Stock Market Today: January 22nd - 26th, 2024

Welcome StonkForums to the trading week of January 22nd!

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.)

 

S&P 500 Surges To New All-Time High Despite Wrecked Rate-Cut Hopes
FRIDAY, JAN 19, 2024 - 04:00 PM

'Good news' was initially 'bad news' for stocks to start the week, but as 'hard' data surged, 'soft' data slumped...



Source: Bloomberg

...but the strong 'hard' data prompted a biig (hawkish) repricing of rate-cut expectations (initial timing and velocity)...



Source: Bloomberg

...and stocks didn't care either way - we were getting to record highs on this large OpEx (Gamma unclench) no matter what. All the majors exploded higher today with Nasdaq the major winner on the week. Small Caps actually ended the week in the red (the 4th weekly loss in a row)...



The S&P 500 finally joined the Nasdaq at new record highs, surpassing its record high close (4796.6 1/3/22) and intraday record high (4818.6 1/4/22)...



Source: Bloomberg

2024 has been very good to L/S Hedge Fund managers, erasing (admittedly in our proxy index below) the ugly losses from December...



Source: Bloomberg

As their 'most shorted' stocks plunged non-stop - erasing the squeeze pain after the FOMC...



Source: Bloomberg

And MAG7 stocks ripped to new highs this week



Source: Bloomberg

AI leaders have dominated YTD, helped by a massive surge off Wednesday's opening lows...



Source: Bloomberg

Interestingly, while the anti-obesity drug names have outperformed YTD, this week saw both the GLP-1 winners and losers get punished...



Source: Bloomberg

Lower-quality stocks suffered this week and YTD...



Source: Bloomberg

US equity markets melted up in the second-half of this holiday-shortened week, completely decoupling from the Treasury market - which saw yields rocket back higher, roundtripping the post-FOMC move entirely...



Source: Bloomberg

Treasury yields were higher every day this week, with the long-end the laggard YTD (30Y +33bps, 2Y +16bps)...



Source: Bloomberg

The yield curve (2s30s) ended back in 'inverted' territory after bear-flattening this week...



Source: Bloomberg

The dollar ended the week higher - though saw selling pressure the last two days...



Source: Bloomberg

Bitcoin has been punched in the face at the cash equity trading open in the US every day since spot ETFs began trading. Today was different though as buyers appeared near $40k and bid the cryptocurrency back above $42k -practically unchanged on the week...



Source: Bloomberg

And while Ethereum also ended the week slightly lower, it held on to its massive outperformance relative to bitcoin last week...



Source: Bloomberg

Spot Gold prices ended the week lower but saw a healthy bounce off the $2000 level midweek...



Source: Bloomberg

Oil prices ended the week higher (yes, higher), but reverted back into the YTD range after breaking out yesterday...



Source: Bloomberg

Finally, be careful what you wish for on 'encouraging' hard-date signals being positive. The lagged effect of the unprecedented loosing of financial conditions is about to strike...



Source: Bloomberg

...and with it 'animal spirits' will be reborn - and the threat of re-inflation.

 

Where Have the Bulls Gone?
Thu, Jan 18, 2024

The S&P 500 has continued its listless drift sideways this year, and sentiment has begun to take notice. Bullish sentiment exited 2023 at elevated readings with close to half of all respondents to the weekly AAII survey reporting as bullish, but since then, that reading has dropped down to 40.4% this week. That marks the lowest reading on optimism since the first week of November when it was a much more muted reading below 25%.



In turn, bearish sentiment has begun to pick up. 26.8% of respondents reported as bearish this week. That is only the highest reading since the first week of December and would need to climb another 4.25 percentage points to reach its historical average.



With the inverse moves in bulls and bears, the bull-bear spread has fallen to 13.6. While bulls have outnumbered bears for 11 weeks in a row now, this week's reading marks the smallest margin during that span.



Not only is the AAII survey showing the least bullish sentiment in about two months, but so too are the Investors Intelligence survey and the NAAIM Exposure index. Plugging each reading into our sentiment composite shows that aggregate sentiment has quickly gone from sitting over a full standard deviation more bullish than the historical norm down to barely bullish readings in less than a month.



