1. U.S. Futures


Stock Market Today: June 24th - 28th, 2024

Discussion in 'Stock Market Today' started by bigbear0083, Jun 10, 2024.

  1. bigbear0083

    bigbear0083 Administrator
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    Welcome StonkForums to the trading week of June 24th!

    This past week saw the following moves in the S&P:
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    S&P Sectors End of Week:
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    Major Indices End of Week:
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    Major Futures Markets End of Week:
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    Economic Calendar for the Week Ahead:
    (T.B.A.)

    What to Watch in the Week Ahead:
    (N/A.)
     
    #1 bigbear0083, Jun 10, 2024
    Last edited: Jun 21, 2024 at 4:45 PM
  2. bigbear0083

    bigbear0083 Administrator
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    Crude Pops, Gold Drops, Crypto Flops As NVDA Suffers Worst Week In 2 Months
    FRIDAY, JUN 21, 2024 - 04:00 PM

    The biggest 'quadwitch' ever saw a tight trading range outside of the open and the close.

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    A chaotic start - as $3 trillion notional options expired on the open - left stocks to tread water for much of the day (even as bond markets suddenly gave a shit about flash PMIs), until the volume exploded into the close.

    It was another ugly week for US macro data overall - with the Bloomberg Economic Surprise Index tumbling to its weakest since Feb 2019...

    [​IMG]

    Source: Bloomberg

    But the decline was dominated by 'hard' real data (worst since Sept 2022) while soft survey data improved off nine-year lows...

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    Source: Bloomberg

    On the week, The Dow outperformed while Nasdaq lagged as Monday's huge squeeze higher saved the entire week...

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    The fund and games were not over until the last second. The Nasdaq Composite cash index closed last Friday at 17688.88. Thanks to some last second shenanigans from the machines, the Nasdaq Composite cash index closed this week at 17689.36... +0.48pts or 0.002%... to ensure the 8th positive week in the last 9 weeks...

    [​IMG]

    Source: Bloomberg

    Utes and Real Estate were the only sectors to close down on the week as Energy outperformed...

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    Source: Bloomberg

    NVDA suffered its first down-week in two months...

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    Goldman Sachs said that their floor tilted -22% better for sale, driven by supply within the LO community. But, they highlighted that as expected, some massive opening prints w/ quadwitch (and noted that the close will be 5x). We did have asset managers take advantage of these opening prints.
    • LOs are currently -6% better for sale. Supply from this group is largely being driven by Info Tech, Healthcare, and Consumer names.
    • HFs are slightly better to buy, led by Consumer Disc and Healthcare. HFs are modestly selling Fins, REITs, Materials, and Energy. HF trading during first 30 mins driven by factor models. Little Mo drawdown mostly concentrated in tech w/ MU, NVD, AVGO, QCOM underperforming vs TXN, INTC, ON, MCHP outperforming.
    Stifel’s Barry Bannister says the US stock benchmark has a shot at reaching the 6,000 mark before the end of 2024 as investors keep piling in, up from just below 5,500 Thursday. But by mid-2026, he expects the gauge to sink back to where it began this year — around the 4,800 level — erasing a fifth of its value.

    To be clear, the forecaster says risk assets, and equity markets in particular, are due for a correction much sooner. His official year-end S&P 500 target stands at 4,750, implying a drop of some 13% from today. The index retreated after touching all-time highs Thursday as technology shares came under pressure. Still, the euphoria among investors that’s powered the market for months is set to propel shares higher before they eventually plunge, he says.

    “Timing is everything,” Bannister and his team wrote Wednesday in a note to clients, “and we are aware that investors may be in full-fledged bubble/mania mode which looks past our concerns.”

    Bannister is not alone as Mark Spitznagel, the founder and chief of Universa Investments, said:

    "I've been saying this for a year and a half because people got 2022 so incredibly wrong (we're not in the 70s!). The Fed recklessly popped the greatest credit bubble in human history and now as people realize that the Fed needs to about-face, they're going to get increasingly juked the other way in a face-ripping rally. At the point of euphoria — which is coming — the high will be in and the market will crash worse than the global financial crisis."

    "What matters more than my views on this are how Universa's clients are positioned for it — for both a face-ripping rally and for the worst crash since 1929."

    Is this week's NVDA weakness a sign of things to come?

    [​IMG]

    Source: Bloomberg

    Or is the macro picture signaling something that stocks don't know...

    [​IMG]

    Source: Bloomberg

    Looking at US bond yields trade this week, it's clear we are entering the 'illiquid summer' season as yields snapped and crapped constantly to end the week marginally higher...

