Panic buying signs emerge Friday as Dow, S&P 500, Nasdaq head for trifecta of records a day after worst fall in 3 weeks


MarketWatch 09 July, 2021 - 02:54pm 14 views

Why did the stock market drop today?

The major U.S. stock indexes fell Thursday on concerns about the global economic comeback from Covid-19. The losses came as Japan declared a state of emergency in Tokyo for the upcoming Olympics and as countries deal with a rebound in cases due to Covid variants. CNBCDow drops more than 250 points amid global economic recovery concerns, S&P 500 slides

The S&P 500 added 48.73 points, or 1.1%, to 4369.55, following its worst one-day retreat since June 18. The Dow Jones Industrial Average added 448.23 points, or 1.3%, to 34870.16. The Nasdaq Composite gained 142.13 points, or 1%, to 14701.92. All three indexes closed at highs.

The strong gains Friday helped stocks narrowly avert weekly losses, pushing the major indexes toward a third consecutive week of gains.

Many investors rushed to buy the stock-market dip after Thursday’s declines, continuing a trend that has become a feature of the stock market’s rally over the past year. That desire, alongside easing concerns about the economic recovery, lifted stocks on Friday and overshadowed any worries about President Biden’s executive order to limit corporate dominance.

“It’s certainly on my list of worries that wasn’t there yesterday,” said Chris Grisanti, chief equity strategist at MAI Capital Management, referring to the executive order. But Mr. Grisanti said that for people wondering if the party is over yet: “I don’t think it is.”

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The stock market is falling. Should you sell?

CNBC 09 July, 2021 - 10:00pm

With the pandemic proving hard to leave behind and the global economy still suffering, the stock market is having a bad week.

The Dow Jones Industrial Average dropped about 350 points, or 1.1%, in early Thursday trading, and the S&P 500 fell 1.3%.

But while it can be painful to watch your investment accounts shrink, you'll likely regret selling.

"Pain is a sign you're investing well," said Allan Roth, founder of financial advisory firm Wealth Logic in Colorado Springs, Colorado.

That's because if you can't withstand the drops, you'll also miss out on the gains.

Over the last 20 or so years, the S&P 500 produced an average annual return of around 6%.

But if you missed the best 20 days in the market over that time span because you became convinced you should sell, and then reinvested later, your return would shrivel to 0.1%, according to an analysis by Charles Schwab.

"For longer-term investors, we suggest staying the course if they can," said Rob Williams, vice president of financial planning at Charles Schwab.

Over the years, the market gives more than it takes.

Between 1900 and 2017, the average annual return on stocks has been around 11%, according to calculations by Steve Hanke, a professor of applied economics at Johns Hopkins University in Baltimore. After adjusting for inflation, that average annual return is still 8%.

As a result, financial advisors caution against making any big changes to your investment strategy based off one bad day or period.

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Opening Bell: Stocks, Futures Tumble As Delta Variant Obscures Fed; Gold Rises 09 July, 2021 - 10:00pm

US futures on the Dow, S&P, NASDAQ and Russell 2000 were falling on Thursday, along with global stocks, the result of increasing concerns about the spread of the Delta variant of COVID-19. Treasuries are plummeting due as worries about a slower economic recovery than originally anticipated gain traction.

Gold extended its rally and oil continued slumping.

With the global death toll from coronavirus topping 4 million according to John Hopkins University figures, the emergence of the Delta variant is seeing some countries struggle to contain further infections.

All four US futures contracts were significantly in the red today, with the reflation related benchmarks underperforming. Contracts on the Russell 2000—which includes stocks of domestic US companies that are expected to outperform in an economic recovery and provided the greatest value as they underperformed during coronavirus lockdowns—suffered the greatest loss, down 1.5%. That's almost double the decline of NASDAQ 100 futures, whose listed equities benefited from last year's social restrictions.

With a 1.00% loss, contracts on the Dow—whose blue-chip, megcaps are also sensitive to economic cycles—was the second-worst performer.

European stocks sold off with cyclical sectors, including miners, automakers and banks. The STOXX 600 Index opened lower and extended its fall to 1.3%.

The index peaked below the bottom of a rising channel since June 18, testing demand.

Focus today is on the ECB’s announcement concerning the results of an 18-month strategy review regarding redefining its inflation target and clarifying its role on climate change. Meanwhile, the minutes from the central bank meeting released ahead of the US open, indicated that members plan to continue the generous monetary accommodations. Policymakers have also agreed to increase inflation goals to 2% and even to let it go past that mark in a move that is in line with the US Federal Reserve's policy.