Jobless Claims Seasonality Not What It Used to Be
Thu, Jan 18, 2024

Among a number of better than expected economic data points this morning was initial jobless claims. Seasonally adjusted claims were expected to rise to 205K from an upwardly revised level of 203K last week. Instead, claims were much healthier than expected, dropping all the way down to 187K. As shown below, that puts the indicator within 5K of the late September 2022 low of 182K. Zooming further out, that is also one of the strongest readings on record, ranking in the first percentile of all weeks since the start of the data in 1967.



In reality, before seasonal adjustment, claims are much higher at 289.2K as the reading is currently working off a seasonal peak. However, that is not to say claims are weak. As shown in the first chart below, versus comparable weeks of the year going back to 2004, this most recent reading was only slightly above where they stood this time last year. In fact, that reading last year currently stands as the record low for the second week of the year of all years going back to 1967. Looking ahead to next week, another week-over-week decline is more than likely given it is the week of the year with perhaps the strongest seasonal tendencies. Going over the history of the data, there has not been a single time that NSA claims have risen week over week in the third week of the year.



As previously mentioned, claims tend to spike to seasonal highs around now, and there has been only one previous time that NSA claims have been lower in the second week of the year, and that was in 2023. But looking back over the past several years shows that the strong reading on claims for this time of year even pre-dates COVID. As shown below, in the 50 years from 1967 through 2016, the second week of the year averaged 656.5K for NSA claims. But since 2017 (excluding 2021 when claims were an outlier with far more elevated readings due to the pandemic) those same weeks have averaged a significantly lower reading of 340.3K. Put differently, the seasonally elevated level that claims have begun the year at is not exactly what it used to be.



Looking at things from another angle, below we show the percent change in NSA claims during the period that the indicator has historically experienced its seasonal runup, lasting roughly from September through the first couple of weeks of the new year. As shown, since the late 1990s, that seasonal climb has been trending smaller and smaller in size. All together, that means there appears to have been some structural changes in seasonal patterns over the past couple decades (which could also have implications for the seasonally adjusted number understating). As a result of a smaller seasonal spike, claims have spent the first few weeks of the year at lower levels than may have been the case in the past.



Finally, we would note that in addition to strong initial claims, seasonally adjusted continuing claims have also continued to roll over, totaling 1.806 million last week. That was a solid decline versus 1.834 million the previous week compared to an expected increase to 1.84 million. That also sets a three month low in continuing claims.



Election-Year January Tracking Historical Seasonal Pattern

Earlier this month we noted that election-year Januarys have historically been soft and that since around the year 2000, January’s prowess has faded. As of today’s close, DJIA, S&P 500, NASDAQ, Russell 1000, and Russell 2000 are all negative year-to-date. Except for Russell 2000, down 5.62% thus far in January, losses have been relatively mild ranging from 0.64% from S&P 500 to 1.12% by DJIA.

In the chart above, the recent 21-year seasonal pattern for January has been plotted and uses the left vertical axis. Year-to-date 2024 is using the right vertical axis. Comparing this year to the averages over the last 21 years, this year has been slightly weaker than average while generally tracking the overall pattern with early weakness followed by some strength. From around now until the end of the month, the historical pattern suggests more choppy trading is likely.

The Most Shorted Names Suffer
Tue, Jan 16, 2024

Equities have generally been consolidating to start out 2024, but one group that has gotten outright punished is those stocks that possess the highest levels of short interest. In the chart below we've broken the large-cap Russell 1,000 into deciles (10 groups of 100 stocks each) sorted by the stocks with the highest to lowest short interest as a percent of equity float as of the end of last year and show each group's average performance year to date. Whereas the average stock in the index is down 2.34% so far this year, the 100 stocks in the index with the highest short interest levels are already down 8.76%. That is significantly more than the second most heavily shorted decile which has averaged a decline of only 2.81%. Notably, the decile of least shorted stocks is actually up 0.41% so far this year on average.

Looking more closely at the decile of most heavily shorted stocks, it's filled with names that have already fallen in excess of 20-30% YTD like EV-related names Lucid (LCID), Chargepoint (CHPT), and Plug Power (PLUG). Solar stocks like Sunrun (RUN), crypto adjacent names like Coinbase (COIN), and meme stock mania names like AMC Entertainment (AMC) and GameStop (GME) also find themselves on this list and have already seen double digit declines year to date.



