Stock Market Today: May 6th - 10th, 2024

Welcome StonkForums to the trading week of May 6th!

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.)

 

Big Taper, Bad Data, & Buyback Bonanza Sparks Buying Frenzy In Bonds & Stocks
FRIDAY, MAY 03, 2024 - 04:00 PM

The markets took on a Dickensian dimension this week as while "it was the worst of times (for economic data), it was the best of times (for stocks)"...

The US Macro Surprise Index continued its serial disappointment plunge into the red - the weakest since Feb 2023 (not helped at all by today's payrolls miss)...



Source: Bloomberg

With growth data plunging while inflation data soared...



Source: Bloomberg

Bad news was good news though as the market only had eyes for Powell's big taper and the buyback bonanza (from AAPL and the rest), and today's NFP Goldilocks results (175k vs. 240k expected) as wage softness helps to ease inflation fears.

Small Caps leading the bunch amid a big short-squeeze and S&P lagging (but all green on the week)...



All the majors rallied up to their 50DMAs but were unable to breakout...



Nasdaq performed well with MAG7 stocks wildly choppy, but overall pushing back up towards record highs...



Source: Bloomberg

'Most Shorted' stocks suffered the biggest squeeze in two months (and biggest two-week squeeze since Jan 2023)...



Source: Bloomberg

Of particular note was Utes outperforming (while energy lagged) as the 'Next AI Trade' goes mainstream. Financials were also red on the week...



Source: Bloomberg

Bonds were also bid all week with yields down 12-20bps as the short-end outperformed...



Source: Bloomberg

And 2Y yields at 5.00% were thoroughly rejected as yields plunged today back below pre-CPI spike levels..



Source: Bloomberg

The dollar dropped this week, erasing almost all of the post-CPI gains...



Source: Bloomberg

Gold prices were lower on the week (second week in a row), despite the weak dollar and 'easing' by The Fed...



Source: Bloomberg

Despite a decent bounce back today, bitcoin was down on the week, testing back up to $62,000...



Source: Bloomberg

...after an ugly week of aggregate net outflows from BTC ETFs...



Source: Bloomberg

Oil prices plunged this week - down all five days for the worst in three months - back to near two-month lows...



Source: Bloomberg

And finally, rate-cut expectations have surged this week with 2024 now pricing in two full cuts and 2025 three more cuts...



Source: Bloomberg

Is this what Powell wanted? To ease financial conditions again!?

 

S&P 500 Election Year 2024 vs. 1968 & 2012

With all the college protests in the news it brings comparisons of 1968 to mind. 2024’s Big Election Year Q1 gains have already put the 2012 analog in my sights. Both were election years with somewhat correlated yet somewhat different narratives to 2024. The chart is from my members only webinar yesterday. S&P is clearly tracking 2012, not 1968 so far this year.

1968 was marked by escalations in Vietnam, the Tet Offensive, and protests on US college campuses and elsewhere. Sitting President Lyndon Johnson dropped out of the race on March 31. Robert Kennedy senior, the leading democratic candidate, was assassinated on June 6. George Wallace ran a formidable third-party candidacy garnering 13.5% of the popular vote and won 5 states and 46 electoral votes. But Q1 was down, and April was up.

In 2012 sitting President Barak Obama ran and won reelection. It was a year with the market driven by the Fed and interest rates. Zero interest rate policy (ZIRP) and quantitative easing (QE) were dug in deep. The Fed spun out QE3 and Operation Twist. Q1 was up big followed by a down April. Again, aside from the protests and wars 2024 is correlated more closely to 2012 than 1968.

This updated S&P 500 Election Year Seasonal Pattern chart underscores the market’s tendency to be weaker in April and May after big Q1 gains in election years 1956, 1964, 1972, 1976, 1988, 1996, 2012. However, the market is likely to be flatter than the green line above due to inflation, the Fed, interest rates, a prominent third party candidate and two ongoing wars. Page 26 of the 2024 Stock Trader’s Almanac reminds us that “War Can Be a Major Factor on Presidential Races. Democrats historically lost on foreign shores while Republicans lost at home.


S&P 500 1%+ Gaps Higher
Fri, May 3, 2024

The S&P 500 ETF (SPY) gapped up 1% at the open this morning, so below we wanted to provide a quick summary of how the ETF has typically traded on days when it gaps up 1%+. As shown in the table below, 1%+ gaps higher on a Friday have been the second most frequent of any weekday with 71, trailing only the 80 1%+ gaps higher on Tuesday. On the 71 prior Fridays when SPY has gapped up at least 1%, its median change from the open to close was a further gain of 0.27% with positive returns 59% of the time. SPY has had the best open-to-close performance (+0.50%) after gapping up 1%+ on Wednesdays and the highest consistency of gains (67%).

