Stock Market Today: May 1st - 5th, 2023

Welcome StonkForums to the trading week of May 1st!

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.)

 

Bonds, Stocks, & Bitcoin Surge Amid Week Of Stagflationary & Systemic Threats

A week of disappointment in macro with stagflation very much back on the table...



Source: Bloomberg

Increasing banking system threats with FRC literally collapsing...



...but the 'rest' surviving based on stocks, but credit markets ain't buying what stocks are selling...



Source: Bloomberg

And looming US debt defaults...



Source: Bloomberg

...was ignored by stocks this week as mega-cap tech gains dragged Nasdaq notably higher (along with the S&P and Dow) while Small Caps lagged...



Of course, the illusion of earnings 'beats' has helped... as Goldman notes, the bar was very low coming into this earnings period.

Consensus expectations were for EPS to fall by 7% year/year, the largest decline since 3Q 2020 and a significant deterioration from the -1% year/year growth posted in 4Q 2022. This is not playing out and as a result the market is hanging tough.

Good News: So far earnings have been much better than feared with 54% of companies beating consensus estimates by at least 1SD (vs historical avg of 48%). Only 10% of companies have missed consensus estimates by at least 1SD (vs historical avg of 14%).



Bad News: The companies that are beating consensus ests by >1SD are only outperforming the S&P 500 by 40bps on the trading session directly following earnings. Typically beats outperform the S&P 500 by over 100bps. The few companies that are missing these low bars are being severely punished, underperforming the S&P 500 by -290bps vs historical avg of -211bps.

But the equity market had help from its 0DTE pals the last two days as the call-grab was unleashed. Yesterday and most of today saw 0DTE call-buyers run riot, lifting the S&P easily back into the green for the week. We do note that late on today, there was some serious negative-delta flow (profit-taking) into the weekend...



Source: SpotGamma

Which sparked a remarkable short-squeeze...



Source: Bloomberg

VIX was lower on the week, down considerably from the early week tag of 20. However, 1-Day VIX (tracking 0DTE) ended notably higher with every day looking the same: an opening gap down and persistent vol bid all day...



Source: Bloomberg

On the month, Nasdaq's last few days got it back to unchanged while The Dow was the month's biggest gainer and Trannies and Small Caps the biggest losers...



Source: Bloomberg

Year-to-date, the Nasdaq continues to roar while the S&P 500 treads water at levels we've seen before...



Source: Bloomberg

While stocks were higher on the week, bond yields ended the week lower with the entire curve down around 11-13bps by the end, as mid-week underperformance of the long-end compressed...



Source: Bloomberg

On the month the picture was even less distributed with yields practically unchanged (belly modestly outperforming as wings underperform)...



Source: Bloomberg

The dollar ended April marginally lower (its 6th month drop of the last seven months)



Source: Bloomberg

Solana, Bitcoin, & Ethereum all had a solid month while Ripple was down notably...



Source: Bloomberg

Amid a very volatile week, Bitcoin was notably higher, pushing back above $29,000...



Source: Bloomberg

Oil managed very modest gains on the month having erased all of the post-OPEC+ production-cut spike that started the month off. NatGas did the opposite, soaring after a kneejerk lower on OPEC. Perhaps most ominously, we note that copper was hammered on the month as growth fears and China reopening hopes fade (that's the third straight mont of drops for Dr.Copper)...



Source: Bloomberg

Gold ended April higher (though by less than 1%) for its 5th positive month of the last six, having tested near record highs and holding around $2,000...



Source: Bloomberg

WTI managed to close back above pre-OPEC+ level thanks to today's bounce, but oil overall remains rangebound broadly speaking between 74 and 81...



Finally, we note that the top 10 stocks are responsible for 86% of the overall index return YTD...



"To infinity and beyond" for 'safe haven' mega-cap tech appears to be the mantra of the market once again, but be careful what you wish for as this narrow breadth often dangerous (see NDX vs NDXE in Nov’08, Oct’18, Dec’21)...



And talking of the future, congrats to Nico on the internship. Enjoy and soak up everything you hear.

 

Everything You Ever Wanted to Know About Sell In May
Posted on April 28, 2023

Buckle up, as one of the most well-known investment axioms is nearly here, the ‘Sell in May and Go Away’ period, otherwise known as Sell in May. This gets a ton of play in the media, as these six months are indeed the worst six-month combo out of all scenarios, while stocks also did quite poorly last year during this timeframe as well, only adding to the likely hype.



