Stock Market Today: January 15th - 19th, 2024

Welcome StonkForums to the trading week of January 15th!

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


S&P Sectors End of Week:


Major Indices End of Week:


Major Futures Markets End of Week:


Economic Calendar for the Week Ahead:


What to Watch in the Week Ahead:
(N/A.)

 

Yield Curve Dis-Inverts As 'Ummm-flation' Sparks Surge In Rate-Cut Odds, Ethereum, & MAG7 Stocks
FRIDAY, JAN 12, 2024 - 04:00 PM

'Cooler-than-expected' PPI (along with lower inflation expectations from NYFRB's survey) trumped 'hotter-than-expected' CPI this week and opened the floodgates for traders to bet on The Fed being dovish-er than they expect to be in 2024.



Source: Bloomberg

Will The Fed comply?



The odds of a cut in March have soared above 80% (despite all the FedSpeak jawboning away from that)...



Source: Bloomberg

Expectations for 2024 rate-cuts exploded to new highs at 170bps (now fully pricing in 6 cuts and a 65% odds of a 7th cut)...



Source: Bloomberg

And as rate-cut expectations soar, so the spread between 2Y yields and current Fed Funds nears record highs...



Source: Bloomberg

Of course, as a reminder, the real reason The Fed will be cutting rates is to avoid a banking crisis which looms large in March...

...as the pace of liquidation at The Fed's RRP is accelerating...



Yields tumbled across the entire curve this week,,, except for the long-end (which was unchanged)...



Source: Bloomberg

With 10Y back below 4.00%...



Source: Bloomberg

..and the 2y Yield at its lowest since May '23 (and the same level as it was in Sept '22)...



Source: Bloomberg

Sparking a massive bull-steepening in the curve - dis-inverting the 2s30s segment...



Source: Bloomberg

For context, this is the 'steepest' and most un-inverted the (2s30s) curve has been since July 2022...



Source: Bloomberg

However, while inflation was on many people's minds, crypto also dominated the headlines with Gensler dragged kicking-and-screaming across the finish-line of spot bitcoin ETF approval.

Bitcoin ended the week marginally lower (after early week gains evaporated on 'sell-the-news' flow)...



Source: Bloomberg

...as Ethereum soared 16% (its best week since January 2023)



Source: Bloomberg

IBIT - the iShares BTC ETF - is err underperforming (to say the least) since the open yesterday...



Source: Bloomberg

Nasdaq surged over 3% on the week (best week since early Nov '23) while The Dow and Small Caps were unchanged (S&P closed up almost 2% on the week)



Nasdaq's strength was driven by the 'Magnificent 7' stocks' best week since early Nov '23...



Source: Bloomberg

Thanks to MAG7, Tech was the best performer on the week as Energy lagged heavily. Financials ended the week lower...



Source: Bloomberg

Microsoft overtook Apple as the world's most valuable company (as TSLA faded this week)...



Source: Bloomberg

'Most Shorted' stocks were down 4% (AGAIN) on the week, erasing more than half of the Fed-driven short-squeeze from December...



Source: Bloomberg

Bank earnings today prompted quite chaotic trading among the big names with most generally disappointing by the close ...



Source: Bloomberg

Gold (spot) rallied significantly in the last two days (from below $2020 to above $2060), finding support at the top of December's FOMC spike...



Source: Bloomberg

Amid tanker attacks by the Houthis and retaliatory missile strikes by US allies, oil prices were lower on the week - of course they fucking were... as the $71-$74 range remains glue, no matter what is going on in the real-world...



Source: Bloomberg

Finally, we note that on both the day that ETFs have been trading, the spot cryptocurrencies themselves have been aggressively sold from the US equity open to the European equity close - at which point selling stops...



Source: Bloomberg

A suddenly tumbling crypto universe would be very convenient for Liz Warren, Gary Gensler, Jamie Dimon, Christine Lagarde, and a whole host of naysayers who were quick to point out Bitcoin's lack of worth for anything but the enablement of terrorism or child sex-trafficking... and all the worst bits of the bible.

These three words seemed perfect for all that bullshit...

Remember to remember MLK on Monday as US markets are closed.

 

Nat Gas All Over The Place
Fri, Jan 12, 2024

Even for a commodity like natural gas, the last three months have been incredibly volatile. Think about this; over the last month, front-month natural gas futures are up over 40%, but over the last three months, they’re actually down. A 40% rally and it’s still in the red over the last three months. Incredible.



Below we show the one-month rate of change in natural gas over time, and anything over the red line indicates a rally of more than 30%. While there have been plenty of other periods where natural gas rallied a lot more than it has over the last month, the recent move ranks as the largest since late 2022. It’s also a far cry from where the market was a year ago when the commodity was in the middle of its largest ever one-month decline (-52.4%).