The most recent short interest data through the end of last year was released just last week. Below we show the average reading for each industry in the Russell 1,000. Across the whole of the index, the average stock has 3.87% of float shorted. Readings are close to or more than double that for Discretionary Retail and Autos at 9.1% and 7.6%, respectively. Media & Entertainment, Transportation, and Consumer Services are the only other sectors that average more than 5% of float shorted. Meanwhile, Insurance, Utilities, Banks, and Commercial and Professional Services are some of the least shorted industries.



As previously mentioned, some of the worst performing stocks this year have been those with the highest levels of short interest. In the table below, we show the 30 Russell 1,000 stocks that currently have the highest short interest as a percentage of float. Recent IPO Maplebear, or Instacart (CART), tops the list with almost 29% short. That is actually down versus the mid-December reading though back then it was again higher than any other Russell 1,000 member. There are seven other names with more than a quarter of float shorted: Sirius XM (SIRI), Plug Power (PLUG), Lucid (LCID), Kohl's (KSS), Medicap Properties (MPW), Birkenstock (BIRK), and Celsius (CELH). One thing that is notable is that while many of these highly shorted stocks are underperforming, some exceptions are those that have more recently IPO'd. For example, CART, BIRK, and CAVA are some of the few from this list that are up on the year. Granted, their gains are not nearly as solid of Celsius (CELH) which has completely distanced itself from the rest of the pack, rising 11.4%.



Under the Hood: Fourth Quarter Earnings Kickoff


JP Morgan kicked off earnings season on Friday as the bank wrapped up its most profitable year ever. While the prospect of lower interest rates in 2024 may temper record profits, the outlook was more optimistic than anticipated. Jamie Dimon, the bank’s Chairman and CEO, acknowledged that the company is over-earning on both interest income and credit, but as these factors normalize, JP Morgan anticipates achieving earnings near record levels once again in 2024. This better than expected outlook supports the Carson Investment Team’s financial sector overweight in the 1st half 2024 Outlook.

Investors are looking for companies to eke out the second consecutive quarter of year-over-year quarterly earnings growth, following declines that commenced in late 2022. While expectations call for only 1.3% growth in the fourth quarter, analysts expect S&P500 earnings will snap back to a brisk double-digit rate in 2024. Investors will be scrutinizing the full year guidance that many companies give on their fourth quarter update calls for clues that support the optimistic outlook.

Against a backdrop of easing inflation and improving efficiency, a key component of earnings growth in 2024 is expected to come from margin expansion. This healthy margin expansion hinges on operating leverage, rather than simply cost cutting measures. The focus is on identifying companies capable of growing sales at a rate that outpaces expenses. It’s crucial to strike a balance between growth and efficiency, because without growth, achieving margin expansion comes at the expense of deeper cuts that could impact the overall quality of the business. Therefore, a healthy combination of both growth and efficiency will be key for fundamentals to live up to expectations.

The initial glimpse offered by JP Morgan, and peers like Bank of America and Wells Fargo, coupled with commentary from UnitedHealth and Delta, suggest that perhaps the tide isn’t turning as fast as anticipated. The US economy remains resilient, and consumers continue spending. However, inflation may be stickier than initially expected as companies expect wages, fuel prices, and healthcare costs to continue rising in 2024. This narrative aligns with recent economic data that suggests investors may have gotten a bit ahead of themselves on the timing and magnitude of rate cuts.

With only a handful of companies reporting, it’s far too early to draw any meaningful conclusions, particularly from the banks where margin on interest income was already expected to soften this year. Regardless of the path to earnings growth in 2024, initial commentary suggests that demand remains resilient which supports top line growth and thus the first component of operating leverage. I expect the efficiency narrative to gain some steam as other sectors, like technology and communications, offer their outlooks. These important sectors that drive much of our economy have been reducing headcounts and right-sizing operations for some time now and much of that work should bear fruit in the form of margin expansion, and ultimately earnings growth, in 2024.

Carson Investment Research Releases Its 2024 Market Outlook: Seeing Eye to Eye


What a strange year we had in 2023. There were few places where market participants, strategists, policymakers and the economy saw eye to eye. Most strategists missed the underlying strength in the economy, leading to too much pessimism about stocks in what turned out to be a strong year. Skepticism about the bond outlook and a flight to money market funds looked justified until the last quarter, when bonds rallied sharply. And consumers remained gloomy for most of the year about what was really a pretty good economy despite the most aggressive Federal Reserve (Fed) rate hike cycle in decades.

