Stock Market Today: September 5th - 9th, 2022

Welcome StonkForums to the trading week of September 5th!

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 on Friday:


Economic Calendar for the Week Ahead:


What to Watch in the Week Ahead:

(N/A.)

 

Putin Kills Goldilocks: Stocks Slammed As Russia Wrecks Dove's Dreams
Today's price action was bought to you by the word "Goldilocks" and the number 'Zero'.

Goldilocks was the word thrown around by all asunder with regard to the labor market data today - most especially a drop in wage growth - which prompted a dovish response from markets (who apparently are unable to remember what Jay Powell said just last week).

Just to steal the jam out of goldilocks' donut, we do note that hours worked continued to tumble - not a good sign - sending up recession-risk flares left and right...



Source: Bloomberg

And the number Zero is the amount of Russian gas that Putin will allow to flow to Europe through Nord Stream 1 after 'coincidentally' finding an oil leak and keeping the crucial pipeline closed (just after G-7 agreed on the completely unworkable Russian oil-price cap scheme)



That all sent rate-hike odds tumbling, with the odds of a 75bps hike this month dropping from 75% to 55%...



Source: Bloomberg

Powell will be pleased though as financial conditions have tightened significantly back to the tightest of the cycle after the Fed Pivot easing...



Source: Bloomberg

On the day, everything was awesome after the jobs data... until the European close (low liquidity) when stocks tanked as Gazprom 'coincidentally' found an oil leak and said it would keep the gas pipeline closed for longer. Nasdaq went from Secretariat to the glue factory in a few brief minutes...



This leaves the Nasdaq down around 8% since Powell's J-Hole jawbone...



The Nasdaq Composite is down 6 days in a row - something it hasn't done since early August 2019.

The S&P rallied perfectly up to its 50DMA and then reversed... Putin's timing was perfect.



All S&P Sectors ended the week in the red with Tech and Materials the worst performers. Energy stocks were the most volatile...



Source: Bloomberg

Treasuries were very mixed on the week after yields puked on the jobs data, leaving the 2Y yield unchanged but the long-end up 15bps...



Source: Bloomberg

The dollar extended its post-Powell gains...



Source: Bloomberg

Litecoin managed some gains on the week but the rest of crypto was dumped with Bitcoin underperforming Ethereum...



Source: Bloomberg

Bitcoin has now hovered around $20,000 for 10 days...



Source: Bloomberg

Zinc headed for its biggest weekly loss in over a decade on concern Chinese demand will be hamstrung by new virus restrictions.



Source: Bloomberg

Oil tanked this week again with WTI back below $90...



Gold rallied on the day extending yesterday's gains after bouncing off $1700...



And here is what that buys in Germany now...

Finally, if you thought it was bad now, just wait...



Source: Bloomberg

On that happy thought, have a great long-weekend.

 

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



S&P sectors for the past week-

 

Weakness on Tuesday After Labor Day – DJIA and S&P 500 Down Five Straight

In the last 21 years, only Russell 2000 has registered an average gain of 0.03% on the Tuesday after the long Labor Day weekend. DJIA, S&P 500 and NASDAQ have struggled with negative average performance. DJIA, S&P 500 and Russell 2000 all have fallen for the last five years on Tuesday. On Wednesday the market’s performance has been varied. DJIA has performed the best, up 71.4% of the time with an average gain of 0.30%. S&P 500 is weakest, up only 47.6% of the time with an average gain of 0.29%. NASDAQ has a better record up 52.4% of the time on Wednesday, but a smaller average gain of 0.26%.

Bears Back Above 50%
Thu, Sep 1, 2022

In the wake of Jackson Hole and more hawkish than previously expected Fedspeak, the S&P 500 is on pace for its worst week since June. As a result, recent improvements in investor optimism have been entirely given back. The AAII survey of individual investors saw only 21.9% of respondents report as bullish this week. That is the worst reading in two months as the back-to-back declines over the past two weeks total 11.4 percentage points.



That was matched with a considerable increase in bearish responses. For the first time since early July, over half of respondents reported a pessimistic outlook for equities. Bearish sentiment's eight percentage point week-over-week increase was the largest since mid-June and the third weekly increase in a row.



