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 January 6th, 2020.
Geopolitical tensions could hold back stocks in the week ahead, as investors await jobs report - (Source)
Geopolitical concerns could continue to weigh on stocks in the week ahead, leaving investors wondering whether Middle East tensions will be the catalyst for a much anticipated market pullback.
Stocks sold off Friday, the second trading day of the year, after a rally to new highs on Thursday. The market was slammed after the U.S. killed Iranian military commander Qasem Soleimani, sparking a rally in oil prices and raising concerns Iran will take some retaliatory action.
The big event in the coming week is the December employment report, expected to show 160,000 payrolls were added and average earnings rose 3.1% year-over-year, according to Refinitiv. The jobs report is especially important after December's ISM manufacturing data Friday was surprisingly negative and the weakest in more than a decade.
The S&P 500 ended the four-day week at 3,235, with a loss of 0.2%, after Friday's 0.7% decline. Treasury yields retreated on Friday, as buyers moved into the safety of bonds and the 10-year yield was at 1.78%.
"This was a textbook rationale for a bout of profit taking, but that said, I don't think it's dramatic," said Quincy Krosby, chief market strategist at Prudential Financial. "Nonetheless, the question will be when do buyers come in ... Much will depend on this weekend and next week in terms of headlines from both the White House and Iran."
Some analysts have been looking for a minor selloff in stocks after the fourth quarter's 8.5% gain in the S&P 500. But whether Friday's decline is the start of something bigger is unclear.
"It could be, but only in retrospect will you know for sure," said Peter Boockvar, chief investment officer at Bleakley Advisory Group.
Boockvar said if Iran takes some minor action, the market could shrug it off, oil could lose its gains, and stocks could move higher again.
"We may see Treasurys continue to get a big bid, gold get a bid and the safe-haven currencies get a bid. If we go into things next week and all things are quiet, the market will pay attention to the data," Krosby said.
Gregory Faranello, head of U.S. rates at AmeriVet Securities, expects to see Treasury yields lower initially. "I think short-term, the geopolitical risk is probably going to override any fundamental views that people have of the marketplace," he said.
But there could be a catalyst for some Treasury selling with the issuance of high level of corporate bonds in the coming week. Faranello expects the year to start off strong, with corporate treasurers looking to raise about $30 billion to $35 billion in the debt market.
Strategists said they will be looking closely at the jobs data after Friday's surprisingly weak manufacturing survey from the Institute for Supply Management, which was expected to have been better because of the trade agreement.
Stephen Stanley, chief economist at Amherst Pierpont, said the survey actually took place before the trade deal was announced, and he's waiting for the results of the next couple of reports.
He expects to see 165,000 jobs added in December, off of 266,000 in November, which was in part skewed by the end of GM's strike. "I think there's a little upside risk. It seems like we saw a pretty strong Christmas season," he said, adding there could have been more hiring than was factored into seasonal adjustments.
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:
Typical January Trading: Volatile Last 20 Years
Yesterday major indexes continued their recent trend of strength on the first trading day of 2020. While today the market has turned weaker on escalating tensions between the U.S. and Iran. This type of volatility was once quite rare in January. However since 2000, the S&P 500 has declined ten times in twenty years in January. This recent weakness can be seen in the above January seasonal pattern chart.
Over the last 21 years, Only NASDAQ has posted a full-month average gain. DJIA, S&P 500 and Russell 1000 have started January positive, only to surrender early-month gains by the eighth trading day. Greatest weakness has appeared just after mid-month, the eleventh trading day. Mild average losses on or around the eleventh trading day quickly swell to over 2% for DJIA and nearly as much for S&P 500 and Russell 1000.
A Banner Year for US Equities
2019 was surely a banner year for US equities. With a total return of 31.5%, the S&P 500's gain in 2019 was nearly three times the historical average 12-month return of 11.7%. That's strong! In the chart below we compare the S&P 500's annualized returns over the last one, two, five, ten, and twenty years to its average annualized returns over those same time frames since 1928. While the one-year return sticks out like a sore thumb, we would note that the S&P 500's annualized returns over the last two, three, and ten years are also above average. Almost as notable as the fact that the one year return has been so much stronger than average is that the S&P 500's two-year return is less than two percentage points above its historical average. That just shows how bad 2018 was! Looking further out, the only time frame where returns are below average is over the last twenty years where the 6.1% annualized gain is almost five percentage points below the historical average. Over a full twenty years, that's a difference of tripling your investment versus making eight times your investment!
The chart below compares how current returns during the above time frames rank on a percentile basis relative to all other periods. The S&P 500's one-year return ranks in the 85th percentile which is pretty extreme. For the two, five, and ten year periods, though, current returns are much more middle of the road. Conversely, as stretched as extreme to the upside that the one-year return is relative to all other periods, the twenty-year return is even more depressed to the downside. At just 4.6, more than 95% of all other 20-year periods have been better than the last 20.