    [​IMG]

    Source: Bloomberg

    But, on the bright side, at least they're not French where the OATS spread exploded to its widest since 2012 (the EU Debt Crisis)...

    [​IMG]

    Source: Bloomberg

    US rate-cut expectations for 2024 and 2025 were basically unchanged on the week...

    [​IMG]

    Source: Bloomberg

    The dollar ended the week very marginally higher

    [​IMG]

    Source: Bloomberg

    Bitcoin suffered this week with ETF outflows for five straight days...

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    Source: Bloomberg

    Bitcoin fell to $64,000 and found some support at six-week lows...

    [​IMG]

    Source: Bloomberg

    Gold was performing well all week until this morning's hot PMIs which sent the barbarous relic into the red...

    [​IMG]

    Source: Bloomberg

    Despite a dip today as contracts rolled, the front-month WTI futures price rallied up to its highest since April this week...

    [​IMG]

    Source: Bloomberg

    Finally, Messers Biden and Powell may be about to have a problem...

    [​IMG]

    Source: Bloomberg

    ...as pump-prices are about to chase wholesale gasoline prices and crude prices higher.
     
    #2 bigbear0083, Jun 10, 2024
    Last edited: Jun 21, 2024 at 4:46 PM
  3. bigbear0083

    bigbear0083 Administrator
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    Small Caps: Value Trap or Timely Add?
    [​IMG]

    Small cap stocks have been left in the dust by their larger-cap cousins since early 2023, with a few fits and starts along the way. Small caps showed strength coming out of the 2022 lows but were unable to build on their momentum as the Fed continued to raise interest rates until the summer of last year. While small cap stocks have had a few positive sectors this year, any strength pales in comparison to large cap technology. Large cap tech stocks – led by Nvidia and Microsoft – have propelled the S&P 500 higher on the year, contributing more than half of the year-to-date gain on the index. While this is likely not news to many, when seen visually compared to the rest of the sectors in the index, and especially the small cap index, the outperformance is striking. To make matters worse for small caps, ultra-highfliers like Super Micro Computer (SMCI) and MicroStrategy (MSTR) have been ineligible for small cap index inclusion, either because they don’t meet earnings criteria or they have simply grown too large too fast to be considered small caps.

    [​IMG]

    Sources: Factset, Carson Investment Research 6/11/2024

    With recent performance working against small caps, why do we continue to lean into the position, and suggest it as an important part of a portfolio for our clients? There are several economic, fundamental, and quantitative reasons not to give up on small caps just yet.

    First off, the soft landing – or maybe no landing – scenario continues to play out. Growth remains strong, labor market dynamics healthy, and inflation appears to have stabilized. This combination of a strong domestic economy, where small caps derive a large portion of their earnings (significantly more than large caps), and the likelihood of lower interest rates is a recipe for small cap strength.

    We have written many times before on how over the long term, fundamentals – particularly earnings – drive stock prices. This is of course true for large caps as much as it is for small caps. Small company earnings growth appears to have been troughed over the past year, setting up future year expectations in a big way. In fact, as it stands today, analysts see small cap earnings growth in 2025 and 2026 above that of S&P 500 companies. While these are just estimates, we know that the market is a forward-looking discounting mechanism and begins to apply these expectations in advance.

    [​IMG]

    Sources: Factset, Carson Investment Research 6/11/2024

    We have also mentioned a number of times before how small caps stocks are historically cheap versus just about every other equity asset class. While this large valuation discount does not provide any sense of timing, it is still a tailwind for the asset class. Valuation re-adjustments can happen quickly, which is one reason for the importance of diversification. Looking at valuations in a differently light, in what can be referred to as long-term reversal, small caps are at a relative performance low versus large caps (probably not a surprise). The magnitude of that relative low, however, is beyond one standard deviation to history, and at a level that has preceded strong small cap rallies in the recent past.

    [​IMG]

    Sources: Morningstar, Carson Investment Research 5/31/2024

    We recognize that small cap stocks have not met the performance of their large cap counterparts — particularly large cap growth. Diversification, by definition, means that not everything in your portfolio moves in the same direction at the same time. We believe small and mid-cap stocks offer an attractive opportunity for investors that wish to limit market concentration and position themselves for a change in recent trends that may be getting overextended.

    [​IMG]

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    Nearing 10x Sales for Large-Cap Tech
    Thu, Jun 20, 2024

    In today's Chart of the Day we took a look at valuations across the Tech sector and how things stand relative to historical extremes. (It's an eye-opening read, so make sure to check it out if you haven't seen it yet.)

