Bullard's comments that the low price of oil was an impediment to the Fed's 2% inflation target, and thus, the Fed may "rethink" its interest rate hike policy for 2016.
While lower oil - and consequently gas - prices are good for everyone except possibly the oil companies and the Fed, Bullard's jawboning served to send the markets soaring on the day, wiping out much of Wednesday's steep losses.
However, the rally fell short in the final hour, as traders exhausted their buying optimism.
Not much should be made from today's trade. Stocks are still moribund and stuck well below all-time highs. The hope of making back the losses of the past two weeks is slim, and anyone thinking the indices will retrace all the way back to all-time highs made in May 2015 is whistling past the grave.
Unless earnings for the fourth quarter are utterly surprising to the upside, expect the pattern of wild swings to continue. Global markets are still in trouble, as is the worldwide currency crisis, reaching from Japan to China, Australia, Europe and even to Canada, where the looney has lost significantly to the dollar due to the downturn in the price of oil.
It's indeed unfortunate that so many keys of economics are locked to the price of oil, because, by most measures, the price is going to stay low or lower for an extended period of time, pushing all other prices down with it. At the apex of the deflationary spiral, oil, which powers more than just machines, pushes down prices for virtually all products, from manufactured to agricultural.
The rally today erased the loss for the week on the Dow, left the S&P virtually unchanged, and the NASDAQ with a 26-point loss. Friday will determine whether the week ends with a positive or negative tone.
The day's action:
S&P 500: 1,921.84, +31.56 (1.67%)
Dow: 16,379.05, +227.64 (1.41%)
NASDAQ: 4,615.00, +88.94 (1.97%)
Crude Oil 31.09 +2.00% Gold 1,077.20 -0.91% EUR/USD 1.0867 -0.14% 10-Yr Bond 2.0980 +1.55% Corn 358.25 +0.07% Copper 1.98 +1.12% Silver 13.85 -2.20% Natural Gas 2.14 -5.69% Russell 2000 1,025.67 +1.53% VIX 23.95 -5.04% BATS 1000 20,474.30 +1.64% GBP/USD 1.4412 -0.07% USD/JPY 118.0400 +0.34%
Overall, their price-earnings ratios are stratospheric, they don't actually make anything, Amazon, in particular, rarely turns a profit, and they don't offer dividends, only appreciation in stock price as their sole saving grace.
Take away the increasing stock price and what have you got? Losses as far as the eye can see, and traders have recently shied and run away from these four horsemen of the internet.
The big winner today was Facebook, which gained nearly three percent, but is still down close to 10% overall. The others didn't fare quite so well. Amazon gained close to 2%, though it is still down over 12% since December 30. Netflix added back just 0.5%, and is down close to 20% since highs made the first week of December. Google, the best of the bunch, with regular profits and solid earnings quarter after quarter, gained 2% and is only down about 8% since after Christmas.
Fourth quarter earnings are coming due for the bunch of them, and market participants will be eager to note any difficulties experienced during the holiday period, though Amazon could surprise, as more and more people flocked to the web for holiday shopping in the past year.
Otherwise, it was a hopeful day on Wall Street, though the massive rally sparked by St. Louis Fed governor James Bullard's comments that the low price of oil was an impediment to the Fed's 2% inflation target, and thus, the Fed may "rethink" its interest rate hike policy for 2016.
While lower oil - and consequently gas - prices are good for everyone except possibly the oil companies and the Fed, Bullard's jawboning served to send the markets soaring on the day, wiping out much of Wednesday's steep losses.
However, the rally fell short in the final hour, as traders exhausted their buying optimism.
Not much should be made from today's trade. Stocks are still moribund and stuck well below all-time highs. The hope of making back the losses of the past two weeks is slim, and anyone thinking the indices will retrace all the way back to all-time highs made in May 2015 is whistling past the grave.
Unless earnings for the fourth quarter are utterly surprising to the upside, expect the pattern of wild swings to continue. Global markets are still in trouble, as is the worldwide currency crisis, reaching from Japan to China, Australia, Europe and even to Canada, where the looney has lost significantly to the dollar due to the downturn in the price of oil.
It's indeed unfortunate that so many keys of economics are locked to the price of oil, because, by most measures, the price is going to stay low or lower for an extended period of time, pushing all other prices down with it. At the apex of the deflationary spiral, oil, which powers more than just machines, pushes down prices for virtually all products, from manufactured to agricultural.
The rally today erased the loss for the week on the Dow, left the S&P virtually unchanged, and the NASDAQ with a 26-point loss. Friday will determine whether the week ends with a positive or negative tone.