Finally, as mentioned above the last year has certainly been a strong one, and it follows a year where returns had been abnormally poor. The chart below shows the rolling 12-month total return for the S&P 500 going back to 1990. The gain of 31.49% over the last year was the strongest for the S&P 500 in six years coming up just shy of the 32.39% gain in 2013. Last year at this time, though, the S&P 500 was down over 4% on a total return basis in the prior 12 months.
2019 and 2020 Dogs of the Dow
The Dogs of the Dow strategy is a simple, hands-off investment approach that says to buy the 10 highest yielding stocks in the Dow 30 at the start of each year. With the calendar turning over from 2019 to 2020, below is a look at how the Dogs strategy performed in 2019. As shown, the 10 Dogs posted a total return of 19.38% in 2019, which was below the 25% return for the Dow and well below the 28% that the 20 non-Dogs returned. The biggest winner in the Dogs in 2019 was JP Morgan (JPM) with a gain of 47.27%, but Pfizer's (PFE) decline of 6.92% really hurt overall performance.
The 20 non-Dogs were led by Apple (AAPL), Microsoft (MSFT), Visa (V), and United Tech (UTX), while Walgreens Boots (WBA) and 3M (MMM) were the two non-Dogs that fell in 2019. Start a two-week free trial to Bespoke Institutional to access our Trend Analyzer tool and track key trends in individual stocks and major ETFs.
Moving on to 2020, below is a list of this year's Dogs of the Dow. Eight of the ten Dogs from 2019 remain on the list, while 3M (MMM) and Walgreens Boots (WBA) -- the two non-Dogs that fell in 2019 -- have replaced JP Morgan (JPM) and Procter & Gamble (PG) -- the two biggest gainers of the Dogs in 2019. Dow Inc. (DOW) is the highest yielding Dog at 5.12%, followed by Exxon (XOM), IBM, and Verizon (VZ), which all have dividend yields above 4%.
Full Year 2019, Q4, and December Asset Class Total Returns
Below are the final total return performance numbers for key ETFs across asset classes in 2019. For each ETF, we also include its performance in Q4 and December.
The S&P 500 rallied 2.9% in December and 8.99% in Q4 to finish the full year up 31.22%. The Tech-heavy Nasdaq 100 (QQQ) was by far the best performing US index ETF in 2019 with a gain of 38.96%, and it was the third best ETF in the entire matrix. The title of best performing ETF in 2019 goes to the S&P 500 Technology sector ETF (XLK), which rallied 49.86%. Remember, 40% of XLK is made up of just Apple (AAPL) and Microsoft (MSFT), which gained 89% and 58% in 2019, respectively. The Russia stock market ETF (RSX) was the second biggest winner in the matrix with a 2019 total return of 40.79%.
Everywhere you look across the equity landscape, there were big winners in 2019, but the weakest area of the market was the Energy sector ETF (XLE). Even still, XLE managed to put up double-digit percentage gains on the year at +11.74%.
In the commodities space, we saw oil gain 32.61% in 2019, which actually bested the gain for the S&P 500. Gold (GLD) and silver (SLV) both put in solid gains in the mid-teens, while the perpetually losing natural gas ETF (UNG) was the only ticker in the matrix that fell across all three time frames (December, Q4, and full year).
Looking at fixed income, the aggregate bond market ETFs (AGG and BND) posted total returns of 8%+, while the 20+ Year Treasury ETF (TLT) gained 14% on the year. Q4 and December were tough for fixed income, however, as rates moved higher.
January Almanac: Average Performance Slips in Presidential Election Years
January has quite a reputation on Wall Street as an influx of cash from yearend bonuses and annual allocations typically propels stocks higher. January ranks #1 for NASDAQ (since 1971), but fifth on the S&P 500 and sixth for DJIA since 1950. It is the end of the best three-month span and holds a full docket of indicators and seasonalities.
DJIA and S&P rankings did slip from 2000 to 2016 as both indices suffered losses in ten of those seventeen Januarys with three in a row, 2008, 2009 and 2010 and then again in 2014 to 2016. January 2009 has the dubious honor of being the worst January on record for DJIA (-8.8%) and S&P 500 (-8.6%) since 1901 and 1931 respectively. Last year, January was downright stellar after the worst December since 1931 for DJIA and S&P 500.
In election years, Januarys have been weaker. DJIA and S&P 500 slip to number #8 while DJIA average performance dips negative. NASDAQ slips to #3, but average performance remains respectable at 1.7%.
