No One Could Have Expected This…!
At the beginning of yesterday’s trading, the bears were ready to pop open the champagne. The market faced a particularly ugly gap down – and confidence was rampant that the failure to pass the health reform bill at the end of last week would effectively mean the final nail in the coffin of the Trump Rally. Sure enough, bulls were still optimistic about the chances of pushing through tax reform, but they knew full well that that wouldn’t happen until August – and that its difficulty would be compounded by the fact that had the health care bill gone through it would have saved $600 billion over a few years’ time, enough to finance the lowered tax rates.
After the market’s breakdown last Tuesday and the anemic recovery in the days thereafter, it seemed that the stage was set for the next set of losses, future contracts signaling the S&P 500 opening almost 1% in the red.
The stage was perhaps set – but for something entirely different – for traders, who wanted to buy the correction, who salivate over the market’s very weakness! At the opening, indexes immediately recorded their daily low, and from thereon in, traded up all day long, closing at the daily high. Yesterday’s movement was the polar opposite of Tuesday’s selloff, when the market had opened at a gap-up and traded down all day long and closed at the daily low. If we take a look at how indexes closed at the end of the day yesterday just based on the numbers, there really wasn’t a lot of movement, but after all, “God is in the details.” It was an impressive reversal that left once cocky bears glum and down on their luck.
In summary for the day: The Dow Jones ended off 0.22%, extending its losing streak to 8, making it its longest losing streak in almost 6 years. The S&P 500 shed 0.1%, the NASDAQ ending up 0.2%.
The S&P 500 has climbed 9.4% since Trump was elected into office at the beginning of November, but the rally has come to a halt of late. Over the last 3 years what we’ve seen is that every time there has been drastic downward movement, the market has succeeded in overcoming the downward forces – and recovering! It’s no less than amazing, that is to say the extent to which the market’s memory is short-term, but after all, that’s coupled with players’ sheer desire to have stocks in their portfolios.
One of the stocks that stood out in yesterday’s trading was Snapchat (SNAP), which soared 4.8% after a number of the lead underwriters for the company, which had gone public just a few weeks ago, gave the stock a “Buy” recommendation. The stock closed very near its $24 issue price, having now soared 19.6% since last week; Goldman Sachs analysts initiated coverage yesterday and gave the stock a “Buy,” noting that despite the high risk level, opportunity is ripe, their price target standing at $27. A number of brokerages seconded Goldman’s “Buy” rating, including Bank of America and J.P. Morgan. As of now, the rundown on the stock is 6 “Buys,” 6 “Sells,” and 4 “Holds.”
On the S&P 500, 11 stocks rose to new 52-week highs, 7 dipping to new yearly lows; on the NASDAQ, 62 stocks recorded new 52-week highs, 54 falling to new yearly lows.
About 6.3 billion shares changed hands on U.S. exchanges, beneath the 7.1 billion average over the last 20 trading days.
Tuesday: To our lament, the intraday reversal didn’t do much as far as changing the bigger picture. On the daily chart, the S&P 500 suffered a lower low yesterday, something that calls into question the 233 support level on the SPY Exchange Traded Fund (ETF). The pressure on the uptrend, felt already from the start of the month, persists. There are only a few days left until the end of the first quarter, and we could very well see the “window displaying” effect, something that would help support large stocks and beaten down sectors. At the same time, the general technical picture is still reason for worry. The S&P 500 has recorded losses on 7 of the last 8 trading days, but yesterday’s brilliant reversal, in some small measure makes up for some of the market’s troubles prior.
We’re going to hear a lot of voices proclaiming that the uptrend going back to Trump’s surprise victory is now over; there has been price movement to some extent supporting this claim but yesterday’s intraday movement signals to us that buyers still feel a certain measure of confidence.
On Tuesday, traders will focus on a number of Fed speakers, including the Fed Chairwoman herself, Janet Yellen, who will be speaking on the topic of workforce development at 12:50 N.Y. time. Fed Vice Chair, Stanley Fischer, will be interviewed by CNBC at 13:30. Today’s Economic Diary includes a large number of indicators. At 9:00, the Case-Shiller Home Price Index will be released, with the PMI for the service sector coming out at 9:45, capped off by the Consumer Confidence Index at 10:00.
Tuesday’s Hot Stocks: RHT, DRI, TSRO, CCL, MKC, FDS
|Tuesday||8:30||Adv. Wholesale Inventories||0.2%||Medium|
|Tuesday||9:00||S&P Case-Shiller Home Price Index||5.6%||Medium|
|Wednesday||10:00||Pending Home Sales||2.4%||Medium|
|Thursday||8:30||GDP – Third Estimate||2.0%||High|
|Friday||8:30||PCE Price Index||0.1%||Medium|
|Friday||10:00||Michigan Sentiment – Final||97.6||High|
|RHT||Red Hat, Inc.||AM||Monday|
|FDS||FactSet Research Systems Inc.||AM||Tuesday|
|DRI||Darden Restaurants, Inc.||AM||Tuesday|
|MKC||McCormick & Company, Incorporated||AM||Tuesday|
|VRNT||Verint Systems Inc.||PM||Tuesday|
|PLAY||Dave & Buster’s Entertainment, Inc.||PM||Tuesday|
|LULU||Lululemon Athletica Inc.||PM||Wednesday|
|WOR||Worthington Industries, Inc.||PM||Wednesday|
Today’s Picks – Day Trading!
New York Strategy Swing
Today’s Picks – Swing “New-York Strategy
No.1 – AFSI
|Company Name||AmTrust Financial Services,|
|Sector||Financial | Property & Casualty Insurance|