As for the entire trading day, 90% of the time when SPY gaps up 1%+, it finishes higher on the day. That may sound impressive, but the fact that there is a one in ten chance of the market giving up all of its opening rally means that gains are hardly guaranteed. The worst day of the week in terms of holding 1%+ opening gains has been on Monday as 14% of those days have erased the entire opening gap.



Looking at more recent 1%+ gaps higher, the table below lists the last ten 1%+ opening gaps higher in SPY. Six of the last ten opening gaps have occurred on Tuesdays, but overall it has been a coin flip in terms of the market's performance from the open to the close. Of the five days where SPY did trade lower from the open to close, it only erased the entirety of its opening gap once (11/1/22).



Buy In May and Stay? At Least in an Election Year


“Spring is nature’s way of saying, ‘Let’s party!'” – Robin Williams

Buckle up, as the trigger points for one of the most well-known investment axioms, “Sell in May and go away,” is nearly here. This gets a ton of play in the media, as the six months starting in May are indeed the worst six consecutive months on the calendar historically. The S&P 500 has averaged only 1.7% over those six months and moved higher less than 65% of the time.



Now let’s be clear. Up 1.7% might not sound like much, but it is still an increase. Also, we do not advocate blindly selling due to the calendar. But it is worth being aware of this calendar effect, as you will hear a lot about it this week.

Now here’s something that might be less well known. These “worst six months” have gained in eight of the last 10 years.



Not to mention the month of May has been higher nine of the past 10 years, so maybe we should call it, “Sell in June and go away”?



Election years also tend to see a summer rally and strength during these six months, with the May through October period up 2.3% and higher an impressive 77.8% of the time.



Here’s another way of showing that a summer rally in an election year quite normal. What stands out to me is October tends to be quite weak, as those jitters are strong ahead of the election.



Given this year started off with more than a 10% rally in the first quarter, what has tended to happen in election years that saw big gains early in the year? April and May were weak, but stocks usually bottomed in early June before a summer rally. So far, this year is playing out to form.



How the market was doing going into these six months also mattered. Some of the worst “sell in May” periods have taken place when stocks were down year to date before May began, whereas if stocks were positive, the following months improved. In fact, when the S&P 500 was up more than 4% for the year at the end of April (as it likely will be this year), the following six months gained 4.2% on average and were higher nearly 78% of the time. Of course, when stocks were lower in April (like 2024) then those six months were quite weak, but much of this was due to the big drop in 1987.



We aren’t overly worried about the normally bullish April struggling this year, as we were up five months in a row heading into it and some type of break was warranted. In fact, we wouldn’t be surprised if stocks consolidated for another month or so, working off some of the historic rebound off the late-October lows. We do not expect major weakness, but a break makes sense. However, since this is an election year and stocks have been strong so far this year, we think a summer rally and strength during these six months is likely.

Lastly, a five-month S&P 500 win streak is about to end, proving once again that all good things come to an end. The good news is looking at the end of previous five-month win streaks showed that a month later things were dicey, but going out 3-, 6-, and 12-months showed above-average returns. In fact, a year later stocks have been higher every time (six for six).



May’s First Trading Day: S&P 500 and Russell 2000 Higher 69.2% of the Time

The first trading day of May has had a bullish history over the past 26 years. DJIA, S&P 500 and NASDAQ have all averaged around 0.4% on the day. S&P 500 and Russell 2000 have the best track records, up 18 times or 69.2% of the time since 1998. With an average gain of 0.21%, 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%.

Underlying Economic Growth Is Strong, and Here Are 5 Reasons Why


Headline GDP growth in the first quarter disappointed, but as I pointed out yesterday, underlying growth was actually quite strong. The good news is that the cyclical areas of the economy, namely housing activity and business investment, are seeing strong growth despite the hurdle of higher interest rates. That’s really icing on the cake.

The workhorse of the US economy remains the consumer, and there’s really not much sign of a slowdown as far as household spending is concerned. In fact, services spending, which makes up 45% of the economy (more than twice as large as goods spending) rose at an annualized pace of 4% — above the 2010-2019 trend of 1.8%, and the fastest pace in since the third quarter of 2021. Back in 2021, strong services spending was driven by everyone rushing out to spend once Covid looked to be in the background. That’s not the case now. The current strength of consumption is directly related to the strength of American household finances. Let’s walk through these.