Meanwhile, after awaiting for the minutes from the Fed's monetary policy meeting all week as a potential catalyst for markets, yesterday's release has failed to dominate market chatter, which is solely focused on the ongoing spread of the Delta variant of COVID-19 and the possibility of additional lockdowns.

The Asia-Pacific region has seen a spike in cases of the Delta variant, threatening another wave and prompting new restrictions.

Japan announced the country’s state of emergency will continue throughout the Olympics, which run from July 23 to Aug. 8, in an effort to avoid a more widespread global contagion. This increases the likelihood that there will be no spectators at the games as overseas fans have already been banned.

Australia, which successfully hosted international cricket matches and tennis tournaments last year, has said it will keep its borders shut because after a two week lockdown in Sydney, its largest city, the state of New South Wales recorded its worst daily number of COVID-19 infections this year. South Korea is considering a lockdown in Seoul as it posted a record of number of cases. And Thailand posted its lowest every consumer confidence figures, as the country considers increased restrictions, including additional curbs on travel.

US investor concerns also have been raised by the news that the Delta strain is already the dominant variant there.

On Wednesday, stocks on Wall Street managed to rebound from an early plunge below Tuesday’s close. They even succeeded in eking out a gain by the close as the Fed meetng minutes showed that US policymakers debated the timeline for tapering its massive debt purchasing program which has been pumping cheap money into the economy to fuel what has been expected to be a powerful recovery but is now looking uncertain amid the worsening global health crisis.

The S&P 500 Index rose 0.34% yesterday, slightly outperforming the Dow’s 0.3% advance. The NASDAQ 100 climbed only 0.16%, and the NASDAQ Composite had an even weaker showing, +0.02%. Still it was enough for the NASDAQ indices to join the S&P in extending record highs and closes.

It seems that investors were willing to increase their risk exposures as the indecision at the Fed may help to ensure that the current Goldilocks environment, in which the economy is not rising too fast nor too slowly, but is just right, is maintained

It was gutsy of traders to increase equity positioning, even as yields, including for the 10-year Treasury note, kept dropping in a straight line.

Treasury yields fell today as well, for the eighth straight day, which is a worse performance than the longest drop in the pandemic—7 sessions in a row in February 2020, before the market bottomed.

This buying frenzy may show that fears of the effect of the spread of the coronavirus are overshadowing the shift by the Fed to begin reducing its overly bloated balance sheet, which should have triggered a Treasury selloff—both because risk assets would provide far superior returns and traders would want to cash out of current, lower yielding bonds in favor of future higher ones.

We can also see this in the disconnect between the longest winning streak for gold in years, while silver and copper are ranging. If gold’s surge is due to its inflationary hedging property, silver and copper should have risen in tandem.

The yellow metal is rising for the seventh straight session, testing Tuesday’s shooting star, whose bearish posture is proportionate to its exceptionally long upper shadow and is tracking how far down bears manage to push back bulls. Working against the bears, however, are the milestones bears captured, the expectant bearish pennant and the top of its former falling channel sine the 2020 record high.

Gold may still decline, just at a more tempered pace, along a more moderate falling channel (blue).

As opposed to gold, silver just rebounded from a four-day selloff.

The reason for today’s comeback could be technical, as the precious metal tested the bottom of a potential rising flag, bearish after the preceding sharp drop.

Copper posted an even poorer performance, trading significantly lower.

The red metal is threatening to complete its own rising flag, especially bearish following a top and as it meets the resistance of its falling channel.

Bitcoin fell for the second day.

Perhaps the cryptocurrency is on its way to complete a H&S continuation pattern.

Oil extended a decline, as traders await clarity about OPEC’s plan to increase production from pandemic-levels, as well as concerns that new social restrictions may dent global demand.

The price fell for the third straight day, for the first time since May, falling below its most recent uptrend line.

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Dow jumps 440 points to record, rebounding from one-day slide

CNBC 09 July, 2021 - 10:00pm

All three major averages notched record closes on Friday, rebounding from the previous session's losses over concerns of a slowdown in global economic growth.

The Dow Jones Industrial Average rose 448.23 points, or 1.3%, to a record close of 34,870.16. The S&P 500 bounced by about 1.1%, closing at an all-time high of 4,369.55. The technology-heavy Nasdaq Composite rose just shy of 1% to close at a record of 14,701.92.

The S&P 500 earned its sixth week of gains in seven.