The thinking is you are better off to simply ignore these six months and go away. Turns out, from May through October the S&P 500 is historically quite weak, up only 1.7% on average and higher less than 65% of the time, making it indeed the worst combo.

Of course, 1.7% is still a positive return, so maybe we shouldn’t just blindly go away? That is our take and there are other reasons not to fear these worst six months in 2023. Sure, more volatility and scary headlines could happen, but with overall market sentiment extremely bearish and the economy on firmer footing than most think, we’d use any seasonal weakness as an opportunity to add to core positions.

Here’s something I bet most investors don’t know, May has been really strong lately for stocks, higher an incredible nine of the past 10 years. Maybe we should call it Sell in June?



Let’s take a closer look at that one year over the past decade that stocks fell in May. Turns out, one potential hiccup is May is the second worst month of the year for stocks during a pre-election year, with only September worse. In fact, these are the only two months with a negative return during a pre-election year, with May down 0.1% and September down 0.7%. Even in the bullish 2019 (when stocks gained close to 30%), stocks still lost more than 6% in May of that year.



Last year was a great time to sell and go away during these historically weak six months, but that wasn’t always the case. In fact, over the past decade, stocks only fell twice these six months, last year and 2015. Looking at the past decade shows that these six months have been up nearly 5% on average versus the 1.7% return going back to 1950.



We’ve noted many times the past several months how historically strong pre-election years were for stocks, well, what about Sell in May in a pre-election year? As you can see below, the returns are right about average, up 1.8% during these six months in a pre-election year. What stands out more to me is how poorly these six months are during a midterm year, playing out well last year for sure.



Now here’s where things get quite interesting. It turns out how things are going heading into these six months can often give a clue what might happen. When stocks are down year-to-date heading into these six months the return drops to 2.3% and is higher less than a coinflip of the time. Given this was the scenario last year, along with a midterm year, maybe a rough time wasn’t such a surprise? Now the good news is when stocks are up for the year (like 2023), these worst six months actually gained more than 4% on average and were higher more than 75% of the time. This could bode well for potentially better returns these six months in 2023.



May’s First Trading Day: S&P 500 Higher 72% of the Time

Next Monday, the first trading day of May, has a bullish history over the past 25 years. DJIA, S&P 500 and NASDAQ have all averaged around 0.4% on the day. S&P 500 has the best track record, up 18 times or 72% of the time since 1998. With an average gain of 0.22%, Russell 2000 is slightly weaker. May’s first trading day’s worst loss was in 2020. DJIA and S&P 500 shed over 2.5% while NASDAQ and Russell 2000 dropped over 3%.


"Big" Winners
Fri, Apr 28, 2023

Whenever you see a list of best-performing stocks, it’s inevitably loaded with many small stocks that most investors have never heard of. This year, though, it’s practically been the opposite trend as the two top performing stocks in the S&P 500 on a YTD basis – Meta Platforms (+96%) and Nvidia (+88%)- are not only household names but they also have market caps of more than $500 billion. We’d also note that both stocks are also more than 30 percentage points ahead of the next closest stocks in terms of top YTD returns.

With such strong returns among the largest stocks in the S&P 500, the YTD performance spread between the market-cap-weighted S&P 500 and its equal-weighted counterpart is among the widest ever seen on a YTD basis through the end of April. Through Friday afternoon, the market-cap-weighted S&P 500 was up 8.26% while the equal-weighted index was up just 2.13%. At 6.14 percentage points, the YTD performance gap between the two indices is the second widest since 1990 trailing only the 6.8% percentage point gap in 2020. Besides 2020, the only other year where the gap was wider than two percentage points was in 1997. While it’s a small sample size and history doesn’t always repeat itself, we’d note that the S&P 500’s rest-of-year performance was a gain of over 20% in both of those years. Just saying.

Besides the two other years where the performance gap was significantly wide like this year, what stands out about the chart below is how common it has historically been for the market cap-weighted index to underperform the equal weight index in the first four months of the year. Including this year, the cap-weighted index has only outperformed nine times in the last 34 years.



Don’t Be Fooled by the Headline GDP Number
Posted on April 27, 2023

The Bureau of Economic Analysis just reported that the U.S. economy expanded by only 1.1% in the first quarter. By the way, that’s an annualized rate – the actual quarter-over-quarter increase is just under 0.3%. This was well below expectations for 1.9% growth.

More fodder for recession calls?

