Stock Market Today: February 1st - 5th, 2021

Welcome StonkForums to the trading week of February 1st!

This past week saw the following moves in the S&P:


Major Indices End of Week:



Major Futures Markets on Friday:


Economic Calendar for the Week Ahead:


What to Watch in the Week Ahead:

• Monday

Earnings: Cirrus Logic, Rambus, ON Semiconductor, Vertex Pharmaceuticals, Otis Worldwide, Thermo Fisher, Nintendo, NXP Semiconductor, Warner Music, Cabot

9:45 a.m. Manufacturing PMI

10:00 a.m. ISM manufacturing

10:0 a.m. Construction spending

2:00 p.m. Senior loan officer survey

2:00 p.m. Atlanta Fed President Raphael Bostic and Boston Fed President Eric Rosengren

• Tuesday

Earnings: Alphabet, Amazon, Exxon Mobil, Pfizer, UPS, BP, Amgen, Electronic Arts, FireEye, Chipotle, Viavi Solutions, PerkinElmer, ConocoPhillips, Sirius XM, Harley-Davidson, Alibaba, McKesson, Eaton, Marathon Petroleum

Vehicle sales

10:00 a.m. Housing vacancies

1:00 p.m. New York Fed President John Williams

2:00 p.m. Cleveland Fed President Loretta Mester

• Wednesday

Earnings: Qualcomm, Boston Scientific, GlaxoSmithKline, Abbvie, Biogen, Humana, Apollo Global Management, Allstate, eBay, PayPal, Check Point Software, Aflac, MetLife, Grubhub, KLA Corp

8:15 a.m. ADP employment

9:45 a.m. Services PMI

10:00 a.m. ISM Services

1:00 p.m. St. Louis Fed President James Bullard

2:00 p.m. Philadelphia Fed President Patrick Harker

5:00 p.m. Cleveland Fed’s Mester

5:00 p.m. Chicago Fed President Charles Evans

• Thursday

Earnings: Merck, Bristol-Myers Squibb, Ford, Hershey, Cigna, Clorox, Yum Brands, Intercontinental Exchange, Activision Blizzard, Gilead Sciences, Snap, Pinterest, Hartford Financial, Prudential Financial

8:30 a.m. Initial claims

8:30 a.m. Productivity and costs

10:00 a.m. Factory orders

• Friday

Earnings: Cardinal Health, Sanofi, Estee Lauder, Regeneron, Illinois Toolworks, Aon, CBOE Global Markets, Lazard, Biomet

8:30 a.m. Nonfarm payrolls

8:30 a.m. Employment report

8:30 a.m. International trade

3:00 p.m. Consumer credit

 

Crypto Jumps In January As Hedgies 'Suffer' Greatest Stock Short-Squeeze In History
The USDollar managed to end higher for the month of January while stocks, bonds, and gold all ended lower...



Source: Bloomberg



Source: Bloomberg

Of course, the really big news was the 'Reddit Rebellion' that routed shorts late in the month, pushing "Most Shorted" stocks to their biggest monthly squeeze in history...



Source: Bloomberg



Source: Bloomberg

This is madness... Those are month-to-date %age performance numbers! lol



Source: Bloomberg


Small Cap stocks surged in January (where many of the 'most-shorted' stocks are found) as Dow and S&P were flat and Nasdaq managed only modest gains...



Energy outperformed in January, Staples were worst but everything was hit in the last few days...



This week was the worst for stocks since October...



The Russell 2000 outperformed the S&P 500 for the 5th straight month...



Source: Bloomberg

This week's weakness sent The Dow back below its 50DMA...



And The S&P 500 found support at its 50DMA...



And as shorts suffered, hedgies were forced to liquidate many of their most liquid longs...



Source: Bloomberg

...pushing FANG stocks back to unchanged on the month...



Source: Bloomberg

WSB to Hedgies...


Artemis' Christopher Cole points out that VIX traded at all-time highs to realized January 27th (Vol-of-vol also near an all-time high amid the transmutation of solvency risk for select L/S HF and margin calls on brokers such as Robinhood)



Bonds were notably sold in the last two days - even as stocks puked - suggesting a sell everything liquidation...



Source: Bloomberg

On the month, the short-end was unch as the long-end steepened notably...



Source: Bloomberg

1.10% remains a key level for 10Y yields...



Source: Bloomberg

Real Yields tumbled in the back half of January...



Source: Bloomberg

The dollar was up on the month - its first monthly gain since September



Source: Bloomberg

Bitcoin tested back above $38k today after Elon Musk's tweet...



Source: Bloomberg



Notably, precious metals got a boost in the last week as the WSB crowd shifted their attention to miners...



Silver surged...





