Good Saturday morning to all of you here on r/StockMarket. I hope everyone on this sub made out pretty nicely in the market this past week, and is ready for the new trading week ahead.
Here is everything you need to know to get you ready for the trading week beginning September 30th, 2019.
The third quarter was a dud for stocks, but the fourth quarter could be full of surprises - (Source)
The third quarter wraps up in the week ahead with stocks just slightly higher for the period, after a summer of zigzag moves.
The market faces some of the same challenges in the final quarter of the year, including Brexit, the trade war with China, sluggishness in the global economy and the impeachment inquiry into President Donald Trump. By mid-quarter, the U.S. presidential election will be just a year away, and it could become a factor that could start to trigger market volatility.
Stocks were lower in the past week, with the S&P 500 down 1%, finishing at 2,961.
For the year to date, the S&P 500 is up 18.1%, but in the third quarter, so far, it added just 0.7%. The S&P started the quarter at 2,752, went as high as 3,028 before falling back. It has chopped in a range down to about 2,860, and has repeatedly struggled to get back to its high.
"We think you stay within the range — 2,820 to 3,030," said Julian Emanuel, BTIG head equities and derivatives strategist. Emanuel's year-end target has been 3,000.
"We see new highs, whether they happen in the fourth quarter or in 2020, as a function of geopolitical developments. From our point of view, the developments of the last several weeks, particularly [Sen. Elizabeth] Warren rising in the polls, increases in our mind the probability you get some sort of deal with China," he said.
Analysts said there could be more volatility because of the efforts by House Democrats to impeach Trump. The investigation into the president has to do with his withholding of aid to Ukraine and whether it was tied to a request to get dirt on front running Democratic presidential candidate former Vice President Joe Biden and his son Hunter.
Warren, D-Mass., whose tax and other policies are viewed as unfriendly to markets, is catching up with Biden in the polls, and some strategists see her benefiting from any negative news on Hunter Biden's dealings with a Ukraine gas company. Emanuel said if Warren continues to gain, that may encourage China to move forward with a trade deal with Trump, for fear making a deal with Warren would be more difficult.
Besides political headlines, there is some key data coming out in the week ahead, including Friday's September employment report, and ISM and PMI manufacturing data on Tuesday. The economy is expected to have added 145,000 jobs, above the 130,000 last month, while the unemployment rate is expected to stay steady at 3.7%, according to Refinitiv.
"We expect another month of census-related hiring to push public sector payrolls higher and, as a result, we forecast only 120k increase in private sector payrolls," notes Michael Gapen, chief U.S. economist at Barclays. "Our forecast for private sector employment gains in September would represent some improvement relative to August, but our forecast overall remains consistent with our outlook for slower employment growth on the heels of deceleration in economic activity."
There are also a number of Fed speakers scheduled for next week, including New York Fed President John Williams; Cleveland Fed President Loretta Mester, and Boston Fed President Eric Rosengren.
Trade will remain a major topic for markets, as U.S. and Chinese negotiators get closer to Oct. 10 talks. Headlines Friday that the White House is considering blocking or limiting U.S. investments into China sent stocks lower, after optimism about the talks lifted them early in the day.
Emanuel said the fourth quarter may have a different tone from that of the third quarter, after the wild move lower in rates during August and early September. He expects bond yields have bottomed, and he favors some of the cyclical names, like financials and energy.
"The likelihood is long-term yields move higher, and you could see some form of switching out of bond exposure and into stock exposure. That type of embracing of the stock market is typical of final innings," for markets, he said.
Strategists said the impeachment efforts against Trump may ultimately not have a negative impact on stocks. Even if he is impeached by the House, the Senate would be expected to acquit him. Analysts liken the possible reaction to be more like when President Bill Clinton was impeached and acquitted by the Senate than when President Richard Nixon was facing impeachment proceedings. Nixon resigned before he was impeached.
Stocks gained 28% in the year after impeachment efforts began against Clinton, but lost 39% in the year after they were begun against Nixon.
Emanuel said the 2020 presidential election could also come into play this quarter, and Trump may take actions to boost the economy, such as finding a solution to the trade war with China. A resolution could give a boost to stocks.
"People are very nervous and in general reasonably well-hedged because they remember the fourth quarter of last year so well, and from our point of view, we don't necessarily see this trading range resolve itself any time soon," said Emanuel.