Short answer, no.
GDP can basically be broken down into 5 components:

• Personal consumption (68% of GDP)
• Business Investment (13%)
• Residential investment, i.e. housing (4%)
• Government spending and investment (18%)
• Net exports, i.e. exports minus imports (-3%)
• Change in private inventories

The last two components are extremely volatile and can create significant volatility in the headline data. Note that net exports are “-3%” of GDP because the US exports less than it imports, and so “net exports” is negative.

Here’s how the various components contributed to the headline number in Q4 2022 and Q1 2023. The last two columns show the pace at which they increased (or decreased). As you can see, change in private inventories pulled GDP growth down by a whopping 2.3%-points in Q1.



Private inventories are the physical volume of inventories businesses maintain to support their production/distribution activities. Private inventories were actually more or less unchanged in the first quarter. But private inventories increased significantly in Q4, and so “change in private inventories” showed up as a massive drag on GDP. Yeah, if you’re confused, don’t worry about it.

The good news is that we have a measure of economic growth that excludes this, which is shown in the last couple of lines of the previous table. Ultimately, when thinking about economic growth, we want to look at domestic demand, a good measure is “Real final sales to domestic purchasers”, which is simply the sum of the contributions from the top 4 components. And we can calculate private sector demand by excluding government.

There was no “slowdown”
Domestic demand rose by 3.2% in Q1. That’s the fastest pace of growth since the second quarter of 2021. By the way, the average over the last decade (2010 – 2019) was 2.3%.



By the way, this wasn’t boosted only by government, though we shouldn’t really ignore the government sector because it makes up close to a fifth of the economy.

Private sector demand rose 2.9% in Q1, which is the fastest pace we saw since the second quarter of 2021.

Consumers powering the economy
As you may have noticed from the GDP contribution table, domestic demand was boosted by personal consumption, which surged at a 3.7% pace. A lot of this came from a rebound in goods consumption, mostly thanks to increased vehicle purchases. But even services spending, which makes up 45% of the economy, rose 2.3%.

For perspective on the consumption numbers from Q1, the pace of growth was a lot faster than the average pace of 2.3% we experienced during the last decade, and the fastest since Q2 2021. Though back in early 2021, consumption was boosted by stimulus checks.



What’s driving strong consumption now? Two things:

• Strong employment
• Lower inflation, especially gas and food prices, which is boosting real incomes, i.e. incomes adjusted for inflation

What next?
Of course, all the above data is for the last quarter and we’re already a month into the second quarter. It’s hard to imagine consumption, and domestic demand, growing at the torrid pace of Q1. However, if you’re predicting a recession, then the onus is to explain what leads to a crash in employment, and/or raises inflation going forward.

On the employment front, the latest news is good. Initial claims for unemployment benefits dropped last week, from 246,000 to 230,000. This means fewer workers were laid off and filing for benefits. Even continuing claims, which represents the total number of people who are continuing to receive unemployment benefits, were unchanged at about 1.86 million.

Beyond the actual numbers, what really matters is the trend. And to that end, we’re not seeing a pickup in initial or continuing claims. In fact, the current levels are in line with what we saw just before the pandemic hit, when the employment situation was strong. Of course, with job growth already hitting 1 million plus in the first quarter, and the unemployment rate close to 50+ year lows, I think its safe to say we currently have a strong labor market.

Another potential positive going forward: housing. Residential investment has dragged on GDP growth for 8 straight quarters now. But as we wrote about last week, we see relief coming from this sector of the economy. Which would be more than welcome.

Of course, we’ll continue to track the data, including inflation and payrolls. Those will tell us a lot about how things are looking in Q2, and just as important, what that means for monetary policy.

The other side of strong domestic demand is that It’s hard to imagine Fed officials looking at these numbers and thinking “the job is done, and now we can cut rates”. But we’ll see.

10 Weeks of Bearish Sentiment
Thu, Apr 27, 2023

As the S&P 500 broke down to the lowest levels of April this week, bullish sentiment according to the weekly AAII survey came in at a new short-term low. After rising to 27.2% last week, only 24.1% of respondents reported as bullish this week, the lowest reading since the end of March.



That resulted in rising bearish sentiment which rose 3.4 percentage points to 38.5%. Conversely, to bullish sentiment, that is the highest reading since the end of March.



With inverse moves in bullish and bearish sentiment, the bull-bear spread has fallen deeper into negative territory meaning bears continue to outnumber bulls, and by a wider margin, although nowhere near the degree as levels seen in 2022.