The inverse moves of bullish and bearish sentiment resulted in the bull-bear spread to quickly move down to the worst level since the start of July. That follows a string of readings only a couple of weeks ago in which bears outnumbered bulls by only single digits.



Given the reversal in the spread, the streak of negative readings presses on. Now at 22 weeks long, it ties the 1990 streak for the second longest on record.



The AAII survey was not alone in showcasing a much more pessimistic tone of investors. Both the NAAIM Exposure Index and the Investors Intelligence survey also pivoted to more bearish readings. Combining these three results, the average reading on sentiment has fallen back to more than one standard deviation below the historical norm. Although that is not as pessimistic of an aggregate sentiment reading as earlier this year, there have only been a handful of other times going back to the mid-2000s in which the investment community had as negative of an outlook towards the equity market.



August Declines All Around the World
Wed, Aug 31, 2022

The end of August is here and US equities, as measured by the S&P 500 ETF (SPY), have been on a wild ride. At the mid-month high, SPY was sitting on a 4.3% month-to-date gain, but that has more than entirely been erased as it is on pace to finish the month down closer to 3.5%. The country ETF of each other major global economy that we track in our Global Macro Dashboard is a similar story. Across these countries, on average, they had reached a 3.13% gain at their month-to-date highs, but today they are down an average of 3.5% MTD. Overall, developed markets have faired much worse than emerging market countries with average declines of 4.82% versus 1.24%, respectively. In fact, there are only two ETFs—Brazil (EWZ) and India (INDA)—that are currently positive for the month. Meanwhile, China (MCHI) is unchanged. On the other end of the spectrum, Sweden (EWD) has been the worst performer nearing an 11% decline with a number of other European nations following up with the next worst performance.

With stock markets around the world giving up the ghost in August, most have moved back below their 50-DMAs or even into oversold territory. There are no country ETFs more than one standard deviation above their moving averages although EWZ and INDA have only moved out of overbought territory in the past week.



As we show in the table above, this year's declines have resulted in the average country ETF falling 24% below its 52-week high. Those declines bring the vast majority of these countries back below pre-COVID highs as well. At the moment, there are only four countries that remain above pre-COVID 52-week highs: Taiwan (EWT), India (INDA), the United States (SPY), and Canada (EWC). This exclusive group would need to fall substantially further to revert back to those prior highs, and as shown in the chart below, each one would also still have support at lows from earlier this year before pre-COVID highs become a technical level worth eying.



High Correlation Between Stocks and Bonds
Tue, Aug 30, 2022

So far in 2022, stocks and bonds have both sold off, leading investors with a balanced portfolio to experience historically painful drawdowns. Rates have risen, and partially because of this fact, equities have had a tough year. The S&P 500 ETF (SPY) is down 16.0% on a YTD basis, while the iShares Core US Aggregate Bond ETF (AGG) has shed 11.3% of its value. Typically, rates fall alongside equities, as investors shift their capital allocations to safer assets. 2022 has been different, though, and has seen selling in both bonds and equities. This has resulted in a historic level of positive correlation between the ETFs SPY and AGG going back to 2004 when AGG first started trading. Click here to start a two-week trial to Bespoke Premium and receive our paid content in real-time.

Although the 200-day correlation between stocks (SPY) and bonds (AGG) has been higher once before (in late 2009), the current level remains particularly elevated. The current 200-day correlation sits at 0.87, which signifies a strong positive relationship. In the last 200 days, stocks have moved in the opposite direction of rates on most days, as the market is incredibly focused on the bond market as the Fed transitions from an accommodative to a restrictive stance in the face of higher inflation. Interestingly, the correlation coefficient does appear to be rolling over, moving lower in each of the last 15 trading sessions. Historically speaking, the correlation coefficient has tended to turn negative not long after rolling over, as illustrated by the chart below.



The more we zoom in, the more the rollover becomes clear. The higher frequency measures, such as the 100 and 50-day correlation coefficients, have already moved substantially off of their recent highs, even though they are still elevated relative to history. The 100-day correlation coefficient is now at just 0.70, while the 50-day coefficient is even lower at 0.55, the lowest levels since mid-June and mid-May, respectively. This tells us that the 200-day correlation will likely pull back further, thus giving SPY a chance to gain even as rates rise, and visa-versa. As evidence of this, today SPY is down over 125 basis points even as AGG is up six bps, moving in opposite directions. To make a long story short, bonds and stocks may begin to diverge in terms of performance as the correlation between the two assets begins to roll over. Now you just have to figure out which direction they'll each go!