Markets will also be watching the Fed's repo operation Monday. The Fed has been conducting open market operations to assure there is enough cash in the short-term funding market, which was under stress at the start of last week. The Fed has calmed the market, but market pros are watching to see how much activity there is and whether rates rise. The final day of the month typically sees a surge in cash requirements, and on Monday, investors may require cash for the settlement of $113 billion in Treasury securities.
This past week saw the following moves in the S&P:
Major Indices for this past week:
Major Futures Markets as of Friday's close:
Economic Calendar for the Week Ahead:
Sector Performance WTD, MTD, YTD:
Percentage Changes for the Major Indices, WTD, MTD, QTD, YTD as of Friday's close:
S&P Sectors for the Past Week:
Major Indices Pullback/Correction Levels as of Friday's close:
Major Indices Rally Levels as of Friday's close:
Most Anticipated Earnings Releases for this week:
Here are the upcoming IPO's for this week:
Friday's Stock Analyst Upgrades & Downgrades:
October's First Trading Day Mixed Over Last 21 years
Based upon data in the soon to be available Stock Trader's Almanac for 2020 on page 88, the first trading day of October is DJIA's fourth weakest of all monthly first trading days since September 1997 based upon total DJIA points gained. June, August and September have been weaker. S&P 500 has been down 10 of the last 21 years on the first trading day of October. DJIA's record is slightly softer with 11 declines and NASDAQ's performance has been the worst of the group, down 12 times with an average loss of 0.36%.
Fruitful to Sell Rosh Hashanah
Happy Jewish New Year to you all! I took the above picture of pomegranates last year in Tel Aviv's Carmel Market during my adventure through Israel with my family in celebration of my eldest son's bar mitzvah.
As the High Holidays approach you may remember the old saying on the Street, "Sell Rosh Hashanah, Buy Yom Kippur." It gets tossed around every autumn when the "high holidays" are on the minds of traders as many of their Jewish colleagues take off to observe the Jewish New Year and Day of Atonement.
The basis for this, "Sell Rosh Hashanah, Buy Yom Kippur," pattern is that with many traders and investors busy with religious observance and family, positions are closed out and volume fades creating a buying vacuum. Even in the age of algorithmic, computer, and high frequency trading these seasonal patterns persist as humans still need to turn the machines on and off and feed them money or take it away – and these algorithms and trading programs are written by people so the human influence is still there.
Holiday seasonality around official market holidays is something we pay close attention to (page 88 Stock Trader's Almanac). Actual stats on the most observed Hebrew holidays have been compiled in the table here. We present the data back to 1971 and when the holiday falls on a weekend the prior market close is used. It's no coincidence that Rosh Hashanah and Yom Kippur fall in September and/or October, two dangerous and sometimes opportune months.
Perhaps it's Talmudic wisdom but, selling stocks before the eight-day span of the high holidays has avoided many declines, especially during uncertain times. While being long Yom Kippur to Passover has produced 59% more advances, half as many losses and average gains of 7.0%.
This year the high holidays commence on Sunday eve, September 29, and end October 9 with Yom Kippur right in time for Octoberphobia. The current news flow already has folks selling ahead of the Jewish High Holidays, setting up the market for further declines in notoriously volatile October.
What If September Is Up?
Well, when the worst month of the year is up, it's not so bad. October is slightly better when September is up. But Q4 and the rest of the year are generally more positive. In the tables below September is ranked by largest gain for DJIA and S&P 500 since 1949 and NASDAQ since 1971. Q4 remains about average, but full year gains are above average. So if September can eke out a gain then watch out for Octoberphobia, but fear not the full year.
Financials Hold on to Broad Gains in September
In spite of the relative weakness we have seen in equities over the last week, US stocks are still poised to finish off September and the entirety of Q3 in the black. While overall breadth among industries was more positive several days ago, there are still four sectors where every industry is still in the black on a month to date basis. As shown in the graphic below, all of the industries within the Energy, Financials, Real Estate, and Utilities sectors remain in the black for the month of September. To be fair, Energy and Real Estate each only have two industries in their respective sectors, so for these two sectors, it isn't quite as impressive. Within the Financials sector, though, all five are still up on the month while all three industries in the Utilities sector are also up MTD.
