Stock Market Today: June 5th - 9th, 2023

Morning Lineup - 6/7/23 - Slow Drift Higher in Stocks and Rates
Wed, Jun 7, 2023

It's another quiet morning in the markets today as futures are little changed with a positive bias. Crude oil and yields are also higher, although overnight economic data out of China and Europe generally came up short of expectations, and mortgage applications in the US declined 1.4% versus the prior week. Bitcoin is also modestly lower on the morning, but given the SEC's actions towards the industry this week, one might have thought the sector would be under even more pressure.

With every advancement, the negative side effects tend to get a disproportionate amount of attention even when the societal benefits of the breakthrough dwarf the costs. The bank runs this spring were a perfect example. How many times did we hear that a consumer’s ability to transfer large sums of capital with nothing more than a couple of taps on their smartphone was a threat to the banking system?

The list of benefits these same commentators fail to mention is long and includes the ability to effortlessly move funds around the world with just a couple of taps and how it has radically improved economic efficiency. Besides the benefits, if banks simply offered even something resembling a competitive deposit rate and didn’t load up on long-duration assets when interest rates were near zero, they never would have run into these problems in the first place. And anyway, is a business model built on a foundation of making it difficult for customers to take their business elsewhere really one we all want to get behind? If that’s the case, why wasn’t anyone defending America Online back in the early 2000s when the company made it nearly impossible for customers to cancel their accounts?

The only reason for bringing this up now is that back on this day in 1962 Switzerland opened its first drive-through bank. After seeing that, we wondered if, even with the added convenience, there were similar cries from the Luddite community railing against the fact that customers could now just drive up to the bank and withdraw funds…all while the car was still running. Talk about a bank run!

Regarding banks, we noticed yesterday that the S&P Regional Banking ETF (KRE) closed above its 50-day moving average for the third day in a row which hasn’t happened since late February/early March, before the onset of the regional banking crisis. Who knows if the worst is over, but if it is, it would have been one hell of a quick ‘crisis’.

 

Here is a final look at today's market and futures maps, as well as how each sector performed individually at the close on Wednesday, June 7th, 2023.

 

Top of the morning StonkForumers! Happy Thursday 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 over 2 hours from the US cash market open.

GLTA on this Thursday, June the 8th, 2023!

 

Good Thursday 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 day ahead today!

 

Morning Lineup - 6/8/23 - Wake Me When Something Happens
Thu, Jun 8, 2023

In a week that has been quiet on the market, economy, and policy fronts, one of the biggest stories has been the merger between the PGA and LIV Golf, and it came 57 years and just two days after what was the most important merger in US sports history when the NFL merged with the AFL forming what has gone on to become the most formidable league in all of professional sports. This week’s merger in golf hasn’t been without controversy, but with time, will we look back on this merger as anything nearly as significant?

As we said, it has been a quiet week, and this morning is no exception. The only economic reports of note today are Jobless Claims and Wholesale Inventories, and they’ll also be the last reports of the week. Jobless claims were mixed as initial claims came in at an 18-month high of 261K while continuing claims were lower than expected (1.757 mln vs 1.802 mln) falling to their lowest level since February. Equity futures are slightly higher but basically unchanged. Likewise, crude oil is up fractionally, and treasury yields are higher across the curve.

Market rotation has been a common theme this year, and throughout the first week of June, we’ve seen it again where the winners YTD have underperformed as the laggards lead. Look at the chart below which compares the YTD performance of major equity index ETFs (x-axis) to their performance in the first week of June. With its 31.2% YTD gain, no index ETF has performed better than the Nasdaq 100 (QQQ), but in the first week of June, it is the only index ETF up less than 1%. Conversely, the Russell Microcap ETF (IWC) was the second worst-performing index ETF YTD, but it’s the best performed during the first week of June (+8.25%).



At the sector level, the inverse relationship hasn’t been quite as notable, but it has still been a factor. Technology (XLK) and Communication Services (XLC) are the two best-performing sector ETFs YTD with gains of over 30% each, but in the first week of June, they’ve been two of the three worst performers. Meanwhile, Energy (XLE), the worst-performing ETF this year (-6.11%), has rallied more than 7%, leading all other sectors. There have also been some exceptions, though. Consumer Discretionary (XLY) is the third best-performing sector YTD and it remained near the top in the first week of June as the fifth best-performing sector. Meanwhile, Utilities (XLU), Health Care (XLV), and Consumer Staples (XLP) were among the weakest sectors YTD, and they continued to lag in the first week of June.



Whatever side of the trade you are on, the question of whether this rotation is a trend shift or not is important, but the fact that it has coincided with the start of a new month would suggest that it has been more a function of rebalancing than a real trend shift.

 

Here is a final look at today's market and futures maps, as well as how each sector performed individually at the close on Thursday, June 8th, 2023.

 

Morning Lineup - 6/9/23 - "Test of the Champion"
Fri, Jun 9, 2023

This weekend marks the 155th running of the Belmont Stakes, which is referred to as the “Test of the Champion” given it is the longest and most grueling of the Triple Crown legs. In many ways, the current bull market, which was confirmed yesterday with the S&P 500 closing 20% (barely) above its October 12th low, has been the Belmont Stakes of rallies off a bear market low. To find a period where it took longer for the S&P 500 to rally 20%+ off a bear market low, you have to go back to the late 1950s. The road may have been long, but it’s better than making new lows!

This morning looks like a continuation of the trend all week where there has been little news in terms of earnings and the economy, and futures are modestly lower. Enjoy the calm while it lasts, though, because next week will be another busy week for economic data and even a Fed rate decision to boot.

Megacap stocks may have taken a back seat to large caps in the last several trading days, but somebody forgot to tell Tesla (TSLA). Heading into today, the stock is riding a 10-day winning streak, and with shares up 5% in the pre-market, the streak looks likely to reach Spinal Tap levels today. TSLA has been a wild stock over the years, but in its history as a public company, the stock has only had two other double-digit winning streaks. The first was ten trading days ending in April 2020 while the second came less than a year later when the stock rallied for eleven straight trading days. A gain today would move the current streak into a tie for the longest on record.



The log chart below of TSLA since its IPO shows where each of the prior 10-day winning streaks occurred. The April 2020 streak marked the beginning of what was a massive post-COVID rally where the stock rallied an additional 191% over the next six months. Following the January 2021 streak, however, the stock went on to fall 21% over the next six months.



While TSLA is currently in the midst of one of its longest-ever winning streaks, the magnitude of the move during the last ten days has been less monumental. While 28.4% over ten trading days is nothing to push your plate away over, as recently as this past February, the stock rallied more than 48% over ten trading days, and since November 2021, there have been three other ten-day periods where the stock rallied as much or more than it has over the last ten trading days.

 

Here is a final look at today's market and futures maps, as well as how each sector performed individually at the close on Friday, June 9th, 2023.

(TB.A. After Today's Market Close.)