    Below is a quick look at trailing 12-month price to sales ratios (P/S) over the last five years for the large-cap S&P 500 and small-cap Russell 2,000 along with each index's respective Technology sector. As shown, the Russell 2,000's price to sales ratio is just 1.25x, which is slightly below its average P/S ratio over the last five years. The Russell 2,000 Technology sector's price to sales ratio is higher at 2.8x, but that's still below the 2.9x P/S ratio for the S&P 500 as a whole. Incredibly, the S&P 500 Tech sector's price to sales ratio has pushed all the way up to 9.8x, which is well above its high at the peak in late 2021. A 9.8x multiple is attractive if you're looking at price to earnings (P/E), but for Tech stocks to be trading at 9.8x annual sales, that's just a remarkably high number. (As mentioned, we've got further coverage of this topic in today's Chart of the Day if you'd like to read more of our thoughts.)

    [​IMG]

    Below is a look at the stocks in the large-cap Russell 1,000 that have seen the biggest increase in their price to sales (P/S) ratios since the current bull market began on 10/12/22. As shown, NVIDIA (NVDA) has seen its share price rise more than 1,000% during this bull market, but its P/S ratio has made 32 turns higher from 9.7x up to 41.9x! That's by far the biggest jump of any stock in the index. Of the 30 stocks shown, the average P/S ratio has risen 9.6 points from 8.6x up to 18.2x, and most stocks on the list are Tech stocks.

    [​IMG]

    View From The Top: 1999 vs. Now
    Tue, Jun 18, 2024

    Breadth has been the topic of the week with the market cap weighted S&P 500 pushing to new highs, leaving behind cumulative AD lines and equal-weight measures of the same index. This means the index's largest stocks are providing an outsized boost to performance, so in the charts below we take a look at the weighting of those largest stocks over the years. As shown below, the combined market cap of what are currently the 30 largest stocks in the S&P 500 account for almost 53% of the index. Looking back to the comparable point of the year 5, 10, 15, 20, and 25 years ago, it has been common for the 30 largest stocks to account for around 40% of the S&P 500's total market cap. However, the current reading is over 10 percentage points higher than even June 1999 when the 30 largest accounted for 42.18%.

    [​IMG]

    As we have mentioned in the past, even though one stock may be a giant at one point in time, it is not guaranteed to hold its dominance. In the chart below we show the number of stocks that currently rank as one of the top 30 largest S&P 500 members and also ranked in the top 30 in years past. As shown, only around half of the current mega-caps were also mega-caps of a decade ago. Setting the calendar back a quarter century, a third of the 30 largest S&P 500 stocks were also in the top 30 in 1999.

    [​IMG]

    Below we show the 30 S&P 500 members that currently have the largest market caps. Of these, there are only a couple, Tesla (TSLA) and Johnson and Johnson (JNJ), that have provided a negative return in the past year. Granted, TSLA has also been a ten bagger over the past five years. The only other stock that boasts such an outstanding gain is, of course, NVIDIA (NVDA).

    [​IMG]

    Below is a look at the 30 largest stocks in the S&P 500 as it stood twenty-five years ago in June 1999. As previously mentioned, there are ten stocks in the current top 30 that were in the top 30 in June 1999 (highlighted in grey below). At the top of the list is the familiar face of Microsoft (MSFT) with an inflation adjusted market cap (in 2024 prices) of $816 bn back then. Like TSLA and NVDA now, MSFT had also been a ten bagger over the previous five years. However, one difference between 1999 and now is that stocks with such large gains had much more company back then. Whereas currently there are only two of the 30 largest stocks that are up 1,000%+ in the last five years, in 1999 there were five: MSFT, Cisco (CSCO), WorldCom, Time Warner, and Dell (DELL). Again, only one of those is still a mega-cap today while others like WorldCom had more dramatic falls from grace following bankruptcies only a few years later.

    In comparing 1999 to today, currently the S&P 500 is in fact more concentrated at the top. Just the top three stocks today—MSFT, AAPL, and NVDIA—account for over 20% of total S&P 500 market cap compared to around 9% for the comparable three—MSFT, GE, and Exxon—in 1999.

    [​IMG]

    No! Saudi Arabia is Not Ending Any “Petrodollar Pact”
    [​IMG]

    Fake news alert: Saudi Arabia is not going to stop selling oil in US dollars (USD), and they’re not ending any petrodollar pact. In fact, there is no petrodollar pact, secret or otherwise. So, there’s nothing to renew (or not renew). Nor is there any “paradigm shift” shift in global finance.