In the Energy sector, even with this month's gains of over 4%, both industries in the sector are poised to finish Q3 with a decline. Utilities have been big winners so far this quarter, but Electric Utilities have been the clear leader with an eye-popping gain of 10.2% this quarter.
Looking for Action? S&P 1500 Most Volatile Stocks
For traders with a short-term time horizon who are looking for big moves, we have updated our list of the S&P 1500 stocks trading above $10 that have the largest intraday high-low ranges (based on the average percent spread between the intraday high and low over the last 50 days). The stocks are grouped based on whether they have a rising or falling 50-day moving average (DMA).
While the VIX remains relatively low, in recent months we have started to see some big moves in individual stocks and that can be seen in the fact that a number of stocks in the table below currently have average intraday ranges of more than 5%. The most volatile stock in the S&P 1500 is Lennox International (LII), which has had an average intraday high-low range of 9.5% over the last 50 trading days. Granted, it's only an $11 stock, so the 9.5% average range works out to just about a dollar per day, but it is still volatile nonetheless. Behind LII, there are another three stocks with average daily moves of over 8%, but here again, they are all relatively low priced stocks trading at less than $20 per share. The highest-priced stock on the current list is Innovative Industrial Properties (IIPR). With a share price of $91 and an average daily move of over 5%, IIPR typically sees an intraday swing of over $5. That's a trader's dream if you trade it right, but a nightmare if you get it wrong!
In terms of sector representation on this month's list, Consumer Discretionary is the most prevalent with 17 different stocks. Behind Discretionary, the next closest sector is Energy at eleven. Finally, with regards to the breakdown between stocks with rising and falling moving averages, there are modestly more stocks with falling moving averages (29) than rising moving averages (21), suggesting some underlying weakness even with the broader S&P 500 trading not far from new highs.
Manufacturing: Doing Okay or In Collapse? It Depends Who You Ask.
Last night in The Closer, we discussed the huge divergence between regional Fed manufacturing activity indices and the ISM Manufacturing Index. In the chart below, we've created a proxy for the ISM Manufacturing Index by averaging sub-indices from various regional Fed manufacturing surveys. The result is generally well-correlated to ISM, but over the last few months the two have diverged wildly. While the Five Fed indices from the New York, Philadelphia, and Richmond Fed districts would indicate an ISM reading in the mid-50s, the actual readings have been deteriorating dramatically. Of course, these three Fed districts are a relatively small snapshot of the overall national economy, but collectively their sample size is similar to the ISM's. It's hard to say which is "right", but the huge divergence is certainly noteworthy.
STOCK MARKET VIDEO: Stock Market Analysis Video for Week Ending September 27th, 2019
([CLICK HERE FOR THE YOUTUBE VIDEO!]())
(VIDEO NOT YET POSTED!)
STOCK MARKET VIDEO: ShadowTrader Video Weekly 09.29.19
Here are the most notable companies (tickers) reporting earnings in this upcoming trading week ahead-
- $COST
- $SFIX
- $THO
- $PEP
- $PAYX
- $STZ
- $MKC
- $UNFI
- $RPM
- $BBBY
- $LEN
- $CALM
- $ASNA
- $LW
- $AYI
- $AMRS
- $ANGO
- $SGH
- $LNDC
- $RECN
- $NG
Below are some of the notable companies coming out with earnings releases this upcoming trading week ahead which includes the date/time of release & consensus estimates courtesy of Earnings Whispers:
Monday 9.30.19 Before Market Open:
Monday 9.30.19 After Market Close:
([CLICK HERE FOR MONDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!]())
NONE.
Tuesday 10.1.19 Before Market Open:
Tuesday 10.1.19 After Market Close:
Wednesday 10.2.19 Before Market Open:
Wednesday 10.2.19 After Market Close:
Thursday 10.3.19 Before Market Open:
Thursday 10.3.19 After Market Close:
Friday 10.4.19 Before Market Open:
([CLICK HERE FOR FRIDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!]())
NONE.
Friday 10.4.19 After Market Close:
([CLICK HERE FOR FRIDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!]())
NONE.