STOCK MARKET VIDEO: Stock Market Analysis Video for Week Ending January 3rd, 2020
STOCK MARKET VIDEO: ShadowTrader Video Weekly 1.5.20
Here are the most notable companies (tickers) reporting earnings in this upcoming trading week ahead-
- $CMC
- $WBA
- $BBBY
- $STZ
- $LEN
- $CALM
- $SMPL
- $RPM
- $ANGO
- $AZZ
- $KBH
- $UNF
- $MSM
- $INFY
- $SCHN
- $SNX
- $AYI
- $GBX
- $HELE
- $SAR
- $EXFO
- $NTIC
- $LNN
- $WDFC
- $KRUS
- $FC
- $SLP
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 1.6.20 Before Market Open:
Monday 1.6.20 After Market Close:
([CLICK HERE FOR MONDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!]())
NONE.
Tuesday 1.7.20 Before Market Open:
Tuesday 1.7.20 After Market Close:
Wednesday 1.8.2 0Before Market Open:
Wednesday 1.8.20 After Market Close:
Thursday 1.9.20 Before Market Open:
Thursday 1.9.20 After Market Close:
Friday 1.10.20 Before Market Open:
Friday 1.10.20 After Market Close:
([CLICK HERE FOR FRIDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!]())
NONE.
lululemon athletica inc. $229.38
lululemon athletica inc. (LULU) is confirmed to report earnings at approximately 4:05 PM ET on Wednesday, December 11, 2019. The consensus earnings estimate is $0.93 per share on revenue of $896.50 million and the Earnings Whisper ® number is $0.98 per share. Investor sentiment going into the company's earnings release has 73% expecting an earnings beat The company's guidance was for earnings of $0.90 to $0.92 per share on revenue of $880.00 million to $890.00 million. Consensus estimates are for year-over-year earnings growth of 24.00% with revenue increasing by 19.91%. Short interest has increased by 9.8% since the company's last earnings release while the stock has drifted higher by 16.0% from its open following the earnings release to be 26.0% above its 200 day moving average of $182.08. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, December 6, 2019 there was some notable buying of 927 contracts of the $260.00 call expiring on Friday, December 13, 2019. Option traders are pricing in a 8.3% move on earnings and the stock has averaged a 11.1% move in recent quarters.
Commercial Metals Company $22.18
Commercial Metals Company (CMC) is confirmed to report earnings at approximately 6:45 AM ET on Monday, January 6, 2020. The consensus earnings estimate is $0.56 per share on revenue of $1.45 billion and the Earnings Whisper ® number is $0.59 per share. Investor sentiment going into the company's earnings release has 74% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 60.00% with revenue increasing by 13.52%. Short interest has decreased by 22.3% since the company's last earnings release while the stock has drifted higher by 17.6% from its open following the earnings release to be 22.0% above its 200 day moving average of $18.18. Overall earnings estimates have been revised higher since the company's last earnings release. Option traders are pricing in a 7.4% move on earnings and the stock has averaged a 6.1% move in recent quarters.
Walgreens Boots Alliance Inc $59.08
Walgreens Boots Alliance Inc (WBA) is confirmed to report earnings at approximately 7:00 AM ET on Wednesday, January 8, 2020. The consensus earnings estimate is $1.40 per share on revenue of $34.63 billion and the Earnings Whisper ® number is $1.41 per share. Investor sentiment going into the company's earnings release has 64% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 4.11% with revenue increasing by 2.48%. Short interest has decreased by 30.6% since the company's last earnings release while the stock has drifted higher by 5.4% from its open following the earnings release to be 7.3% above its 200 day moving average of $55.08. Overall earnings estimates have been revised lower since the company's last earnings release. Option traders are pricing in a 4.8% move on earnings and the stock has averaged a 5.7% move in recent quarters.
Bed Bath & Beyond, Inc. $16.08
Bed Bath & Beyond, Inc. (BBBY) is confirmed to report earnings at approximately 4:15 PM ET on Wednesday, January 8, 2020. The consensus earnings estimate is $0.03 per share on revenue of $2.86 billion and the Earnings Whisper ® number is $0.04 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 83.33% with revenue decreasing by 5.68%. Short interest has decreased by 7.7% since the company's last earnings release while the stock has drifted higher by 65.3% from its open following the earnings release to be 24.8% above its 200 day moving average of $12.89. Overall earnings estimates have been revised lower since the company's last earnings release. On Friday, December 27, 2019 there was some notable buying of 4,141 contracts of the $17.00 put expiring on Friday, February 21, 2020. Option traders are pricing in a 13.3% move on earnings and the stock has averaged a 9.3% move in recent quarters.