As we noted throughout 2022 and earlier this year, bears have consistently outnumbered bulls. In fact, this week marked the tenth in a row in which the bull-bear spread was negative. While that is one of only a handful of other streaks lasting for ten or more weeks going back through the history of the survey, it comes on the back of the record 44-week streak that ended this past February. That was only shortly after another 12-week streak ending in March of last year and the second longest streak on record (34 weeks long) that ended in the fall of 2020. In other words, the story remains in which sentiment has been unshakably bearish.



Some Improvement in Claims
Thu, Apr 27, 2023

The latest week's jobless claims data fell down to 230K from the previous week's upward revision to 246K. That 16K decline was the largest week over week drop since the first week of the month and brings claims back down to the low end of the past couple of months' range.



Before seasonal adjustment, claims were lower reaching 225.84K. That is roughly inline with the comparable weeks of last year and the few years prior to the pandemic. As shown in the second chart below, a drop in the current week of the year has very much been the norm historically. As for 2023 as a whole, unadjusted claims have remained relatively flat following the steep seasonal decline in the first weeks of the year. The potential for further seasonal strength will remain in place for the next few weeks as claims historically have reached a seasonal low in late May.



Like initial claims, seasonally adjusted continuing claims also surprised with a decline this week. Continuing claims totaled 1.858 million in the most recent week, down from 1.865 million and better than the expected increase to 1.87 million. Albeit the latest week's reading was surprisingly strong, the indicator's uptrend remains firmly in place which as we noted in last week's Bespoke Report, the overall rise in continuing claims has resembled other recessionary periods.



S&P 500 April Loss Historically Bearish for Rest of Year

April has been the second-best performing S&P 500 month since 1950 based upon average percent gain. As of today’s close, S&P 500 is down 1.3% this April. Should S&P 500 close out April in the red, the outlook for the balance of the year diminishes notably. In the included table all S&P 500 down Aprils since 1950 appear. Performance in May, during the “Worst Six Months” (May to October), the rest of the year, and the full year is also included.

When comparing S&P 500 down Aprils to all Aprils and positive Aprils there historically has been a sizable reduction in average performance and frequency of gains following a down April. Average performance for the rest of the year after a down April was a loss of 0.49% compared to a gain of 7.30% after an up April and 5.06% after all Aprils. Full year S&P 500 performance also dropped significantly following a down April, –1.36% versus 13.31% in years with a positive April. But, with two trading days left, there is still a chance S&P 500 avoids an April loss.

May Almanac: Second Worst S&P 500 Month in Pre-Election Years

May has been a tricky month over the years, a well-deserved reputation following the May 6, 2010 “flash crash”. It used to be part of what we once called the “May/June disaster area.” From 1965 to 1984 the S&P 500 was down during May fifteen out of twenty times. Then from 1985 through 1997 May was the best month, gaining ground every single year (13 straight gains) on the S&P, up 3.3% on average with the DJIA falling once and two NASDAQ losses.

In the years since 1997, May’s performance has been erratic; DJIA up fourteen times in the past twenty-five years (four of the years had gains exceeding 4%). NASDAQ suffered five May losses in a row from 1998-2001, down –11.9% in 2000, followed by thirteen sizable gains of 2.5% or better and seven losses, the worst of which was 8.3% in 2010 followed by another substantial loss of 7.9% in 2019.

Since 1950, pre-election-year Mays rank poorly, #10 DJIA, #11 S&P 500, #8 NASDAQ, #8 Russell 1000 and #7 Russell 2000. Historically bullish pre-election forces do not consistently lift May. Four of the nine S&P 500 pre-election year May declines exceeded 4%, the worst was a 6.6% loss in 2019. Russell 2000 gained 10.6% in May 2003, notably boosting its average gain and ranking.

Is Anyone Bullish? (Part 2)
Posted on April 25, 2023

“Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.” -John Maynard Keynes

Stocks have had a great start to 2023 and the economy continues to surprise to the upside, with China specifically showing a turn for the better. If one of the largest economies in the world is quickly improving, what does that do for the odds of a US recession? Our base case has always been the US would avoid a recession in 2023 and we still are in the camp, with a better Chinese economy doing little to change our views. For more of our views on the macro backdrop, but sure to read all the amazing work that Sonu has been doing.