Costco Wholesale Corp. $285.95
Costco Wholesale Corp. (COST) is confirmed to report earnings at approximately 4:15 PM ET on Thursday, October 3, 2019. The consensus earnings estimate is $2.54 per share on revenue of $47.26 billion and the Earnings Whisper ® number is $2.53 per share. Investor sentiment going into the company's earnings release has 86% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 7.63% with revenue increasing by 6.42%. Short interest has increased by 2.3% since the company's last earnings release while the stock has drifted higher by 19.7% from its open following the earnings release to be 16.3% above its 200 day moving average of $245.88. Overall earnings estimates have been revised higher since the company's last earnings release. On Thursday, September 26, 2019 there was some notable buying of 2,274 contracts of the $312.50 call expiring on Friday, October 18, 2019. Option traders are pricing in a 4.7% move on earnings and the stock has averaged a 3.6% move in recent quarters.
Stitch Fix, Inc. $18.34
Stitch Fix, Inc. (SFIX) is confirmed to report earnings at approximately 4:05 PM ET on Tuesday, October 1, 2019. The consensus earnings estimate is $0.04 per share on revenue of $432.10 million and the Earnings Whisper ® number is $0.06 per share. Investor sentiment going into the company's earnings release has 87% expecting an earnings beat The company's guidance was for revenue of $425.00 million to $435.00 million. Consensus estimates are for earnings to decline year-over-year by 76.47% with revenue increasing by 35.75%. Short interest has increased by 89.0% since the company's last earnings release while the stock has drifted lower by 37.3% from its open following the earnings release to be 25.8% below its 200 day moving average of $24.72. Overall earnings estimates have been revised higher since the company's last earnings release. On Wednesday, September 11, 2019 there was some notable buying of 4,187 contracts of the $25.00 call and 4,010 contracts of the $25.00 put expiring on Friday, October 18, 2019. Option traders are pricing in a 22.4% move on earnings and the stock has averaged a 17.6% move in recent quarters.
Thor Industries, Inc. $48.92
Thor Industries, Inc. (THO) is confirmed to report earnings at approximately 6:30 AM ET on Monday, September 30, 2019. The consensus earnings estimate is $1.48 per share on revenue of $2.36 billion and the Earnings Whisper ® number is $1.43 per share. Investor sentiment going into the company's earnings release has 51% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 15.43% with revenue increasing by 25.93%. Short interest has increased by 80.4% since the company's last earnings release while the stock has drifted lower by 15.1% from its open following the earnings release to be 15.7% below its 200 day moving average of $58.04. Overall earnings estimates have been revised lower since the company's last earnings release. On Tuesday, September 24, 2019 there was some notable buying of 879 contracts of the $50.00 put expiring on Friday, October 18, 2019. Option traders are pricing in a 13.3% move on earnings and the stock has averaged a 5.3% move in recent quarters.
PepsiCo, Inc. $135.60
PepsiCo, Inc. (PEP) is confirmed to report earnings at approximately 6:00 AM ET on Thursday, October 3, 2019. The consensus earnings estimate is $1.50 per share on revenue of $16.97 billion and the Earnings Whisper ® number is $1.53 per share. Investor sentiment going into the company's earnings release has 62% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 5.66% with revenue increasing by 2.94%. Short interest has decreased by 13.5% since the company's last earnings release while the stock has drifted higher by 2.0% from its open following the earnings release to be 9.6% above its 200 day moving average of $123.69. Overall earnings estimates have been revised lower since the company's last earnings release. On Wednesday, September 11, 2019 there was some notable buying of 897 contracts of the $135.00 put expiring on Friday, October 18, 2019. Option traders are pricing in a 2.8% move on earnings and the stock has averaged a 2.7% move in recent quarters.
Paychex, Inc. $81.52
Paychex, Inc. (PAYX) is confirmed to report earnings at approximately 8:30 AM ET on Wednesday, October 2, 2019. The consensus earnings estimate is $0.69 per share on revenue of $990.93 million and the Earnings Whisper ® number is $0.70 per share. Investor sentiment going into the company's earnings release has 68% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 2.99% with revenue increasing by 14.85%. Short interest has increased by 3.4% since the company's last earnings release while the stock has drifted lower by 3.0% from its open following the earnings release to be 3.1% above its 200 day moving average of $79.07. Overall earnings estimates have been revised lower since the company's last earnings release. On Wednesday, September 4, 2019 there was some notable buying of 731 contracts of the $87.50 call expiring on Friday, March 20, 2020. Option traders are pricing in a 4.1% move on earnings and the stock has averaged a 1.8% move in recent quarters.