Constellation Brands, Inc. $189.53
Constellation Brands, Inc. (STZ) is confirmed to report earnings at approximately 7:30 AM ET on Wednesday, January 8, 2020. The consensus earnings estimate is $1.90 per share on revenue of $1.95 billion and the Earnings Whisper ® number is $1.91 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 19.83% with revenue decreasing by 9.75%. Short interest has decreased by 7.7% since the company's last earnings release while the stock has drifted lower by 5.7% from its open following the earnings release to be 1.9% below its 200 day moving average of $193.11. Overall earnings estimates have been revised lower since the company's last earnings release. Option traders are pricing in a 5.5% move on earnings and the stock has averaged a 6.8% move in recent quarters.
Lennar Corp. $56.47
Lennar Corp. (LEN) is confirmed to report earnings at approximately 6:00 AM ET on Wednesday, January 8, 2020. The consensus earnings estimate is $1.90 per share on revenue of $6.70 billion and the Earnings Whisper ® number is $1.95 per share. Investor sentiment going into the company's earnings release has 69% expecting an earnings beat The company's guidance was for earnings of $0.84 to $1.94 per share. Consensus estimates are for earnings to decline year-over-year by 3.06% with revenue increasing by 3.73%. Short interest has increased by 4.9% since the company's last earnings release while the stock has drifted higher by 0.1% from its open following the earnings release to be 5.7% above its 200 day moving average of $53.44. Overall earnings estimates have been revised higher since the company's last earnings release. Option traders are pricing in a 5.2% move on earnings and the stock has averaged a 4.6% move in recent quarters.
Cal-Maine Foods $42.45
Cal-Maine Foods (CALM) is confirmed to report earnings at approximately 6:30 AM ET on Monday, January 6, 2020. Investor sentiment going into the company's earnings release has 50% expecting an earnings beat. Short interest has decreased by 19.1% 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 2.6% above its 200 day moving average of $41.38. Overall earnings estimates have been revised higher since the company's last earnings release. Option traders are pricing in a 6.4% move on earnings and the stock has averaged a 4.7% move in recent quarters.
Simply Good Foods Company $28.17
Simply Good Foods Company (SMPL) is confirmed to report earnings at approximately 7:00 AM ET on Thursday, January 9, 2020. The consensus earnings estimate is $0.21 per share on revenue of $166.52 million and the Earnings Whisper ® number is $0.23 per share. Investor sentiment going into the company's earnings release has 70% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 16.67% with revenue increasing by 37.70%. Short interest has increased by 140.7% since the company's last earnings release while the stock has drifted higher by 16.2% from its open following the earnings release to be 10.0% above its 200 day moving average of $25.62. Overall earnings estimates have been revised higher since the company's last earnings release. Option traders are pricing in a 18.1% move on earnings and the stock has averaged a 4.4% move in recent quarters.
RPM International Inc. $75.15
RPM International Inc. (RPM) is confirmed to report earnings at approximately 6:45 AM ET on Wednesday, January 8, 2020. The consensus earnings estimate is $0.73 per share on revenue of $1.40 billion and the Earnings Whisper ® number is $0.72 per share. Investor sentiment going into the company's earnings release has 59% expecting an earnings beat The company's guidance was for earnings of $0.71 to $0.76 per share. Consensus estimates are for year-over-year earnings growth of 40.38% with revenue increasing by 2.75%. Short interest has decreased by 16.2% since the company's last earnings release while the stock has drifted higher by 15.5% from its open following the earnings release to be 13.8% above its 200 day moving average of $66.05. Overall earnings estimates have been revised lower since the company's last earnings release. Option traders are pricing in a 4.5% move on earnings and the stock has averaged a 3.7% move in recent quarters.
AngioDynamics $16.49
AngioDynamics (ANGO) is confirmed to report earnings at approximately 6:00 AM ET on Tuesday, January 7, 2020. The consensus earnings estimate is $0.01 per share on revenue of $71.88 million. Investor sentiment going into the company's earnings release has 28% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 95.45% with revenue decreasing by 21.45%. Short interest has decreased by 27.0% 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 11.1% below its 200 day moving average of $18.55. Overall earnings estimates have been revised lower since the company's last earnings release. Option traders are pricing in a 16.2% move on earnings and the stock has averaged a 9.4% move in recent quarters.
AZZ Inc. $45.21
AZZ Inc. (AZZ) is confirmed to report earnings at approximately 6:30 AM ET on Thursday, January 9, 2020. The consensus earnings estimate is $0.84 per share on revenue of $276.30 million. Investor sentiment going into the company's earnings release has 55% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 42.37% with revenue increasing by 15.36%. Short interest has increased by 121.9% since the company's last earnings release while the stock has drifted higher by 7.6% from its open following the earnings release to be 5.1% above its 200 day moving average of $43.00. Overall earnings estimates have been revised lower since the company's last earnings release. Option traders are pricing in a 11.7% move on earnings and the stock has averaged a 7.7% 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.
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