Here’s what is so fascinating about the current state of things, various signs of sentiment are showing over the top negativity. From a contrarian point of view, this type of negativity could be a very bullish catalyst. Think about it, if everyone is bearish, then they’ve already sold, leaving nothing but buyers. So any good news (or even less bad news) could spark a rally.

If this sounds familiar, it is because we’ve been bullish for this very reason, everyone else was negative. In mid-December we moved to overweight equities, at a time when nearly everyone else was spouting the usual end-of-the-world scenarios. We wrote about this in Is Anyone Bullish? Now after a great start to the year for stocks, we are hearing some of the same negativity.

Here are some things I’ve noticed recently which are all suggesting investors are a tad too pessimistic and this could be positive for stocks down the road.

• Net short positions on S&P 500 e-mini futures for non-commercial hedgers are at their highest level since 2011. This is more widely known as bets that hedge funds are making. This doesn’t mean they are outright bearish, they very well could be hedged to the tilt. Still, going back to 2011, it is clear when there are this many shorts, it has been a nice time to be looking for higher stocks, not lower.

• The recent Bank of American Global Fund Manager Survey showed the most underweight stocks relative to bonds since the Great Financial Crisis. This survey looks at more than 600 money managers and it is clear again the crowd is quite defensive here. Note how popular stocks were relative to bonds in January 2022, just as stocks peaked and went into a vicious bear market.

• Turning to flows, a recent Goldman Sachs report showed that flows were huge into safe assets versus risky assets. This is another way of showing very few investors are willing to step up and expect better times.

• JPM Morgan had this survey of institutional investors and it showed that 95% expected stocks to drop by the end of the year. Only 5% were looking for stocks to gain and virtually no one expected stocks to gain by the end of the year. This one amazes us, but shows just how much potential there is for a surprise rally the rest of 2023.

• Lastly, a CNBC survey showed public pessimism on the economy hit a new high. That’s right according to the latest CNBC All-American Economic Survey, 69% of those surveyed held negative views about the economy now and in the future, the most pessimistic ever. Also, just 24% said it was a good time to invest in stocks, the lowest in the 17-year history of the survey.

In conclusion, think about the Keynes quote above. Most money managers were in the same camp at the start of the year and that was underweight equities and a big bear market was coming. Turns out, most are still in that camp. Who knows, maybe not all of them really thought it was even true, but when everyone else was doing it, it was easier to follow the crowd for the sake of their career.

I’ve always lived by ‘if you do what is average, expect average returns’. At the Carson Investment Research team we aren’t about being contrary for the sake of being contrary, but when the macro backdrop, market technicals, fundamentals, and sentiment all line up in our favor, we will take the road less traveled and go against the herd. We continue to think the economy is on better footing than most expect, thanks to a strong consumer and healthy employment backdrop, while we also remain overweight equities in the models we run for our Carson Partners.

S&P 500 Futures Historically Shorted
Tue, Apr 25, 2023

As we do each Monday, in last night's Closer we highlighted the latest futures positioning data from last Friday's release of the CFTC's Commitments of Traders report. Of all assets, perhaps the most striking number was in S&P 500 futures. In data as of last Tuesday, a net 15.11% of open interest among speculators was positioned short. That marked the most bearish positioning for this class of investors since September 2007. Prior to that, there have been relatively few instances of speculator positioning exceeding 15% net short. Most of those occurred in the late 1990s and early 2000s when positioning readings were far more volatile on account of open interest being much smaller than it is today. With that being said, we would also note that open interest has been trending lower in the past few years with recent readings being some of the lowest since 2008 on a 52-week moving average basis.



Fed Days Flipping Script
Tue, Apr 25, 2023

The FOMC blackout period is now underway meaning there will be no communications from FOMC members until the day of the May meeting. As we detailed yesterday, performance outside of and during blackout periods has been pretty weak during the current roughly year-long tightening cycle. However, things have been improving more recently. As for Fed days themselves, the opposite has been true.

In the chart below, we show the performance of the S&P 500 on the day of FOMC rate decisions going back to 1994. Earlier in the current tightening cycle, Fed days offered the market a brief respite from selling. In fact, some of the strongest Fed days (in terms of S&P 500 performance) of the past few decades occurred last year as the rolling 10-meeting average hit a more than decade-long high in July. With that being said, that average has been rolling over with weaker reactions to the FOMC in the past few meetings. In other words, to some extent, S&P 500 performance during and outside of blackout periods and on Fed days has begun to flip the script in the past few FOMC meetings.