The rolling 100-day correlation between stocks and bonds has been over 0.5 (or 50%) for 129 trading days, which is the longest streak since the inception of AGG by a considerable margin. Although the coefficient is declining, the 100-day correlation would need to drop another 0.2 points for this streak to end.



Continuing Claims Catching Up
Thu, Sep 1, 2022

Initial jobless claims had a strong showing this week as the previous reading was revised lower by 6K to 237K. From that revised level, claims fell another 5K down to 232K marking the lowest reading since the last week of June. That was also handily below expectations which were calling for an increase up to 248K. With another week over week decline, claims have now fallen for three weeks in a row; the longest streak of declines since February.



On a non-seasonally adjusted (NSA) basis, the current week of the year has historically marked the annual low. Assuming that is the case this year, 176.8K is in line with the readings from the comparable week of the year in 2018 and 2019. Although further declines are not out of the realm of possibility, assuming normal seasonal patterns, NSA claims will likely rise from here through the end of the year.



Continuing claims are lagged an additional week to initial claims.. While continuing claims remain low having avoided the same degree of upward drift that initial claims have experienced this year, this week's reading did move up to 1.438 million. That marks the most elevated level since the first week of April.



Recently we have been highlighting the ratio of initial claims to continuing claims as a way of showing the disconnect between the two seasonally adjusted readings. In other words, the lack of filter through of initial claims into continuing claims, which can be extrapolated as those filing for unemployment are quickly finding new roles. Although the ratio remains well above the historical norm and especially the range of readings observed since the early 1990s, it has begun to roll over in the past five weeks. As for just how big of a drop it has been, the decline ranks in the bottom 2% of all 5-week moves on record. While that is not to say the overall claims picture (initial claims not turning into continuing claims) has completely turned around, it is a sign that continuing claims have been playing a degree of catch-up.



All About 1,000 Point Down Days
Posted on August 30, 2022

The Dow fell more than 1,000 points on Friday on the heels of a hawkish Fed at the Jackson Hole Economic Symposium, the 13th time in history that Poppa Dow fell that much. As the chart below shows, most of these big down days have taken place lately, with two in February 2018, eight in 2020, and three more this year.



Although we would never want to minimize the impact of a big down day, it is important to put the drop in perspective. You see, the media will no doubt hype up big down days and the larger the point decline the more sensational the drop could become. But as we show below, Friday was the 13th largest point drop ever, but it came in at a more manageable 405th largest percentage decline ever.



Additionally, a year after a 1,000 point drop the Dow has never been lower, up more than 33% on average. Of course, most of these big drops took place during the pandemic bear market in 2020 and the returns a year later are stellar. Still, this is somewhat comforting after what happened on Friday.

Another angle on this is the crash of 1987 saw the Dow fall a single day record 22.6% on October 19, 1987. As horrible as that day was, the Dow lost 508 points, which means there have now been 93 days with a larger point decline. To us here at the Carson Investment Research team, paying attention to the percentage decline is much more important.

Lastly, as the chart below shows, there have been 24 times the Dow was down at least 1,000 points at some point during the day. In fact, the first time the Dow was ever down more than 1,000 was on August 24, 2015.



Although the Dow managed to rebound some and avoid a 1,000 point drop that day, it is still a day I’ll never forget. I was unemployed and struggling to find the right fit. At the same time, I had a herniated disk and spent most of that summer in pain, laying on the floor. I’ll never forget struggling to walk into my back doctor’s office and while I’m sitting there the stock market was collapsing and boom, it was officially down 1,000 points. At the time it was a very surreal feeling, although it could have been the meds. Sitting there I just kind of laughed to myself and said I sure hoped things don’t get much worse, because being unemployed when the market was crashing and it hurts to even get out of bed, that was a pretty bad situation.

Fast forward exactly seven years and the Dow is up more than 100% from that day and I’m at a job that I love. Seven years ago if you’d have told me this, I’m not sure I’d have believed you. I’ll leave you with this, keep the faith, work hard, and treat people the right way. No matter how many 1,000 point drops there are, if you do those three things I feel confident that things will work out just fine.