The day's action:
S&P 500: 1,921.84, +31.56 (1.67%)
Dow: 16,379.05, +227.64 (1.41%)
NASDAQ: 4,615.00, +88.94 (1.97%)
Crude Oil 31.09 +2.00% Gold 1,077.20 -0.91% EUR/USD 1.0867 -0.14% 10-Yr Bond 2.0980 +1.55% Corn 358.25 +0.07% Copper 1.98 +1.12% Silver 13.85 -2.20% Natural Gas 2.14 -5.69% Russell 2000 1,025.67 +1.53% VIX 23.95 -5.04% BATS 1000 20,474.30 +1.64% GBP/USD 1.4412 -0.07% USD/JPY 118.0400 +0.34%
Wednesday, January 22, 2014
Market Direction Is Decidedly Indecisive; Ebay, NetFlix Report, Soar
For the second straight session, the Dow was down while the S&P and NASDAQ sported small gains.
A bifurcated market is often one which is about to change direction, so, since the general direction has been up, up and up, a change would indicate, what, lower prices for stocks?
Bernanke, Yellen and company simply cannot have that, thus, like everything else since 2008, everything depends solely upon the whims of the central bank. So sad.
Aftre the bell, eBay announced 4Q earnings, which were decidedly upbeat, with revenues up 14% from a year ago, and earnings per share of 81 cents, a decisive beat. Additionally, the company announced a $5 billion stock buyback program and also received a proposal from meddling Carl Icahn, who wants to see PayPal split out and an independent company, a move which would make a good deal of sense, since PayPal is the company's main profit driver. Shares soared more than eight percent in after-hours trading.
Netflix also announced fourth-quarter earnings after the bell and absolutely blew out the estimates. The company earned $48 million, or 79 cents per share, during final three months of 2013, compared to $8 million, or 13 cents per share, at the same time in 2012.
Revenue rose 24 percent from the previous year to nearly $1.2 billion and the US subscriber base grew by 2.3 million in the quarter. The stock was up more than 17% in the after-hours.
Look for NASDAQ futures to be up about 25 points prior to Thursday's open.
DOW 16,373.34, -41.10 (-0.25%)
NASDAQ 4,243.00, +17.24 (+0.41%)
S&P 1,844.86, +1.06 (+0.06%)
10-Yr Note 99.02, -0.06 (-0.06%) Yield: 2.87%
NASDAQ Volume 1.88 Bil
NYSE Volume 3.36 Bil
Combined NYSE & NASDAQ Advance - Decline: 3467-2224
Combined NYSE & NASDAQ New highs - New lows: 424-43
WTI crude oil: 96.73, +1.76
Gold: 1,238.60, -3.20
Silver: 19.84, 0.031
Corn: 426.00, +1.25
A bifurcated market is often one which is about to change direction, so, since the general direction has been up, up and up, a change would indicate, what, lower prices for stocks?
Bernanke, Yellen and company simply cannot have that, thus, like everything else since 2008, everything depends solely upon the whims of the central bank. So sad.
Aftre the bell, eBay announced 4Q earnings, which were decidedly upbeat, with revenues up 14% from a year ago, and earnings per share of 81 cents, a decisive beat. Additionally, the company announced a $5 billion stock buyback program and also received a proposal from meddling Carl Icahn, who wants to see PayPal split out and an independent company, a move which would make a good deal of sense, since PayPal is the company's main profit driver. Shares soared more than eight percent in after-hours trading.
Netflix also announced fourth-quarter earnings after the bell and absolutely blew out the estimates. The company earned $48 million, or 79 cents per share, during final three months of 2013, compared to $8 million, or 13 cents per share, at the same time in 2012.
Revenue rose 24 percent from the previous year to nearly $1.2 billion and the US subscriber base grew by 2.3 million in the quarter. The stock was up more than 17% in the after-hours.
Look for NASDAQ futures to be up about 25 points prior to Thursday's open.
DOW 16,373.34, -41.10 (-0.25%)
NASDAQ 4,243.00, +17.24 (+0.41%)
S&P 1,844.86, +1.06 (+0.06%)
10-Yr Note 99.02, -0.06 (-0.06%) Yield: 2.87%
NASDAQ Volume 1.88 Bil
NYSE Volume 3.36 Bil
Combined NYSE & NASDAQ Advance - Decline: 3467-2224
Combined NYSE & NASDAQ New highs - New lows: 424-43
WTI crude oil: 96.73, +1.76
Gold: 1,238.60, -3.20
Silver: 19.84, 0.031
Corn: 426.00, +1.25
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