Carson Investment Research took an unpopular contrarian stance in 2023, calling for the expansion to continue and stocks to post solid gains, based simply on what we were seeing in the data. Consensus has moved toward our view in 2024, but we still see quite a bit of gloom out there, with a number of strategists holding to their recession calls. We take a deep dive into our Outlook for 2024 in Carson Investment Research’s Outlook ‘24: Seeing Eye to Eye.

DOWNLOAD OUR 2024 MARKET OUTLOOK


The Macroeconomic Backdrop
As we look at the year ahead, we see even lower odds of a recession than we did in 2023, as signaled by our proprietary Leading Economic Index (LEI), which places less emphasis on manufacturing and business sentiment and more on consumer spending (which makes up more than 2/3 of the economy) than some of the more widely followed LEIs. With the Federal Reserve very likely to start cutting rates in the first half of the year, and a solid job market supporting incomes, there’s plenty in place to support continued growth.



We also see strong potential for some pick-up in productivity growth as falling interest rates support business investment. Lower rates may also help sustain momentum in new businesses creation, which typically also gives a boost to productivity. And let’s not forget technological advances. It usually takes a decade or more for new technologies to impact the broad economy, but the pipeline is strong (artificial intelligence was already being actively deployed a decade ago even if “generative AI” is new). In addition, the investment in the U.S. high technology manufacturing base in the last year has been extraordinary.

This economic environment should support solid earnings growth and improved margins, leading to a good year for markets. Yes, 2023 was a strong year, but historically that has not been a harbinger of market downside. To the contrary, it’s actually pointed to a pretty good market in the following year, only limiting the likelihood of a blockbuster follow-up year. The four-year election market cycle, which has held largely true to form in 2022 and 2023, also signals a solid year, especially when we have a first term president (independent of party).

What may look different for stocks in 2024 is for the market rally to broaden. While a lot of attention was given to the strength of U.S. mega-cap stocks in 2023, we were already seeing increased market breadth and valuations point to the possibility of that trend continuing, potentially support small- and mid-cap stocks.

After a strong late year run for fixed income, some of the expected returns for bonds may have been pulled forward, but we still see as solid year ahead for bond as inflation continues to fall, the Fed lowers short-term rates, and flows from money market funds and other short-term instruments supports demand after the great flight from bonds in 2022 and 2023. Something close to the yield-to-maturity for the broad investment-grade Bloomberg US Aggregate Bond Index would be perfectly satisfactory. As important, with a higher starting yields and falling inflation, bonds are less vulnerable to losses and are once again more likely to add some ballast to a portfolio during periods of volatility.

Our bottom line: We expect markets, many strategists, and policymakers to once again largely see eye to eye in 2024 on broad outcomes, although we continue to tilt more optimistic than most based on the underlying data. We continue to favor the U.S., although valuations should help international markets see reasonable gains as well. While emerging market valuations are depressed, policy uncertainty, especially in China, continues to weigh on prospects. In fixed income, our economic outlook supports some tilt toward credit-sensitive bonds but we prefer reflecting our economic outlook by overweighting equities.

Remember, even good years exhibit some volatility so it’s important to be prepared to weather the market’s normal ups and downs. A 5% pullback in stocks is something that has historically occurred around 3-4 times a year, while a 10% correction occurs at least once a year. And a 20% bear market has historically occurred once every three years.



Carson Investment Research will be there to help, continuing to emphasize facts, not feelings, in our blogs, podcasts, and commentaries as we navigate the markets in 2024.

Empire Collapses In Spite of Expectations
Tue, Jan 16, 2024

The economic data slate was light to kick off the holiday-shortened week with the only release of note being the NY Fed's Empire State Manufacturing Survey. The report came in catastrophically worse than forecasted. Forecasts were calling for the index to improve from a reading of -14.5 in December up to -5 this month. Instead, the headline reading collapsed down to -43.7. As shown in the chart below, that's the lowest level since the spring of 2020 and before that, there was never a lower reading in the 20+ year history of the survey.