 

Here are the current major indices pullback/correction levels from ATHs as of week ending 9.2.22-


Here is also the pullback/correction levels from current prices-


Here are the current major indices rally levels from correction low as of week ending 9.2.22-

 

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Here are the upcoming IPO's for this week-

 

Stock Market Analysis Video for September 2nd, 2022
Video from AlphaTrends Brian Shannon


ShadowTrader Video Weekly 9/4/22
Video from ShadowTrader Peter Reznicek
(VIDEO NOT YET POSTED.)

 

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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 9.5.22 Before Market Open:

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

(NONE. U.S. MARKET CLOSED IN OBSERVANCE OF LABOR DAY.)

Monday 9.5.22 After Market Close:

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

(NONE. U.S. MARKET CLOSED IN OBSERVANCE OF LABOR DAY.)

Tuesday 9.6.22 Before Market Open:

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

Tuesday 9.6.22 After Market Close:

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

Wednesday 9.7.22 Before Market Open:

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

Wednesday 9.7.22 After Market Close:

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

Thursday 9.8.22 Before Market Open:

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

Thursday 9.8.22 After Market Close:

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

Friday 9.9.22 Before Market Open:

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

Friday 9.9.22 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-
($NIO $DOCU $GME $PATH $ZS $KR $COUP $ASO $GTLB $FCEL $RH $AEO $ASAN $BILI $PLAY $KC $CASY $ABM $MCFT $SWBI $GIII $HQY $BIOX $GWRE $LOVE $REVG $KFY $DSGX $ZUMZ $VRNT $ICMB $AVAV $CDMO $BASE $SOL $PHR $WLY $AVO $CXM $SKIL $IDEX)


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

• Most Anticipated Earnings Releases for the week beginning September 5th, 2022 <-- click there to view!

 

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 (9/5-9/9) <-- click there to cast your weekly market direction vote and stock picks for this coming week ahead!

Daily SPX Sentiment Poll for Tuesday (9/6) <-- click there to cast your daily market direction vote for this coming Tuesday 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!

 

REMINDER: U.S. MARKETS ARE CLOSED ON MONDAY, SEPTEMBER 5TH, 2022 IN OBSERVANCE OF LABOR DAY.

Here is the CME Globex holiday schedule for the upcoming Labor Day holiday:

 

Top of the morning StonkForumers! Happy Tuesday to all of you! And welcome to the new trading week and a fresh start. Here is a quick check on those futures as we are a little under 3 hours from the cash market open.

GLTA on this Tuesday, September the 6th, 2022!

 

Morning Lineup - 9/6/22 - Positive Futures...For Now
Tue, Sep 6, 2022

Maybe we needed the weekend to pause and regroup. At least that's the hope for the bulls. Futures are higher this morning after a news-packed Labor Day which saw volatility in Europe following news that Russia would cut off natural gas supplies to that region of the world until sanctions were lifted. Also, yesterday, OPEC+ announced that it would cut supplies by 100,000 barrels per day reversing the token increase from September after President Biden visited Saudi Arabia in the Summer.

Despite the positive pre-market tone, concerns still loom as the economy remains on a shaky footing and traders have become all to used to the market trading higher and giving up those gains throughout the trading day. The upcoming weeks are busy with investor conferences so be on the lookout for any negative commentary emanating from those get-togethers. In terms of economic data, the only report on the calendar today is the ISM Services for August. Economists are forecasting the headline index to slow modestly from 56.7 in July to a still expansionary reading of 55.0.

It's hard to believe after the last week few weeks of selling that the S&P 500 still isn't even at oversold levels. As shown in the graphic from page two of the Morning Lineup, just three sectors - Consumer Staples, Health Care, and Communication Services - are currently oversold while Energy is the lone sector at overbought levels. While the S&P 500 isn't oversold, it did close out last week below its 50-day moving average (DMA) along with every other sector except Energy and Utilities.

 

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, September 6th, 2022.

 

Top of the morning StonkForumers! Happy Hump Day to all of you! And welcome to the new trading day and a fresh start. Here is a quick check on those futures as we are a little under 3 hours from the cash market open.

GLTA on this Wednesday, September the 7th, 2022!

 

Good Wednesday 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 trading day ahead today.