Incomes Are Growing Faster than Inflation
There’s no question that inflation ran hot in the first quarter, which is a setback after the downtrend in the second half of 2023. The Federal Reserve’s preferred inflation metric, the personal consumption expenditures index, rose at an annualized pace of 4.4% in Q1. But here’s the big picture: income growth is outpacing inflation. Disposable incomes grew at an annualized pace of 4.8% in Q1, but that’s also being pulled lower by falling income from assets (like dividends). More importantly, employee compensation surged by 7.3%. That’s the simplest explanation for why consumption continues to run strong.



Average Hourly Wages Are Growing Faster Than Inflation
The charts above showed aggregate income growth, or total income across all workers, but that has been helped by an increase in the number of workers. However, inflation-adjusted hourly wages are growing even when you look at the average worker, and separate non-managers from managers. Since the pandemic started, average wages for non-managers have grown faster than the pre-pandemic trend, after adjusting for inflation (green line in the chart below). Over the last year it’s up 1.5%, above the pre-pandemic trend of 1.3%. Interestingly, wage growth for managers has fallen behind inflation since the pandemic, but the good news is that it’s been picking up recently, as the yellow line shows. Over the last year, inflation-adjusted wage growth for managers is up 1.2%, matching the pre-pandemic trend. Keep in mind that non-managers typically tend to spend a greater proportion of their incomes from wages.



Household Balance Sheets Are Strong
Rising stock prices and home prices have resulted in more wealth for American households. At the same time, liabilities – especially mortgage debt, but also personal loans – have not increased at the same pace, especially relative to disposable income. At the end of 2023, household net worth was 736% of disposable incomes, well above historical levels. That’s on the back of asset values running at 836% of disposable income, even as liabilities stay at 100% of disposable income (in line with what we’ve seen in the past). This is a big reason why the savings rate has fallen since the pandemic. Savings rates averaged 7.4% in 2019, but it’s averaged 4.2% over the past year (through March). In fact, the savings rate has fallen from 5.2% in March 2023 to 3.2% last month. This is not surprising considering net worth is higher. Why save more if you’re worth more?



Households Are Far Less Leveraged
The chart above is on an aggregate basis, i.e. across all households in America. A typical question we get is, “How does the picture look outside of the wealthiest groups, considering we have a lot of inequality”. Turns out the picture looks good. Across all income groups, liabilities as a percent of assets are well below what we’ve seen historically. In short, households are significantly less levered than in the past.



What matters when we talk about household debt is really the proportion of income that goes toward servicing that debt. Household debt service payments are running at 9.8% of disposable income, slightly below pre-pandemic levels and well below the historical average of 11.2%.



The Labor Market Is Strong
The labor market is the entire ballgame as far as the consumer is concerned. If the labor market deteriorates, incomes fall, consumption falls, and the economy is in trouble. But we have the opposite now. Payroll growth has averaged 266,000 in the first quarter and the unemployment rate has remained below 4% for 26 straight months (the longest streak since the late 1960s).

Historically, weekly unemployment claims have been a leading indicator for labor markets. Initial claims for benefits tell you whether layoffs are increasing, while continuing claims for benefits tell you how hard it is for laid off workers to find jobs. Seasonal adjustments due to pandemic-related distortions have been a big problem with claims data lately.To get around this, I compare non-seasonally adjusted data for 2024 to corresponding weekly data in 2023, 2022 and the 2018-2019 average. The top panel in the chart below shows that initial claims continue to run low. They’re comparable to what we saw in 2023, 2022, and in 2018-2019, indicating companies are not laying off too many workers.

The bottom panel shows continuing claims for benefits normalized by the size of the labor force – this is the “insured unemployment rate.” You can see that it’s about 1.2% now and running higher than in 2022 when the labor market was red hot. That does mean hiring has eased and workers are finding it a little harder to find jobs. Yet, it’s running close to where it was in 2018-2019, indicating that this is still a strong labor market.



Ultimately, here’s what’s important to keep in mind: Consumption makes up 70% of the US economy, and right now consumption is running strong, thanks to…

• Strong labor markets, which are pushing incomes higher to above the pace of inflation
• Higher net worth, which means households can spend more

 

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 5.3.24-


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 5.3.24-

 

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Here are the upcoming IPO's for this week-

 

Stock Market Analysis Video for May 3rd, 2024
Video from AlphaTrends Brian Shannon


ShadowTrader Video Weekly 5/5/24
Video from ShadowTrader Peter Reznicek

 

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 (5/6-5/10) <-- click there to cast your weekly market direction vote and stock picks for this coming week ahead!

Daily SPX Sentiment Poll for Monday (5/6) <-- click there to cast your daily market direction vote for this coming Monday 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 5.6.24 Before Market Open:

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

Monday 5.6.24 After Market Close:

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

(T.B.A.)