The scatter chart below compares rolling one-month moves in natural gas to rolling three-month returns. As you would expect, the relationship is positively correlated- if natural gas is up over the last three months, it’s probably also up over the last month and vice versa. That’s what makes the current performance stick out so much. In the chart below, we have drawn a red box around all the different occurrences where nat gas rallied at least 30% in a month but was down over the prior three months, and there weren’t many.



In the long-term chart of natural gas below, we have included red dots for each of those occurrences when it was up at least 30% in the prior month but down over the prior three months. While there were sporadic occurrences from the late 1990s through 2012, there was nearly a ten-year lull from May 2012 up until 2022 at which point there have been several additional occurrences.



In terms of performance following these periods of extreme divergences between one and three-month returns in natural gas, overall, there hasn’t been much of a clear trend. Before the three most recent occurrences since the start of 2022, the commodity’s performance was generally positive going forward. In the three most recent occurrences, though, natural gas experienced declines of over 40% each time.

Just to illustrate once again how volatile natural gas is, check out the performance following the January 2022 occurrence. While natural gas was up nearly 70% after six months, a year later it was down 44.9% for an overall performance shift of over 110 percentage points!



January Monthly OpEx Week Bearish

Over the past 25 years, since 1999, S&P 500’s performance during January’s option expiration week has been mixed with a negative lean. Friday has been up 13 and down 12, and the entire week has been down 16 times with an average weekly loss of 0.72%. DJIA’s record on Friday and the week after is similar to S&P 500. DJIA has performed modestly better during expiration week with 12 advances, but its average loss is larger at 0.89%. NASDAQ holds no observable advantage over S&P 500 and DJIA with mild average losses on Friday, during the full week and the week after.



Claims Ratio Spiking
Thu, Jan 11, 2024

Overshadowed by the hotter than expected CPI print, initial jobless claims at least came in healthier than expected this morning. Initial claims came in at 202K, down 1K from last week's upwardly revised level of 203K. At current levels, initial claims are down near some of the lowest levels of the past year. Zooming out, those are also some of the lowest levels since the late 1960s which could paint a historically rosy picture for the labor market.



Taking a look at claims before seasonal adjustment, one of the first couple weeks of the year have often marked the annual peak in claims. Assuming this week does in fact mark that seasonal high, it would measure roughly inline with other years since 2018 save for 2021 when claims were working off extremely elevated pandemic levels. Looking forward over the first half of the year, unadjusted claims face seasonal tailwinds.



In addition to initial jobless claims posting a strong reading, continuing claims came in below expectations falling to 1.834 million compared to expectations of an uptick to 1.87 million. That also marks back-to-back weekly declines in continuing claims as current levels are now down 91K versus the mid November high of 1.925 million. That level is also back below last spring's highs. That means there has been at least some respite in what more generally has been an upward trend in continuing claims over the past year and a quarter.



In all, both initial and continuing claims have come off their best levels put in place in the fall of 2022 but have each seen steady improvement in recent weeks after a lackluster 2023. However, that does not exactly put the two in parity, and there is at least one way of chopping up the data which comes off as less optimistic than the historically strong levels.

Below we take the ratio of the four week moving averages of continuing claims versus initial claims. While far from a perfect recessionary indicator, it has generally spiked during, albeit particularly in the later stages of, past recessions. Given initial claims have returned to historically low levels while the pivot lower in continuing claims has been less pronounced and more recent, this ratio has rocketed higher over the past six months. In fact, it has risen 31% in that span. Prior to 2020, each instance of an increase of that size occurred at the tail ends of recessions, namely those of the 1970s and early 1980s. However, in the post pandemic period, swings of that size have greater precedence with three other even larger increases occurring over the past few years.



Junk Bonds Crushing Long-Term Treasuries
Wed, Jan 10, 2024

Since the bond market peaked in late 2021 just before the Fed embarked on its attempt to tame inflation by hiking rates, it has been painful to be an investor in "risk-free" Treasuries at nearly all points on the curve. The most pain has been felt at the long-end of the Treasury curve on notes expiring in 10-20+ years.

While the 20+ year Treasury ETF (TLT) is down 28% on a total return basis over the last two years, you may be surprised to see that the high-yield (junk) bond ETF (HYG) is actually now up on a total return basis over the same time frame. HYG has also easily outperformed the aggregate bond market ETF (BND), which is down 7.4% over the last two years.



Going back five years instead of two, had you decided to go with the "safety" of long-term Treasuries (TLT) over the higher-risk junk bond space (HYG) back in early 2019, you're still kicking yourself as HYG is up 18.3% over the last five years compared to a 10.6% decline for TLT over the same time frame.