Fed Blackout Begins
Mon, Apr 24, 2023

Saturday began the FOMC's blackout period meaning there will be no communication from Fed officials for the next several days until the May 3rd meeting (Hooray). As of Monday afternoon, the CME's FedWatch Tool is pricing in a nearly 90% chance of a 25 bps hike at that meeting.

In the chart below, we show the performance of the S&P 500 from the end of a Fed day until the start of the blackout period for each inter-meeting period since 1994 when the FOMC began announcing its rate decisions on the same day as the meetings. Since the current tightening cycle began a little over a year ago, most periods between meetings and blackouts have seen the S&P 500 turn lower with a median decline of 0.53%. One notable exception to that weakness was after the meeting last November when the S&P 500 went on to rally over 8% leading up to the blackout period. That was the strongest run for the S&P 500 from meeting to blackout since June 2009. As for more recently, the 5% gain from the March meeting through last Friday again stands out ranking as the second strongest of the current tightening cycle (out of ten).



In the chart below, we show the performance from the start of each past blackout period up through the last close prior to the FOMC meeting. Again, the current tightening cycle has tended toward weak performance for the S&P 500 with more declines than gains. However, the last blackout period in March saw the strongest gain for the S&P 500 since the runup to the June 2020 meeting.



Although there has been some strength during and leading up to blackout periods more recently (especially relative to earlier this tightening cycle), over the full history of the data, strong performance ahead of the blackout period is not a good explainer of performance during the blackout period itself. As shown below, there has historically been a wide dispersion of results without much in the way of a trend. In other words, the strong performance headed into the blackout period in and of itself does not mean it will continue as Fed speakers go quiet.



Is the Housing Market About to Give the Economy a Boost?
Posted on April 21, 2023

Housing was the biggest drag on economic growth last year. The economy grew by 2.1% in 2022, but that overcame a 0.93%-point drag from residential investment, i.e. housing. In fact, it’s been a drag on GDP growth for 7 straight quarters now (through the end of 2022). It got worse over the last 3 quarters of 2022 as mortgage rates surged from below 3% to just above 7% thanks to an aggressive Federal Reserve. Housing is likely to be a drag for the 8th quarter in a row in the first quarter of 2023.



But things may be looking up for the rest of 2023.

People want houses but there aren’t many
Existing home sales fell 34% in 2022 but are up 10% over the first three months of this year. Some of that is because mortgage rates have pulled back a bit from the peak level of 7%+ we saw last fall. However, rates are still high, and significantly higher than over a year ago when 30-year mortgage rates were around 3%.



In fact, based on the median price of an existing home, and assuming a 20% down payment, the monthly mortgage payment has jumped from about $1,200 at the end of 2021 to $1,900 as of March. That’s not because of an increase in home prices – the median price increased about 5% to $376,000 during this period. It’s because the 30-year mortgage rate jumped from about 3.1% in December 2021 to 6.5% in March 2023! In short, affordability is truly low.



Nevertheless, as we saw from rebounding home sales, there’s still pent-up demand. A big factor is that there are a record number of people in the 25-34 year age cohort, which is prime-home-buying age. For perspective, the number of potential first-time homebuyers is up from 39.5 million in 2006 to 46.1 million today.

The problem is that there aren’t many homes for sale. Inventory of existing homes, in terms of months-of-supply at the current sales pace, is currently at 2.6 months. Well below a normal range of 4-6 months.

You can probably guess why inventory is low. Most homeowners are “locked-in” to their homes since they got their existing mortgage at ultra-low rates. As a percent of disposable income, mortgage debt service payments were just 4% at the end of 2022. That’s lower than it was pre-pandemic, and lower than at any point during the last four economic expansions. This is great from a consumption point of view, since it means households are less financially constrained. However, it also means a lot of homeowners are unlikely to move – who would want to sell and buy a new home at a mortgage rate of 6.5%?



Pent-up demand was evident in the latest existing home sales report. Properties typically remained on the market for 29 days in March, and 65% of homes sold in March were on the market for less than a month. So there clearly is demand despite high mortgage rates.

New buyers pushed to new homes
At the end of the day, if you have to buy a house, you go out and buy a house. And if there’s not much inventory in the existing home market, you look at the market for new houses. Which is why new home sales are up 16% from last September (through February). There’s relatively more inventory in this market, about 8-months of supply at the current sales pace. Though on an absolute basis, I do want to point out that the inventory of new homes is under 450,000, which is less than half that of existing homes (close to 1 million).

