Stock Market Today: February 5th - 9th, 2024

Top of the afternoon StonkForumers! Happy Tuesday to all of you and welcome to the new trading day and a frrrrrrrrrrrresh start. Here is a quick check on those futures as we are over 3 hours into the US cash market open.

GLTA on this Tuesday, February the 6th, 2024!

 

Morning Lineup - 2/6/24 - Do it for the Gipper
Tue, Feb 6, 2024

Across the S&P 500, Nasdaq, and Dow this morning, futures are pointing to modest losses with all three indices trading down 0.12% as of this writing. True to form, though, the Russell 2000 is down more than triple that at 0.37%. Outside of the US, European stocks are modestly higher, and Chinese stocks surged on hopes for more government support. The economic calendar in the US is light today as it will be for most of the week.

Today would have marked the 113th birthday of former president Ronald Reagan, and besides being the leader of the free world for eight years, Reagan’s acting career was highlighted by his role in Knute Rockne – All American, where he played George Gipp. Knute Rockne was the coach of football at Notre Dame and was famous for his ”Win One for the Gipper Speech” which he gave at halftime in a game against Army at Yankee Stadium in 1928. The team was having a terrible season and living up to their Fighting Irish nickname they were not. Inspired by the pep talk, Notre Dame came out and scored two second-half touchdowns to stun Army by a score of 12-6. If there’s any part of the market that could use a Rockne boost right about now, it’s small caps.

Well maybe not just small caps. Just when you thought it was safe to get back in the 60/40 pool, long-term US treasuries have found themselves getting bombarded in 2024. Year to date, the iShares 20+ Year US Treasury ETF (TLT) is already down over 4%. Long-term treasuries sold off throughout just about all of January, and while they rallied in the last days of January and to kick off February to get back to even, the two trading days since last Friday’s employment report have been painful. TLT has experienced back-to-back declines of over 2%, taking it back below both its 50 and 200-day moving averages and perilously close to breaking the loose uptrend that emerged from the October lows.



Consecutive declines of over 2% hurt no matter what the asset class, but the sting of two declines of that magnitude for treasuries hits hard. Since TLT started trading in late 2002, there have only been two other periods where the ETF experienced back-to-back 2% declines, and they occurred at the two most volatile periods of trading in the last two decades – late in the Financial Crisis (January 2009) and within days of the Covid lows. As everyone remembers, those two prior periods both ended up being massive buying opportunities for the equity market, but they also occurred after very large declines in stocks. Right now, the S&P 500 is within half of one percent of an all-time high. Extreme volatility in the treasury market with the VIX under 14? You don’t see that often, but then again, there’s a lot that has happened in the last four years that wouldn’t get filed in the normal folder.

 

Here is a final look at today's market and futures maps, as well as how each sector performed individually at the close on Tuesday, February 6th, 2024.

 

Top of the morning StonkForumers! Happy Hump Day to all of you and welcome to the new trading day and a frrrrrrrrrrrresh start. Here is a quick check on those futures as we are over an hour into the US cash market open.

GLTA on this Wednesday, February the 7th, 2024!

 

Morning Lineup - 2/7/24 - Futures on the Rebound
Wed, Feb 7, 2024

US equity futures were flat to modestly lower up until about an hour ago, but have seen a nice bounce, and all three major US indices are indicated to open higher on the day. Once again, there's not much economic data to steer futures, and the pace of earnings since yesterday's close has been mixed. On the upside, Ford (F) has been one of the bigger winners as it trades 5% higher after better-than-expected earnings and announcing a special dividend of 18 cents per share. To the downside, shares of Snap (SNAP) have lost nearly a third of their value this morning following a weaker-than-expected report, putting the stock on pace to fall in reaction to earnings for seven straight quarters.

In international markets, it was a mixed session in Asia overnight as Japan saw a stronger-than-expected report on Leading Indicators. Europe has taken a modestly negative tone in early trading as most major indices in the region trade down fractionally. In Germany, Industrial Production fell more than expected while a payrolls report in France was slightly better than expected.

After Tuesday’s rally in mainland China, the KraneShares CSI China Internet ETF (KWEB) had its best day since last July as it rallied 6.7%. Investors were excited about the prospects for a major round of stimulus from the Chinese government to prop up its stock market and economy, but it’s important to realize that there have been more than a few false alarms over the last few years. Already this morning, KWEB reversed some of yesterday’s gains with a decline of over 2% in the pre-market.

The chart below shows the performance of KWEB since its inception in 2013, and the red dots indicate each time the ETF rallied more than 5% in a single day. It’s easy to see that there have been a lot more occurrences since the ETF’s peak in February 2021 than before it. Of the 58 occurrences in the ETF’s history, 42 (72%) have been in the last three years.



After big rallies in a bear market like Tuesday, it’s tempting to think that it’s the start of something bigger, but in KWEB’s case, it has not. We saw a similar dynamic at play in the US during the dot-com bust and then during the financial crisis where the response to every big move was “Is this it?” Eventually, one of the rallies does take hold, but there are a lot of false alarms along the way. In KWEB’s case, Tuesday’s rally only took the ETF back to where it was less than two weeks ago.

 

Here is a final look at today's market and futures maps, as well as how each sector performed individually at the close on Wednesday, February 7th, 2024.