As shown below, TLT was actually up nearly 50% YoY versus a decline of more than 10% for HYG at the time of the COVID Crash in early 2020 when the Fed cut rates to zero while riskier assets like stocks and junk bonds were tanking. But ever since the COVID Crash lows, long-term Treasury yields have been trending higher (meaning lower bond prices).

Because the high-yield bond ETF has a lower average duration than TLT, it has been spared the massive drop in price that long-term Treasury bonds have experienced. Couple that with high yield spreads being in a relatively good place, and HYG is currently trading close to a five-year high on a total return basis. TLT investors are jealous.

Just as longer duration worked against TLT as rates were rising, it reaps the rewards during periods when rates decline. Since the 10/19/23 peak in the 10-year yield, for example, TLT has rallied 16.3% while HYG is up less than half that (7.8%).

Some Bad News and Some Good News


“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” – Winston Churchill

We noted last week that stocks fell during the normally bullish Santa Claus Rally (SCR) period and why this potentially could be a troublesome sign. Well, we have some more bad news, but don’t worry, we will end with some good news.

On the heels of no Santa, now the first five days of the new year finished slightly in the red for the S&P 500, another potential warning sign. As random as it sounds, how a year starts those first five days can be a good tell for how the rest of the year might go. Remember, for example, last year stocks had a huge first five days.

If those first five days are lower the full year average return is only 0.3% and the year is higher about a coinflip of the time, but if the first five days are up the returns jump to 14.2% and 81.3%.

Here are the 26 times (since 1950) the first five days of the new year finished in the red. Yes, the returns overall are quite disappointing, but what stands out to me is some of the recent weakness all took place in troublesome times. 2022 saw the massive jump in inflation and an aggressive Fed, 2008 was the financial crisis, 2000 and 2001 saw the tech bubble implode, and 1981 was a recession. There were a lot of other years that saw a negative first five days and things turned out just fine. Could economic trouble come in 2024? Or course, but as of now, we aren’t seeing any major warning signs of impending economic trouble and that should comfort investors.



What about when stocks are down during the SCR and the first five days? Now we only have 11 instances since 1950 and again, the returns leave a lot to be desired. Again, 2000 and 2008 are there, and we also see 1969, another year we had a recession.



The bottom line is we remain bullish and expect higher prices in 2024, but the potential for some early ’24 weakness is heightened due to some of these signals. This weakness during a normally bullish time of the year has our attention, but after a 9-week win streak closing out 2023 (the longest since 2004), the S&P 500 was likely due for a break. The massive breadth thrusts we saw late last year, a healthy economic backdrop, and the pivot to a more dovish Fed still have us in the camp that better times are coming.

Ready for some good news? After reading the above, I know I sure am.

It turns out that one of the best reasons to be bullish this election year is because stocks fell in 2022, which was a midterm year. It turns out that the past 17 pre-election and election years that came after a negative midterm year finished in the green. 17 out of 17!

You can see all the breakdowns below, but we expect this year to make it 18 out of 18 when all is said and done. Lastly, looking at things through the lens of having a Democratic vs Republican president really doesn’t change the returns all that much either.



We are excited that our 2024 Outlook is set to come out very soon! There are many worries out there, but overall, we remain optimistic we can avoid a recession and investors should have another good year in ’24. Be on the lookout for our Outlook and thanks for reading!

First Five Days Negative, Trifecta 0 for 2

S&P 500 was down 0.1% for our First Five Day (FFD) early warning system is negative. Since 1950, the previous 26 down FFD were followed by 14 up years and 12 down with an average gain in all years of just 0.3%. The last negative FFD was in 2022 when S&P 500 declined 1.9%. In 2022, S&P 500 went on to decline 5.3% in January and thus our January Barometer (JB) was negative. For 2022, S&P 500 was down 19.4%.

Last week the Santa Claus Rally (SCR) was negative, and today the FFD was negative. At this juncture there are two possible outcomes remaining for our January Indicator Trifecta. Our JB can either be positive or negative. The historical results of both are visible in the following tables.

A positive JB would certainly boost prospects for full-year 2024 even after down FFD and negative SCR. Following the previous three occurrences when the SCR and FFD were negative and the January Barometer was positive, S&P 500 advanced three times over the remaining eleven months and for the full year with average gains of 15.1% and 19.9% respectively. The December Low Indicator (2024 STA, page 36) should also be watched with the line in the sand at the Dow’s December Closing Low of 36054.43 on 12/6/2023.

Market Generally Better Before Martin Luther King Jr. Day than After

This year will be the 27th year that the stock market will be closed to honor Dr. King and his contributions to the world and civil rights. Martin Luther King, Jr. Day has only been observed since 1998 and market behavior around this holiday has not been added to the Stock Trader’s Almanac yet. We wanted to share with you the history of market performance around this holiday.