Also, the inventory of completed homes is rising while homes under construction are falling, as supply-chain issues fade. Homebuilders are also starting fewer homes than they are completing – this is not a problem now but that does mean supply next year is likely to be constrained. The good news is that new housing starts may have bottomed – starts are up 7% over the past 5 months through March.



Homebuilders are feeling good, and the market likes that
Combine the high pent-up demand picture with relatively low supply, and builders are feeling good. As witnessed by a rebound in homebuilders’ confidence.



The market is sensing this as well. The SPDR S&P HomeBuilders ETF is up almost 16% year-to-date (through April 20th) versus 8.1% for the S&P 500. Since September 30th, the HomeBuilders ETF is up 28%, versus 16% for the S&P 500.

This was validated by D.R. Horton’s earnings report on April 20th. They beat revenue and earnings estimates by wide margins, sending the stock up by 5.6% over the day. But it was forward looking guidance that was especially positive: they see higher revenue in 2023 and expect to close on 77,000 to 80,000 new homes. Well above estimates for 71,000. Quoting management:

” Although higher interest rates and economic uncertainty may persist for some time, the supply of both new and existing homes at affordable price points remains limited, and demographics supporting housing demand remain favorable … Started less homes than they completed in the quarter, but do expect starts to increase each quarter.”

All of which is good for the economy. None of what you read above is what we’d be seeing if the economy was in a recession, or close to one. If households’ employment situation was looking shaky, we would expect housing demand to crater. The fact that the housing market, especially starts, appears to have found a floor, indicates that the labor market is expected to remain strong.

In fact, more activity in the new home market is even better for GDP growth. It involves activities like design and construction, as well large household appliance purchases – which is not the case for existing homes.

Single-family home construction makes up almost 40% of residential activity within GDP. And over the last 3 quarters of 2022, it crashed 23%, which is why housing was such a big drag on GDP last year.

The good news is that we may have seen the back of that, with single-family construction no longer sinking. That by itself would be a positive for the economy. And any rebound, if it happens, will be even better.

 

Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2022-



S&P sectors for the past week-

 

Here are the current major indices pullback/correction levels from 52WK highs as of week ending 4.28.23-


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 4.28.23-

 

​

Here are the upcoming IPO's for this week-

 

Stock Market Analysis Video for April 28th, 2023
Video from AlphaTrends Brian Shannon
(VIDEO NOT YET POSTED!)

ShadowTrader Video Weekly 4/30/23
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 May 2023 Stock Picking Contest & SPX Sentiment Poll <-- click there to cast your monthly market direction vote and stock picks for May of this year 2023!

StonkForums Weekly Stock Picking Contest & SPX Sentiment Poll (5/1-5/5) <-- click there to cast your weekly market direction vote and stock picks for this coming week ahead!

Daily SPX Sentiment Poll for Monday (5/1) <-- click there to cast your daily market direction vote for this coming Monday ahead!

========================================================================================================

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!

 

​

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 5.1.23 Before Market Open:

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

Monday 5.1.23 After Market Close:

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

(T.B.A.)

Tuesday 5.2.23 Before Market Open:

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

(T.B.A.)

Tuesday 5.2.23 After Market Close:

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

(T.B.A.)

Wednesday 5.3.23 Before Market Open:

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

(T.B.A.)

Wednesday 5.3.23 After Market Close:

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

(T.B.A.)

Thursday 5.4.23 Before Market Open:

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

(T.B.A.)

Thursday 5.4.23 After Market Close:

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

(T.B.A.)

Friday 5.5.23 Before Market Open:

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

(T.B.A.)

Friday 5.5.23 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-
($AAPL $SOFI $AMD $NCLH $UBER $SHOP $PFE $F $ON $AMC $SQ $CVS $YUM $ANET $QCOM $COIN $DKNG $ALB $CHKP $BP $BUD $DDOG $MRNA $ET $RCL $SEDG $ACMR $SMCI $MELI $GPN $SBUX $CNA $MGM $MAR $WBD $RIG $PK $MPC $FANG $EPD $NVO $PTON $STNG $FUBO $LNG $AMG $CAR $WEC $LYFT $LUMN)


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

• Most Anticipated Earnings Releases for the week beginning May 1st, 2023 <-- click there to view!

 

Top of the morning StonkForumers! Happy Monday to all of you and welcome to the new trading week and month of May and a frrrrrrrrrrrresh start. Here is a quick check on those futures as we are a little over 3 hours from the US cash market open.