Friday's comeback brought all three majors averages into the green for the week. The Dow rose 0.2% for the week. The S&P 500 and Nasdaq gained 0.4% and 0.4% since Monday, respectively.

The stocks that led the losses on Thursday, reopening plays and banks, notched gains on Friday. Bank of America jumped about 3.3%, leading a bounce in financial shares. Royal Caribbean popped 3.6% and Wynn Resorts gained close to 2%. American Airlines and United Airlines both gained more than 2%.

The small cap benchmark Russell 2000 rallied more than 2% on Friday.

Shares of General Motors gained 4.8% after Wedbush said the stock is a buy and could jump more than 50% as investors realize the extent of its tech and electric vehicle evolution.

Big Tech stocks' gains were capped on Friday as President Joe Biden signed a new executive order aimed at the competitive practices by the sector's giants. Amazon fell 0.3% after hitting a new all-time high on Thursday.

The yield on the 10-year Treasury rebounded 7 basis points to 1.36%, easing concerns about an economic slowdown (1 basis point is 0.01%). Falling yields have mystified investors lately, with the 10-year yield falling to 1.25% at its low on Thursday.

Thursday's losses, which saw the Dow drop nearly 260 points, came as the proliferation of the highly infectious delta Covid variant also fueled worries about the global economic comeback. The Olympics announced a ban of spectators at Tokyo's summer games as Japan declared a state of emergency to curb the spread of coronavirus.

"Our central case has been for a choppy July" with the S&P 500 falling as low as 4,100, wrote Tom Lee, Fundstrat's head of research, in a note to clients Thursday night. "While this is a possibility, we think there is a chance [Thursday] marked the peak of [the] 'growth scare' and if this is correct, equities might be shifting toward a broader risk on."

Further, the latest jobless claims report released Thursday indicated a potential slowdown in the labor sector.

"The market is solidly mid-cycle and with that typically comes a 10-15% index level correction. We expect such a correction will create buying opportunities given a still strong growth backdrop," Mike Wilson, Morgan Stanley's chief U.S. equity strategist, told clients. Wilson favors financials, healthcare and materials.

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Stock Market Suffering From Severe Case Of Halitosis 09 July, 2021 - 10:00pm

Haliwhat? Halitosis: an oral health problem where the main symptom is bad (smelling) breath.

Since the stock market is an index made up of individual stocks (about 500 for the S&P 500 and 30 for the Dow Jones Industrial Average), Halitosis means fewer and fewer stocks in each index are participating in the rally.

Figure 1: Percent of stocks in the S&P 500 above their respective 50-day Simple Moving Average

The number of stocks in the S&P 500 trading above their own 50-day SMA has steadily declined since late March, while the index kept rising. Only 44% of all the 500 individual stocks in the S&P 500 are trading above their 50-d SMA, while the index hit a new all-time high yesterday. One of the most significant divergences over the last two years. The chart shows the varying decrease of correction that followed: anywhere from 5% to 35%.

Figure 2: NYSE Common Stock Only Cumulative Advancing/Declining line

The Cumulative Advancing/Declining (A/D) Line can also help assess if a correction is pending by showing negative divergence. See Figure 2 above.

Starting on the left-hand side of the chart (pink dotted arrows), negative divergence is not even needed to usher in a 10-20% correction. Then, in February 2020 (solid red arrow), the 35% COVDI-19 crash was foretold. Similarly, for the September 2020 correction, which was “only” 11% (second solid red arrow). Currently, the A/D line is negatively diverging once again (red dotted arrows on the right-hand side of the chart) and, thus, a 10-35% correction should be expected.

Figure 3: Bullish Percent Index Charts for S&P 500 and NASDAQ

Thirdly, the Bullish Percent Index (BPI) measures how many individual stocks in an index are on a Point & Figure Buy Signal (Source: here). Also, now it follows fewer and fewer individual stocks in both the S&P 500 and the NASDAQ Composite were on a “buy,” while both indexes moved higher. The arrows in both charts show prior similar diverging instances, how long they can take, and what effect they ultimately had on the underlying indexes. Corrections varied from anywhere between 5-35%.

Figure 4: Summation Indexes for the S&P 500 and NASDAQ 100

Lastly, the McClellan Summation Indexes (SIs) for the S&P 500 and Nasdaq 100. SI’s add daily McClellan Oscillator (MO) readings to the previous day. Source: here.