Overall the market has been more positive, on average, on the Friday before MLK day and weaker the Tuesday after. Though trading is rather mixed with a relatively even split of ups and downs on the day before and the day after. DJIA has been notably weak on Thursday, down 17 times in the last 26 years. This mixed and choppy performance is possibly due to the fact that MLK day can either land in options expiration week or the week after. Both weeks have been rather volatile and weak since 1999.

 

Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2024-



S&P sectors for the past week-

 

Here are the current major indices pullback/correction levels from 52WK highs as of week ending 1.12.24-


Here is also the pullback/correction levels from current prices


Here are the current major indices rally levels from 52WK lows as of week ending 1.12.24-

 

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Here are the upcoming IPO's for this week-

 

Stock Market Analysis Video for January 12th, 2024
Video from AlphaTrends Brian Shannon


ShadowTrader Video Weekly 1/14/24
Video from ShadowTrader Peter Reznicek
(VIDEO NOT YET POSTED.)

 

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

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StonkForums Weekly Stock Picking Contest & SPX Sentiment Poll (1/15-1/19) <-- click there to cast your weekly market direction vote and stock picks for this coming week ahead!

Daily SPX Sentiment Poll for Tuesday (1/16) <-- click there to cast your daily market direction vote for this coming Tuesday ahead!

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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!

 

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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 1.15.24 Before Market Open:

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

(NONE. U.S. MARKETS CLOSED IN OBSERVANCE OF MARTIN LUTHER KING JR. DAY.)

Monday 1.15.24 After Market Close:

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

(NONE. U.S. MARKETS CLOSED IN OBSERVANCE OF MARTIN LUTHER KING JR. DAY.)

Tuesday 1.16.24 Before Market Open:

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

Tuesday 1.16.24 After Market Close:

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

(T.B.A.)

Wednesday 1.17.24 Before Market Open:

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

(T.B.A.)

Wednesday 1.17.24 After Market Close:

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

(T.B.A.)

Thursday 1.18.24 Before Market Open:

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

(T.B.A.)

Thursday 1.18.24 After Market Close:

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

(T.B.A.)

Friday 1.19.24 Before Market Open:

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

(T.B.A.)

Friday 1.19.24 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-
($GS $TSM $MS $AA $IBKR $SCHW $APLD $SLB $DFS $FITB $PLD $PNC $TCBI $PPG $USB $HWC $CVGW $PRGS $TFC $WTFC $FAST $CFG $HBAN $ALLY $JBHT $MBWM $FHN $MTB $KMI $SNV $PNFP $KEY $TRV $OZK $CMA $FULT $STT $FBK $NTRS $RF $HOMB $GNTY $IIIN $BANR $FNB $OCFC $FUL $WNS $HDB $SIFY)


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

• Most Anticipated Earnings Releases for the week beginning January 15th, 2024 <-- click there to view!

 

(REMINDER: U.S. MARKETS ARE CLOSED ON MONDAY, JANUARY 15TH, 2024 IN OBSERVANCE OF MARTIN LUTHER KING JR. DAY.)

 

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

GLTA on this Tuesday, January the 16th, 2024!

 

Morning Lineup - 1/16/24 - Empire Crushed
Tue, Jan 16, 2024

Futures are poised for a negative start to the US week as European and Asian equities generally traded lower while US markets were closed yesterday. Oil prices along with interest rates have been moving higher this morning, but the Empire Manufacturing report for January which was just released came in significantly weaker than expected, and that could help to keep a lid on rates. While economists were forecasting the headline reading to come in at around -3, the actual reading was much weaker falling to -43.70. Just to put some perspective on that number, the only time it was lower was during the depths of the Covid lockdowns in early 2020, and the only time the report missed expectations by a wider margin was in April 2020.

Atlanta Fed President Bostic was interviewed in the FT over the weekend, and he suggested that any potential rate cuts from the Fed would be unlikely until at least the summer. That has let some air out of the rate cut pricing balloon this morning relative to last Friday (blue vs yellow bars below), but only by a little bit. In the short-term, markets are pricing in 1.8 25 bps rate cuts between now and the May 1st meeting which is slightly less than where things stood at the January meeting but still well above where the market was at the end of October.

Longer-term, pricing of cuts remains aggressive with 6.4 25 bps cuts priced in between now and the 12/18/24 meeting. That’s down from 6.7 last Friday but still slightly above where things stood at the end of last year and well above the 5.9 cuts that were priced in as of December.

Bostic is a voting member of the FOMC this year, so his comments certainly carry weight and looking ahead, investors will be focused on a speech today at 11 AM Eastern where he will be speaking at the Brookings Institution on his economic and policy outlook. Back in November, Waller commented that he was confident that Fed policy was well positioned to slow the economy and get inflation back down to its 2% target and even envisioned a scenario where the Fed could be cutting rates within the next three to five months.

 

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, January 16th, 2024.