Constellation Brands, Inc. $206.00
Constellation Brands, Inc. (STZ) is confirmed to report earnings at approximately 7:30 AM ET on Thursday, October 3, 2019. The consensus earnings estimate is $2.62 per share on revenue of $2.33 billion and the Earnings Whisper ® number is $2.69 per share. Investor sentiment going into the company's earnings release has 48% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 8.71% with revenue decreasing by 7.75%. Short interest has increased by 10.8% since the company's last earnings release while the stock has drifted higher by 3.7% from its open following the earnings release to be 10.5% above its 200 day moving average of $186.43. Overall earnings estimates have been revised lower since the company's last earnings release. On Tuesday, September 17, 2019 there was some notable buying of 982 contracts of the $227.50 call expiring on Friday, October 4, 2019. Option traders are pricing in a 5.7% move on earnings and the stock has averaged a 6.4% move in recent quarters.
United Natural Foods, Inc. $11.42
United Natural Foods, Inc. (UNFI) is confirmed to report earnings at approximately 4:10 PM ET on Tuesday, October 1, 2019. The consensus earnings estimate is $0.69 per share on revenue of $6.44 billion and the Earnings Whisper ® number is $0.72 per share. Investor sentiment going into the company's earnings release has 63% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 9.21% with revenue increasing by 148.43%. Short interest has increased by 5.4% since the company's last earnings release while the stock has drifted higher by 14.2% from its open following the earnings release to be 2.0% below its 200 day moving average of $11.65. Overall earnings estimates have been revised lower since the company's last earnings release. On Thursday, September 19, 2019 there was some notable buying of 5,030 contracts of the $10.00 put expiring on Friday, February 21, 2020. Option traders are pricing in a 20.4% move on earnings and the stock has averaged a 10.6% move in recent quarters.
McCormick & Company, Incorporated $156.80
McCormick & Company, Incorporated (MKC) is confirmed to report earnings at approximately 6:30 AM ET on Tuesday, October 1, 2019. The consensus earnings estimate is $1.29 per share on revenue of $1.34 billion and the Earnings Whisper ® number is $1.31 per share. Investor sentiment going into the company's earnings release has 46% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 0.78% with revenue decreasing by 0.39%. Short interest has decreased by 11.3% since the company's last earnings release while the stock has drifted higher by 7.4% from its open following the earnings release to be 5.3% above its 200 day moving average of $148.93. Overall earnings estimates have been revised higher since the company's last earnings release. Option traders are pricing in a 3.8% move on earnings and the stock has averaged a 4.2% move in recent quarters.
RPM International Inc. $68.64
RPM International Inc. (RPM) is confirmed to report earnings at approximately 6:45 AM ET on Wednesday, October 2, 2019. The consensus earnings estimate is $0.91 per share on revenue of $1.49 billion and the Earnings Whisper ® number is $0.93 per share. Investor sentiment going into the company's earnings release has 56% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 19.74% with revenue increasing by 2.06%. Short interest has decreased by 29.2% since the company's last earnings release while the stock has drifted higher by 5.6% from its open following the earnings release to be 12.8% above its 200 day moving average of $60.87. Overall earnings estimates have been revised higher since the company's last earnings release. Option traders are pricing in a 7.5% move on earnings and the stock has averaged a 4.0% move in recent quarters.
Bed Bath & Beyond, Inc. $9.89
Bed Bath & Beyond, Inc. (BBBY) is confirmed to report earnings at approximately 4:15 PM ET on Wednesday, October 2, 2019. The consensus earnings estimate is $0.29 per share on revenue of $2.77 billion and the Earnings Whisper ® number is $0.29 per share. Investor sentiment going into the company's earnings release has 3% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 23.68% with revenue decreasing by 5.62%. Short interest has increased by 1.7% since the company's last earnings release while the stock has drifted lower by 9.6% from its open following the earnings release to be 23.9% below its 200 day moving average of $12.99. Overall earnings estimates have been revised lower since the company's last earnings release. On Friday, September 20, 2019 there was some notable buying of 23,522 contracts of the $9.00 put expiring on Friday, October 18, 2019. Option traders are pricing in a 18.4% move on earnings and the stock has averaged a 12.2% move in recent quarters.
DISCUSS!
What are you all watching for in this upcoming trading week?
I hope you all have a wonderful weekend and a great trading week ahead r/StockMarket.
![[link]](https://i.redd.it/bkndh9qcxbp31.png){kind=link}
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