    The rather mundane truth behind this volcano of misinformation is that the US and Saudi Arabia put together a Joint Bilateral Commission on Economic Cooperation in the 1970s to strengthen US-Saudi relations. Oil prices surged in 1973-74 after the Arab oil embargo, sending inflation surging. Following this unpleasant episode, the US wanted to foster closer ties with the Saudis to avert another crisis. The best way to do that was to get the Saudi’s to invest the proceeds of their oil sales in the US by buying US assets. Note that this was already happening, with the Saudis starting to invest a lot of their oil wealth in the US. The goal was to continue and enhance this trend. The result of the bilateral commission was that the US would give technical assistance to the Saudis across multiple areas – defense, agriculture, labor, science and technology, industrialization – all of which the Saudis would fund using “petrodollars,” petrodollars simply being the dollars received for selling oil.

    Crucially, this arrangement was not a formal deal or treaty.

    The US built closer ties to a country that could prevent another oil shock. It clearly worked for the Saudis too, as they got 2 things:
    • Development assistance from the US
    • Assets in a currency (USD) that was liquid and freely convertible (so they could move it around as they liked)
    Fast forwarding to the current day, and the irony behind the rumors is that the US and Saudi Arabia are on the verge of signing a historic security agreement, pulling the two countries even closer together from a defense perspective. Also, everything related to the global oil trading systems – financing, transportation, insurance, etc. – is all done in USD. That’s unlikely to change anytime soon, as the network effects are just too strong.

    Finally, the US is now the largest oil producer in the world. Which means the biggest source of “petrodollars” right now is the US.

    So What If the Saudis Don’t Sell Oil in USD ¯\_(ツ)_/¯
    Back in the 1970s, the Saudis didn’t have a lot of other options when it came to selling oil. However, now it looks like they do. The Saudis could “diversify” and start selling oil to the Chinese in yuan and to the Indians in rupees. But what comes next? Once they receive Chinese yuan or Indian rupees, what do they do with it? Ideally, they’d buy Chinese or Indian assets with it, i.e. government bonds, stocks, and/or real estate. That may work, but only up to a certain point. There are a lot of constraints to “replacing the dollar.”

    For one thing, US assets are a lot more attractive from a return perspective, especially relative to Chinese assets. Chinese and Indian assets are also not as liquid as US assets. There’s not even enough “T-bill” equivalents to park cash in, like the Saudis (or even you or I) can do with US Treasuries.

    Just as important, their currencies are not “fully convertible” like the US dollar is. The dollar is easy to buy and sell on the foreign exchange market with few restrictions (the Japanese yen, euro, and pound are also fully convertible). China and India, by contrast, have strict capital controls, which is why their currencies are not easily convertible. The best way to think about this is that you can buy Chinese and Indian assets but selling them and moving money out of these countries is not easy. China and India are unlikely to loosen capital controls anytime soon. China in particular will likely see a flood of capital moving out of China if that happens, into more “safe” places (like the US).

    More likely is this scenario: If the Saudis receive yuan or rupees for their oil, they’re likely to hand it over to someone else in exchange for USD (assuming they find takers for it, which may be quite hard to do at scale). And we’re back to the same place.

    Here’s Why the Dollar Will Likely Remain Dominant
    The USD is unlikely to be dethroned from its top status anytime soon (maybe not even in our lifetime). Three reasons why.

    One, global trade is dominated by the US, China, and the EU. But it’s massively skewed, with the US importing much more than it exports. China is the dominant exporter, but even Europe exports more than it imports. All this means the rest of the world is awash in US dollars – which they receive in exchange for supplying Americans with goods. That’s actually a feature of how their economies work, which they rely on in many ways.

    And what do they do with the USD they receive? They invest them in the most liquid and deepest capital market in the world, the United States of America.

    This dynamic is not going to change unless countries like China start importing a lot more goods from America, which would be very good for American manufacturers and workers. But, for countries like China and Germany to start importing more, their households will have to start earning a larger share of national income. It also means their domestic manufacturers will lose some of their market share. However, the political dynamic in these countries is not going to allow for redistribution from domestic businesses to households.

    If you really want to start “worrying” about the dollar’s premier status, a good time would be when the Chinese government implements something like Social Security and Medicare. That’s as good a signal as any that foreshadow the demise of the dollar.