Taking a look under the hood, below we show a breakdown of each category of the report as well as its reading the previous month, the month-over-month change, and how those rank (as a percentile) versus all months of the survey's history. Obviously, with only a couple of months with lower readings, the headline number is in the bottom 1% of all readings on record. The same goes for New Orders and Shipments which were the key drivers of weakness this month. Additionally, it is worth noting that each of those categories was already sitting at historically contractionary levels (ranking in or close to the bottom deciles of their respective historical ranges) in December. While the month-over-month decline was much smaller in January, Unfilled Orders is also down near record lows. That is not to say all areas of this month's report deteriorated. Delivery Times, Prices Paid, and Number of Employees each rose month over month as did nearly all categories for six-month expectations.



Again, the two biggest declines in January were New Orders and Shipments. Like the headline number, the only period with lower readings was the spring of 2020. The fresh low in Unfilled Orders has surpassed the onset of the pandemic for the lowest reading since November 2010. Inventories are not exactly strong with the current level also in contraction, however, that category is much more elevated than others, currently ranking in the 30th percentile.



As previously noted, while current condition indices have collapsed, the same moves have not been observed for expectations. To quantify this dynamic, below we take the spread of each category's current condition index and expectations index and average across each one. As shown, the January reading dropped significantly and is now at historic lows. Again the only comparable lows to draw from were early on in the pandemic as well as late 2001, only a few months into the survey's history. That means New York area manufacturers have observed a material and significant slowdown in their businesses, but that has yet to show any impact on the level of optimism looking forward.

 

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 1.19.24-


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 1.19.24-

 

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Here are the upcoming IPO's for this week-

 

Stock Market Analysis Video for January 19th, 2024
Video from AlphaTrends Brian Shannon


ShadowTrader Video Weekly 1/21/24
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 (1/22-1/26) <-- click there to cast your weekly market direction vote and stock picks for this coming week ahead!

Daily SPX Sentiment Poll for Monday (1/22) <-- 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 1.22.24 Before Market Open:

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

Monday 1.22.24 After Market Close:

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

(T.B.A.)

Tuesday 1.23.24 Before Market Open:

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

(T.B.A.)

Tuesday 1.23.24 After Market Close:

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

(T.B.A.)

Wednesday 1.24.24 Before Market Open:

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

(T.B.A.)

Wednesday 1.24.24 After Market Close:

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

(T.B.A.)

Thursday 1.25.24 Before Market Open:

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

(T.B.A.)

Thursday 1.25.24 After Market Close:

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

(T.B.A.)

Friday 1.26.24 Before Market Open:

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

(T.B.A.)

Friday 1.26.24 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-
($TSLA $NFLX $UAL $VZ $INTC $IBM $MMM $T $ASML $GE $AAL $NOW $RTX $ISRG $AXP $HAL $JNJ $LMT $LVS $TXN $PGR $ABT $V $LOGI $LRCX $AGYS $NEE $PG $AGNC $BRO $AJG $ALK $STLD $APH $LUV $FCX $DOW $BX $NEP $HUM $VLO $ZION $KLAC $DHI $WAL $KMB $UNP $BKR $COF)


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

• Most Anticipated Earnings Releases for the week beginning January 22nd, 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 into the US cash market open.

GLTA on this Monday, January the 22nd, 2024!

 

Morning Lineup - 1/22/24 - Party On
Mon, Jan 22, 2024

After last Friday’s run to record highs, there is no hangover in the markets this morning as futures are firmly in positive territory to kick off the week. There’s not much specific to point to as reasons for the positive tone, and the stocks leading the way in the pre-market are essentially the ones that have taken us here in the first place, namely mega caps, and anything to do with AI. It’s a quiet day for both earnings and economic data to kick off the week, but that will change as the week goes on. In the meantime, the only economic data to be on watch for this morning is Leading Indicators at 10 AM Eastern.

Just as the US equity market breaking out to new highs hasn’t been a tide lifting all stocks, global stocks have also seen disparate performance. The snapshot below shows where the equity benchmarks of the ten largest global economies are trading relative to their trading ranges (in dollar-adjusted terms). While the US was up over 1% last five trading days, the only two other country ETFs that traded higher were India (PIN) and Japan (EWJ). They are also the only two other countries that have managed gains so far this year. While most other major-country ETFs are still above their 50-day moving averages, that can’t be said for the UK, Brazil, and China. However, given the disaster that Chinese equities have been lately, it’s probably not fair to lump the UK and Brazil in the same basket.

 

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, January 22nd, 2024.