And so did Gold, but each surge in gold was met by a mysterious selling pressure...



And crude futures were totally insane...



Finally, this made us laugh out loud - The Fear & Greed Indicator has plunged to 36, full of fear!



And the S&P 500 is just 3.5% from all-time record high prices (and valuations).

 

Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2020-



S&P sectors for the past week-

 

How Stocks Perform in a President’s First Year

2021 kicks off the first year of a new four-year presidential cycle. One of the most popular questions we’ve received lately is how have stocks performed historically during this political year.

For starters, the S&P 500 Index historically has gained 6.8% per year during the first year of the four-year presidential cycle, but stocks have done better when the president was re-elected than when someone new occupied the White House. This makes sense, as a new president could bring new policies and potential uncertainty. Additionally, stocks do better during years three and four under a new president, while they are much weaker early in the cycle.



As shown in the LPL Chart of the Day, breaking down all the quarters of the four-year presidential cycle shows that the first quarter of the first year in the cycle is one of only two quarters with a negative average return.



Bigger picture, historically the fourth quarter of the year has been the strongest of the year, with the first quarter the second best on average. Don’t forget, the third quarter is usually a weak one. Please note, below is for all years, not just the first year of the cycle.



We will take a closer look at February returns next week on the blog, but it is worth noting that when a new party is in power in the White House, historically stocks have struggled from late January until early March. “It is interesting, but from around the time of the inauguration to several weeks out, stocks tend to be pretty weak,” according to LPL Financial Chief Market Strategist Ryan Detrick. “It may be as simple as new leadership could bring with it new policies and added uncertainty”.



Will GameStop Stop The Bull Market?

“In the short term, the market is a popularity contest. In the long term, the market is a weighing machine.” -Warren Buffett

The incredible action from some of the most heavily shorted names has investors everywhere wondering what it all means? GameStop (GME) specifically has taken the country’s imagination by storm, as the stock started the year under $20 per share and this morning nearly hit $500.

Please note, we aren’t allowed to discuss individual equities, and in no way are we recommending any stocks in this blog, but from a bigger perspective, what is happening here? Basically, individual investors are using message boards like Reddit to find some of the most shorted stocks, then they all pile in at the same time, forcing large institutions to cover their shorts, and thus producing massive buying pressure.

LPL Research doesn’t think these parabolic moves reflect an overall unhealthy market, but institutions covering shorts at sizable losses may be removing capital from some big cap names. “While these developments could be another sign of excessive optimism in certain segments of the equity markets, we do not believe they represent a sign of a broader market bubble or indicate a major correction is forthcoming,” explained LPL Financial Chief Market Strategist Ryan Detrick. “Don’t forget, overall market breadth is extremely healthy and the credit markets are functioning just fine—we don’t see a repeat of 1999 like some are claiming.”

Lastly, as shown in the LPL Chart of the Day, after a 72% rally in the S&P 500 Index (and more in small caps and the Nasdaq), maybe it is simply time for a break. After all, the current bull market has tracked almost perfectly the start of the 1982 and 2009 bull markets thus far, and both of those took a break for a few months starting around this point in the cycle.



Most Heavily Shorted Stocks at the End of 2020 and Now
Fri, Jan 29, 2021

In the table below, we show the 20 stocks in the Russell 3000 that currently have the highest short interest as a percentage of float. It should come as no surprise that GameStop (GME) still tops that list with 122.97% of float short as of the most recent data for mid-month. That is even after a 21.36 percentage point drop from the end of 2020 when 144.34% of shares were short. It was also the most heavily shorted stock then. The runner-up is Dillard's (DDS) which currently has 83.04% of shares sold short compared to over 90% at the end of 2020. Again, despite that sizeable decline in the percentage of shares sold short, it was also the second most heavily shorted stock one month ago. Of the rest of the top 20, there are six other names with lower short interest than the end of last year. Looking across the rest of the most heavily shorted stocks, Sumo Logic (SUMO), American Well Corp (AMWL), and Sunpower (SPWR) are the stocks that have seen their short interest as a percentage of equity float rise the most. In terms of stock price performance, SPWR has been the one with the biggest rally having doubled YTD. The only other stock that has doubled YTD in this cohort has been GME.



In the table below, we show the stocks that have seen the biggest changes in the percent of shares sold short between the end of 2020 and the most recent data as of January 15th. Those currently in the top 20 most shorted stocks are highlighted in gray. Across the entire Russell 3,000, 1,777 stocks have seen their short interest as a percent of short move lower in the two week period from the end of December to mid-January. As shown, even after the massive short squeeze that has taken place, GME is actually not the stock that has seen the biggest decline in shorts. Relay Therapeutics (RLAY) holds that title with a 22.62 percentage point decline. That is even though the stock has experienced a relatively smaller move than some of its peers. Granted, a number of other stocks like nCino (NCNO) and Berkeley Lights (BPYU) to name a few have actually moved lower so far in 2020 and have also seen their short interest decline significantly. On the other end of the spectrum, WW International (WW) has seen its short interest rise the most.