Tuesday 5.7.24 Before Market Open:

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

(T.B.A.)

Tuesday 5.7.24 After Market Close:

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

(T.B.A.)

Wednesday 5.8.24 Before Market Open:

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

(T.B.A.)

Wednesday 5.8.24 After Market Close:

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

(T.B.A.)

Thursday 5.9.24 Before Market Open:

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

(T.B.A.)

Thursday 5.9.24 After Market Close:

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

(T.B.A.)

Friday 5.10.24 Before Market Open:

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

(T.B.A.)

Friday 5.10.24 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-
($PLTR $ARM $UBER $SHOP $DIS $RIVN $MARA $ANET $SOUN $HOOD $CELH $ABNB $SYM $AFRM $UPST $CLSK $AMC $SAVE $ACMR $DDOG $WYNN $TTD $LYFT $RBLX $LCID $OXY $BYND $GCT $O $WBD $TWLO $AVDL $APP $HIMS $MPW $ET $CROX $U $INSE $RICK $RKLD $KRYS $CFLT $ENB $TOST $DUOL $SNDL $PLUG $TM $NKLA)


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

• Most Anticipated Earnings Releases for the week beginning May 6th, 2024 <-- click there to view!

 

Top of the morning StonkForumers! Happy Monday 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 from the US cash market open.

GLTA on this Monday, May the 6th, 2024!

 

Morning Lineup - 5/6/24 - Walk the Line
Mon, May 6, 2024

Equities are picking up right where they left off on Friday as futures have been gaining ground all morning. Even the Nasdaq is trading higher despite the disclosure over the weekend that Berkshire Hathaway has cut its stake in Apple (AAPL) by 13%. The stock was down over 1% earlier but has erased most of its pre-market losses. There's very little in the way of economic data to look forward to this week, but there are still plenty of earnings reports to deal with even though, we've passed the peak of the Q1 reporting period.

The S&P 500 eked out its second positive week in a row, and the Nasdaq and Russell 2000 each squeezed out their second week in a row of 1%+ gains. Despite the gains, the S&P 500 still closed the week modestly below its 50-day moving average. If you look at the snapshot of US indices from our Trend Analyzer below, all the major US index ETFs closed out the week clustered right around their 50-day moving averages (DMA). No ETF is more than 0.70% above or below its 50-DMA.



While the indices are all “walking the line” of their 50-DMAs, there’s a little more dispersion at the sector level. Four of eleven sectors are trading at least 1% above or below their 50-DMA. Utilities and Real Estate are the two highest-yielding sectors in the S&P 500, but they have moved in opposite directions this year. As of Friday, Utilities was the most extended relative to its 50-DMA while Real Estate was the furthest below. Besides those two sectors, Health Care and Consumer Staples are the two other sectors trading further than 1% from their 50-DMAs.

 

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 6th, 2024.

 

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 over an hour into the US cash market open.

GLTA on this Tuesday, May the 7th, 2024!

 

Morning Lineup - 5/7/24 - It at First You Don't Succeed, Try Again
Tue, May 7, 2024

S&P 500 futures were just unchanged on the day in what has been a relatively quiet morning. Crude oil is modestly lower and treasury yields are slightly lower. In terms of earnings, Disney is sharply lower after reporting weaker-than-expected sales and dragging the Nasdaq lower, shares of Palantir (PLTR) are down over 8% despite reporting better-than-expected EPS and sales. Dragging the stock lower? A disappointing forecast relative to lofty expectations.

Heading into yesterday’s session to start the week, the setup looked much like the prior Monday. Then, we started the week following a Friday when the S&P 500 rallied but came up just shy of its 50-DMA. While we rallied to start last week, the market couldn’t maintain enough momentum to get back above its 50-DMA. We then followed that failed attempt with a disheartening three straight days of lower intraday highs and lower intraday lows. Last Friday, we rallied again and broke that streak of lower highs and lows and rallied but finished the week just shy of the 50-DMA.

One positive about weakness in the middle of last week around the Fed meeting was that from the lows in mid-April, the S&P 500 maintained a run of higher lows. Fortunately for bulls, Monday wasn’t a Groundhog Day type event, and the S&P 500 not only opened the week above its 50-DMA, but it stayed there the entire session in a run of three straight days of gains of at least 0.91%.



The picture for the Nasdaq looks a lot like the S&P 500. Unlike the S&P 500, though, the Nasdaq finished off last week above its 50-DMA and stayed there to kick off this week. Like the S&P 500, however, it took the Nasdaq two tries to get back above that short-term moving average. As the old saying goes, “If at first you don’t succeed, try again.”

 

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, May 7th, 2024.