Negative MOs mean there were more declining than advancing stocks that day, causing the SI to decrease, whereas positive MOs mean the reverse. Thus, since May, the S&P 500 has mostly seen negative MOs and a declining SI, while the NDX mostly had positive MOs and a rising SI. Talk about bifurcation and not making the life of a market analyst any easier. This shows that the market-cap-weighted indexes like these two were pushed higher by technology-related stocks and predominantly a select group of mega-cap stocks like Facebook Inc (NASDAQ:FB), Apple Inc (NASDAQ:AAPL), Inc (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL).

Although there are many more market breadth indicators, I do not want to succumb to “analyses paralyzes.” These select indicators all show that several indexes indeed suffer from Halitosis, which always lead to a correction further down the road. The question now is: “How much of a correction will we get?”

Given my preferred EWP count (see my recent article here), I don’t expect a 35% correction, but anything in between 5% and 10% will suffice to reset the clock before the next rally can start.

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US STOCKS-Wall Street closes at record highs as financials lead rebound

Yahoo Finance 09 July, 2021 - 03:00pm

  * Didi takes a breather after four-day losing streak (New throughout, updates prices, market activity and comments to close) 

  NEW YORK, July 9 (Reuters) - The three major U.S. stock indexes rallied to record closing highs on Friday as financials and other economically focused sectors rebounded after a selloff sparked by growth worries earlier in the week. 

  The week also saw a sharp rally in U.S. Treasuries as investors worried the U.S. economic recovery might be losing steam with the Delta variant of the coronavirus spreading. 

  S&P financials led sector gains followed by energy, materials and industrials. 

  "What an about-face from all of the gloom and doom from yesterday," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma. 

  Unofficially, the Dow Jones Industrial Average rose 446.29 points, or 1.3%, to 34,868.22, the S&P 500 gained 48.44 points, or 1.12%, to 4,369.26 and the Nasdaq Composite added 139.83 points, or 0.96%, to 14,699.61. 

  Big banks will be among the first to report quarterly earnings, with the season kicking off next week. A big jump in quarterly earnings is expected to mark a peak for U.S. profit growth in the recovery from last year's pandemic-induced collapse. 

  Analysts expect earnings growth of 65.8% for companies in the S&P 500 index in the quarter, up from a previous forecast of 54% growth at the start of the period, according to Refinitiv IBES data. 

  Among individual stocks, Levi Strauss & Co rose as it forecast a strong full-year profit after beating quarterly earnings estimates on improving demand across its markets for jeans, tops, and jackets. 

  U.S.-listed shares of Chinese ride-hailing company Didi Global Inc gained after four sessions of losses, as it was recently hit by an investigation from China's internet watchdog. 

  (Additional reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Editing by Arun Koyyur, Aditya Soni, Maju Samuel and David Gregorio) 

The three major U.S. stock indexes rallied to record closing highs on Friday as financials and other economically focused sectors rebounded from a selloff sparked by growth worries earlier in the week.

All three major indexes ended at records Friday, underscoring a powerful rebound in equities a day after one of the worst selloffs since mid June. The S&P 500 index closed 1.1% higher at about 4,370, the Nasdaq Composite [c: COMP] booked a roughly 1% advance at roughly 14,700, and the Dow Jones Industrial Average climbed 450 points, or 1.3%, at around 34,869, on a preliminary basis. All three indexes logged record closing highs a day after notching the worst daily drop since June 18. The decline

U.S. stock indexes recorded their worst day in about 3 weeks Thursday, as yields on government bonds extended their decline thanks to investors shying away from bets on any blistering economic recovery and rising inflation.

U.S. stocks rallied on Friday and the S&P 500 hit a record high as financials and other economically focused sectors rebounded after a selloff sparked by growth worries earlier in the week. The indexes were also set to end higher on a week that also saw a sharp rally in U.S. Treasuries amid the fears that the recovery in the U.S. economy was losing steam with the Delta variant of the coronavirus spreading. S&P financials led sector gains, followed by materials.

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U.S. stocks are seen opening largely higher Friday, attempting to rebound from the previous session’s losses although weakness in Big Tech could weigh following a report that the Biden administration is to look to reinstate Obama-era rules on net neutrality. At 7:15 AM ET (1115 GMT), the Dow Futures contract was up 220 points, or 0.7%, S&P 500 Futures traded 17 points, or 0.4%, higher, while Nasdaq 100 Futures was marginally lower. The broad-based S&P 500 closed Thursday 0.9% lower, the Dow Jones Industrial Average dropped over 250 points, or 0.8%, and the technology-heavy Nasdaq Composite fell 0.7%.

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