Funding Markets Full of Cash
Thu, Jan 28, 2021

US funding markets are awash with liquidity thanks to ongoing QE purchases by the Fed and the progression of fiscal policy since the end of the year, as well as normal seasonal tailwinds that see more liquidity after year-end balance sheet constraints would roll off. Funding markets refer to collateralized, short-term lending via repo and related wholesale cash transactions.

Government money market funds that are allowed to conduct repo operations as well as buying Treasury and Agency debt are seeing roughly typical inflows, but those come on top of record share of overall money market funds. As a result, repo rates have been plunging. The secured overnight financing rate, which tracks the volume-weighted general collateral repo rate has fallen to 3 basis points above the bottom of the Fed Funds target range. While repo rates falling below the Fed Funds target range wouldn’t be a catastrophe and some parts of the market have gotten there, it’s not in the FOMC’s interest to have funding rates trading far outside its target policy rate range on a regular basis.

The solution already exists, of course: the NY Fed has a standing overnight reverse repo facility first introduced back in 2013 which is likely to start draining cash as investors seek higher returns than the repo markets offer. Reserve scarcity, which roll-off brought to bear in 2018 and 2019, is now reserve plenty, and so many reserves exist that the NY Fed will start draining them with reverse repos. Reserve balances will continue to grow this year thanks to QE purchases and an expected decline in the balance of the federal government's transaction account at the Federal Reserve.



Federal Reserve Rebukes Hawkish Rumors; Reaffirms Support

It has been a busy past 12 months for the Federal Reserve (Fed), after the onset of the global pandemic prompted historic stimulus from monetary policymakers. With the economy showing signs of being in the early stages of expansion, some have speculated that the Fed may begin to slow the pace of its asset purchases. Recent comments from some Federal Open Market Committee (FOMC) members that have hinted that the Fed’s bond buying program could be reduced by the end of the year, has signaled that other policymakers may be thinking that way, too.

Adding fuel to the speculation, the 10-year Treasury yield has been climbing, breaking above 1% for the first time since March 2020 as the economy has expanded. Meanwhile, as shown in the LPL Chart of the Day, breakeven inflation rates—the yield difference between Treasury Inflation-Protected Securities (TIPS) and nominal Treasuries—have risen to levels not seen since 2018, suggesting that inflation expectations are heating up, although levels still remain largely benign.

 

Here are the current major indices pullback/correction levels from ATHs as of week ending 1.29.21-


Here is also the pullback/correction levels from current prices-


Here are the current major indices rally levels from correction low as of week ending 1.29.21-

 

​

Here are the upcoming IPO's for this week-

 

Stock Market Analysis Video for February 1st, 2021
Video from AlphaTrends


ShadowTrader Video Weekly 2.1.21
Video from ShadowTrader

 

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Here are the most anticipated Earnings Releases for this upcoming trading week ahead.

***Check mark next to the stock symbols denotes confirmed earnings release date & time***

Monday 2.1.21 Before Market Open:

Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES!

Monday 2.1.21 After Market Close:

Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES!

Tuesday 2.2.21 Before Market Open:

Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES!

Tuesday 2.2.21 After Market Close:

Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES!

Wednesday 2.3.21 Before Market Open:

Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES!

Wednesday 2.3.21 After Market Close:

Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES!

Thursday 2.4.21 Before Market Open:

Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES!

Thursday 2.4.21 After Market Close:

Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES!

Friday 2.5.21 Before Market Open:

Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES!

Friday 2.5.21 After Market Close:

Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES!

NONE.

 

And finally here is the most anticipated earnings calendar for this upcoming trading week ahead-
($AMZN $BABA $PFE $UPS $PINS $PYPL $SNAP $GOOGL $XOM $F $QCOM $TMO $PTON $ABBV $APPS $SPOT $ON $ATVI $CLX $BMY $BP $GILD $CMG $EA $OTIS $EBAY $QTNT $NXPI $FEYE $VRTX $SIRI $CRUS $MRK $PLUS $LGND $BIIB $PENN $HOG $ARLP $MDC $REGN)


If you guys want to view the full earnings post please see this thread here-

• Most Anticipated Earnings Releases for the week beginning February 1st, 2021 <-- click there to view!