GLTA on this Monday, May the 1st, 2023!

 

Good Monday morning StonkForumers!

Here is this morning's pre-market news thread for those of you wanting to get a quick read before today's open-
<-- click there to read!

Hope everyone has a great new trading week and month of May ahead!

 

Last week was the busiest for S&P 500 companies reporting #earnings, but this is the week that counts with 1,200 companies set to report and $IWM in focus. http://eps.sh/wrs ... oh, and $AAPL $SPY $STNG $SMCI $ALX $TGTX $SBT $ACMR $FUBO $WING $MSTR $CHGG $CEIX $SJW $FSLY $LTHM $TRN $RMBS $TREE $SPWR $ABR $AMKR $ALGT $BCRX $SAGE $TMDX $MDC $CVI $LNTH $BRY $ATI $WISH $INSW $ADUS $HRMY $ETRN $SFM $JJSF $ETWO $MUR $AXNX $ACRE

 

Morning Lineup - 5/1/23 - May-be May-be Not
Mon, May 1, 2023

Even with First Republic going into receivership over the weekend, it’s a quiet morning in the futures market. Perhaps it’s because you couldn’t have had a more telegraphed bank failure or simply that most world markets are closed for May Day. Economic data overnight has been mixed in the few reports that have been released so far, but we’ll have to wait until tomorrow to get the full barrage of data as markets that are closed today reopen for trading. One notable weak spot in the PMI data was China where both the Manufacturing and Services sector reports were weaker than expected (manufacturing below 50 and services above).

This week will be an extremely busy one for economic data with ISM Manufacturing today, ADP Employment, ISM Services, and the FOMC Wednesday, Jobless Claims on Thursday, and then the Employment report Friday. Oh, and don’t forget about earnings too.

Despite the tumultuous issues in the US banking system and specifically the demise of First Republic (FRC), US stocks managed to finish the week higher capping off what has been a rally of over 8% for the S&P 500 in the first four months of the year and a rally of nearly double that in the Nasdaq composite. The only blemish is the small-cap Russell 2000 which is barely hanging on to gains for the year. While a lot of attention is placed on the small caps, though, keep in mind that the Russell 2000’s entire market cap is less than Apple's (AAPL)!

Now that the first four months are behind us, we’re at the dreaded point of the year where it’s time to sell in May, although as most aware and we pointed out last week, there’s some nuance to that. The chart below summarizes the performance of S&P 500 sectors during the month of May going back to 2000. Over the last 23 years, every sector except for Telecom Services (now Communication Services) has had gains during the month of May on a median basis, and the S&P 500’s median performance has been a gain of 1.07% with gains 70% of the time. Small caps, which have lagged so badly this year, have tended to perform even better with a median gain of 1.51% and gains 61% of the time.

Looking at individual sectors, Technology has been the clear winner as it’s the only one with a median gain of over 2% (although positive just 57% of the time). There’s been a lot of volatility for the sector, though, as it has seen a move of +/-5% during the month more than half of the time. The only other sectors with median gains of more than 1.5% have been Financials (1.70%) and Materials (1.66%), but both sectors have only been positive during the month 61% of the time. Speaking of consistency, the only three sectors that have been up during May more than two-thirds of the time are Health Care (74%), Real Estate (74%), and Consumer Staples (70%).

 

Here is a final look at today's market and futures maps, as well as how each sector performed individually at the close on Monday, May 1st, 2023.

 

@stock1234 and @Stoch - just a quick heads up in here. I had sent this out as part of an e-mail to some members, but not 100% sure if it reached out to you guys or what.

But, I've finally gone ahead and officially pushed the change for SSL (https) for this site.

The domain name stonkforums.com should now automatically take you to the SSL enabled site that is prefixed with HTTPS.

So if you just type out stonkforums.com in your web browser, does it automatically take you to this site with the "https"?

If one of you could let me know for sure would be really greatly appreciated!

Thanks in advance.

It's about dang time that I finally got this fixed up for our website here. I've put it off on the back burner for sooo long as well haha.

Hopefully now you guys can now access this site w/o any issues from the past at all.

 

I noticed the site also loads just a touch quicker now with the SSL (HTTPS) enabled on this site. Anyone else?

Hope you guys all had a great kickoff to May Day today.

 

Top of the morning 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 a little under 3 hours from the US cash market open.

GLTA on this Tuesday, May the 2nd, 2023!