    [​IMG]

    The second reason: The world has confidence in the US, and therefore the dollar. This is because the US has the deepest and most liquid financial markets, thanks to the size of the US economy, the strength of the US economy, open trade and capital flows with few restrictions, strong rule of law, property rights, and a history of enforcement. Despite the US making up 25% of the global economy, about 60% of global foreign currency reserves are in USD. It has fallen from 71% in 2000 but remains far ahead of other currencies as the decline in share has been spread across various currencies.

    [​IMG]

    The third reason is that the USD is dominant in trade invoicing and international finance. Outside of Europe, more than 70% of exports are invoiced in US dollars. That’s unlikely to change anytime soon. Again, everyone wants USD because it’s liquid and “safe”. It also means the USD automatically becomes the dominant currency for international banking. Close to 60% of international foreign currency banking claims are in USD, including bank deposits denominated in foreign currency and loans taken out in a foreign currency. That’s been fairly stable since 2000, and actually increased over the past decade.

    Foreigners like to borrow in dollars, thanks to stability. Of the total amount borrowed in foreign currency, USD-based borrowing accounts for 62%, up from 56% in 2012. This is all about network effects and they can be extremely hard to dislodge. It won’t be easy to convince people across the world that they have to move their assets from the USD to another currency, let alone face the risk of actually making the switch.

    [​IMG]

    Could all of these things I laid out above change? Sure, but its likely to be a long and very slow process. Our advice: Ignore the viral advertising and trigger seed stories that have come up every few months really for decades that some triviality or plain made up news event is going to “crash” the dollar. The global economy is a complex system in which the dollar is deeply embedded. But that’s been an economic strength, as the dollar continues to play an important role facilitating trade, providing liquidity, and supporting economic stability.

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    #3 bigbear0083, Jun 10, 2024
    Last edited: Jun 21, 2024 at 11:44 AM
  4. bigbear0083

    bigbear0083 Administrator
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    Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2024-
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    S&P sectors for the past week-
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    #4 bigbear0083, Jun 10, 2024
    Last edited: Jun 21, 2024 at 4:50 PM
  5. bigbear0083

    bigbear0083 Administrator
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    Here are the current major indices pullback/correction levels from 52WK highs as of week ending 6.21.24-
    [​IMG]

    Here is also the pullback/correction levels from current prices
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    Here are the current major indices rally levels from 52WK lows as of week ending 6.21.24-
    [​IMG]
     
    #5 bigbear0083, Jun 10, 2024
    Last edited: Jun 21, 2024 at 4:50 PM
  6. bigbear0083

    bigbear0083 Administrator
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    [​IMG]

    Here are the upcoming IPO's for this week-

    [​IMG]
     
    #6 bigbear0083, Jun 10, 2024
    Last edited: Jun 18, 2024 at 3:19 PM
  7. bigbear0083

    bigbear0083 Administrator
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    Stock Market Analysis Video for June 21st, 2024
    Video from AlphaTrends Brian Shannon


    ShadowTrader Video Weekly 6/23/24
    Video from ShadowTrader Peter Reznicek
    (VIDEO NOT YET POSTED.)
     
    #7 bigbear0083, Jun 10, 2024
    Last edited: Jun 21, 2024 at 4:51 PM
  8. bigbear0083

    bigbear0083 Administrator
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    StonkForumers! Come join us on our stock market competitions for this upcoming trading week ahead!-

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

    StonkForums Weekly Stock Picking Contest & SPX Sentiment Poll (6/24-6/28) <-- click there to cast your weekly market direction vote and stock picks for this coming week ahead!

    Daily SPX Sentiment Poll for Monday (6/24) <-- 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! :cool:
     
  9. bigbear0083

    bigbear0083 Administrator
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    [​IMG]

    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 6.24.24 Before Market Open:

    (NONE.)

    Monday 6.24.24 After Market Close:

    (T.B.A.)

    Tuesday 6.25.24 Before Market Open:

    (T.B.A.)

    Tuesday 6.25.24 After Market Close:

    (T.B.A.)

    Wednesday 6.26.24 Before Market Open:

    (T.B.A.)

    Wednesday 6.26.24 After Market Close:

    (T.B.A.)

    Thursday 6.27.24 Before Market Open:

    (T.B.A.)

    Thursday 6.27.24 After Market Close:

    (T.B.A.)

    Friday 6.28.24 Before Market Open:

    (T.B.A.)

    Friday 6.28.24 After Market Close:

    (NONE.)
     
  10. bigbear0083

    bigbear0083 Administrator
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    #10 bigbear0083, Jun 10, 2024
    Last edited: Jun 22, 2024 at 10:54 AM