 

StonkForumers! Come join us on our stock market competitions for this upcoming trading week ahead!-

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• Stockaholics Weekly Stock Picking Contest & SPX Sentiment Poll (2/1-2/5) <-- click there to cast your weekly market vote and stock picks!

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It would be pretty sweet to see some of you join us and participate on these!

I hope you all have a fantastic weekend ahead!

 

haha, yup i'm feeling the same too. it does feel a bit short term oversold maybe. not that i totally think the downside is done yet, but maybe just a breather until it resumes again. it'll be interesting to see how this week unfolds though. we just had a down JB (january barometer) and that sometimes hasn't bode well for the full year. so, could be some choppy time again. would be welcoming tbh, market has been going pretty gang busters for a while now. so, some downside would be quite welcoming and healthy. although, maybe not all at once haha.

 

BTW, just some quick stats I had stumbled across on my twitter feed this evening.

So as I had mentioned ^ above, we did finish with a down January (aka, the "January Barometer")...which has an 'ole saying that goes "so goes january, so goes the rest of the year".

Since going back to 1950, the final 11 months of the year has been up +11.9% on average when the SPX has finished the full month of January in the green. However, that's compared to just up only a meager +1.7% if the full month ended down. So, could be some choppy times ahead, and maybe not an only up up and away market that we have been so accustomed to seeing for so long. We'll see how this plays out.

 

However, there is a bit of a catch to that January Barometer indicator, as it has actually been kinda off/broken of late lol.

Just saw now, that when there has been a down January, the SPX has actually done an about face and has actually been kinda bullish recently, with the final 11 months of the trading year seen higher 8 of past 9 times (when there was a red January). Albeit, the most recent 3 times (2015, 2016, and last year) have all had some pretty significant volatility.

 

Haha, so I didn't know there was such a thing as the "Tom Brady" indicator for the market. I mean, it's really just called the "Super Bowl Indicator" but I guess since Tom Brady has been in the big game, like almost always over the past several years, they just made it into the Tom Brady indicator.

I don't ever put any weight into these things because I think they're pretty irrelevant when it actually comes to the market. But, I suppose it's fun to talk about lol.

Evidently, the SPX has been alternating between green and red years for the past 7 times that Tom Brady has gone to the big game. The last time was in 2019 with the Pats. The SPX was up a pretty whopping +28.9% that year. If this follows the pattern that it has been following for the past 7 times that Tom Brady has been to the Super Bowl, then that would suggest a red year. But, again take this all with a good grain of salt at the very least haha.



Also, while we're on the topic of football and the market, it's worth noting that the Super Bowl Indicator has better odds of a green full year for the market if the NFC wins.



However, lately though, the AFC winning the Super Bowl has actually been very good for the bulls.

 

One last thing to note about that Super Bowl Indicator, as I really don't want to spend too much time or thoughts on this, because like I said before, it's really not meant to be taken too serious.

But, apparently the market has had its best year when the Bucs have won the SB out of all of the other 20 teams that have ever won it.

 

Oh and BTW guys, just real quickly here. This is a bit unrelated to the market. But, I just wanted to quickly point out some of the changes I had made to the forums here over this past weekend, in particular the main home page.

I've removed the index charts (rather I moved them to the right sidebar, which you'll see in my next screenshot) at the top, and have added some futures charts, that are being pulled from Finviz. These charts are actually not static charts but rather dynamic, which means they update on each page refresh here at StonkForums.



And I just moved the index charts to the right sidebar of the front page. And I've made them much "bigger" than your used to, and a bit more easier to see.



Finally, I've added a few new things to the navigation bar up top.

Having a tab for the contests here, and a new look to our "Live Charts" tab as well. Hope you guys like the new dark colored theme with the TradingView charts there.

 

Bespoke's Morning Lineup - 2/1/21 - Global Rally
Mon, Feb 1, 2021

When futures opened for trading last night, it was looking like January's end of month weakness was going to continue right into the start of February. After the opening weakness, dip buyers stepped up in full force turning a weak start to the month into a strong one. Across the globe, equities are rallying, and strangely enough, GameStop (GME) shares are basically flat on the day!

After a weak close to January, the S&P 500 ended at its lows of the month on Friday. That decline was also notable for the fact that it was the first time since the Election that the S&P 500 closed below its 50-day moving average and ended a streak of 58 straight trading days above that level.



At 58 trading days, the most recent streak of closes above the 50-DMA for the S&P 500 was a relatively long one but nothing extreme by historical standards. In the last 10 years alone, there have been 12 streaks of longer duration including the 102 trading day streak coming out of the COVID lows. In other words, while the S&P 500's post-election rally has ended, it doesn't necessarily mean the market is in for an extended period of market weakness either. Without pullbacks, there wouldn't be rallies.