Federal Reserve Chairman Jerome Powell is expected to reassure markets next week the central bank will do whatever it takes to help the economy heal. That should be enough to keep investors moving into stocks that benefit from an economic rebound and push the S&P 500 into the green for 2020.
Stocks could be caught in a tug-of-war in the week ahead, as investors weigh the potential positives of a reopening economy against worry that the coronavirus continues to spread.
In the past week, the S&P 500′s sharp gains briefly drove the index into positive territory for the year, before a bruising sell-off at the end of the week. Stocks were more than 47% above the March 23 low before investors got spooked by signs the coronavirus is picking up in some areas.
The Fed also dampened sentiment when it released economic forecasts Wednesday that showed a slow recovery and interest rates at zero through the end of 2022. Investors will hear more of the same when Fed Chairman Jerome Powell speaks before Congress this Tuesday and Wednesday in his semi-annual economic testimony. He may provide more clarity on the Fed’s bond buying and other policy moves.
Retail sales for May are released Tuesday, and that will be an important look at consumer spending activity. It is the most important data in the coming week, other than the weekly jobless claims report on Thursday.
Stocks rose on Friday with the S&P 500 up more than 1% after Thursday’s sharp sell-off that sent the index down nearly 6%. Treasury yields, which move opposite price, also moved sharply lower as investors moved to the safety of bonds. The 10-year yield was back to 0.70%, well off the high of 0.95% in the week earlier.
“We’ve been overbought for awhile and digesting gains would be natural,” said Sam Stovall, chief investment strategist at CFRA.
Stovall said the fact that 97% of the S&P 500 companies’ stocks were above their 50-day moving average this past week was a warning. The 50-day moving average is a momentum indicator, and if a stock or index rises above it, it is usually a positive, but if they all do, it’s a contrarian warning.
“Historically that’s just too high ... and also the P/E on the S&P was 25.1 of forward 12-months earnings, which is a 52% premium to the P/E average since 2000,” he said. The P/E, or the price-to-earnings ratio, is an important tool to value stocks, and it averages around 16.5 times.
In the sell-off, stocks that would benefit from the economy’s reopening were the hardest hit. Investors had been jumping into those names, driving them higher at a dizzying pace. They were also the sectors that were last to join the rally, like banks, casinos, airlines and hotels.
“Once the pullback runs its course I think investors will move back again into the sectors and subsectors that were most beaten up in the bear market,” said Stovall.
Scott Redler, partner with T3Live.com, said he lightened up his holdings earlier in the week. “There were some clues early in the week that the market was vulnerable, like when the S&P closed below 3,191 on Tuesday. You had some feverish trading in some of the very speculative names,” he said.
Stovall said other headwinds hang over the market, and one big one is the upcoming presidential election, which could become a bigger influence on the market. RealClearPolitics has President Donald Trump trailing former Vice President Joseph Biden by 8.1 points in the latest average of polls.
“Trump’s numbers are just looking so bad, and if the Fed needs to keep interest rates at zero and we have the potential for a resurgence in Covid cases, then Trump is not going to benefit from an economic recovery, and as a result, that gives Biden a better chance of being elected,” said Stovall. “It’s not necessarily that the market dislikes Biden, but they dislike uncertainty. And a decline in equity prices would be representative of that uncertainty.”
Consumer barometer
Retail sales are typically a barometer for consumer spending, and when Americans were shut in their homes they did much less shopping than usual. April data showed a 16.7% drop in sales, but consumers did spend online.
Economists are watching Tuesday’s report on May sales closely, particularly after the May jobs report had a large upside surprise. There were 2.5 million jobs added in May, instead of an expected loss of 8.3 million.
Mark Zandi, chief economist at Moody’s Analytics, said business-to-business spending data for May implies that retail sales were flat compared with April’s depressed level and could be down 22% from a year ago.
Zandi used data from Cortera, which collects information on about $1.5 trillion in business-to-business spending. In an analysis of spending by retailers in May, it found there were gains from April in some categories, including furniture, gasoline stations and restaurants.
“Clothing and sporting goods store sales have been crushed, and that continued in May. Restaurants, gasoline stations and furniture stores have been hit hard, but showed strong improvement in May. Food and health and personal care stores have done well through the crisis, but gave some of that back in May,” notes Zandi. “Online retailers, general merchandise stores (which includes WalMart and Target), and building material and garden supply stores (Home Depot and Lowes) have navigated the crisis well, and May was another solid month.”
Zandi said weakness in apparel and sporting goods washed out the gains in other areas.
Fed ahead
Strategists said Powell did not surprise the market with his comments this past week, but his sober approach reminded investors that the Fed policy will have to be in place for a very long time to pull the economy out of its deep rut. That will keep markets on high alert during his two days of testimony.
“I think the cat’s out of the bag. I don’t think he can sugarcoat it. The thing he’s got to worry about is he needs help. He needs Congress and the administration to come up with another fiscal rescue package. He can’t do it on his own,” said Zandi. “He has to keep the pressure on them and get a piece of legislation before they go on August recess. ... He’s speaking as much to the American people as he is to the policy makers.”
Zandi said the Fed has acted aggressively and swiftly to unfreeze credit markets when they locked up in March, but the economy needs more stimulus ahead of a wave of potential business defaults and with a high level of unemployment. The Fed’s balance sheet has ballooned to $7.2 trillion, and on Wednesday the central bank committed to monthly purchases of $80 billion in Treasury securities and $40 billion in mortgage securities.
“I think he continues to lay the foundation for policy changes to come,” said Zandi. “He’s strongly suggesting there’s going to be more monetary support, and that would come in the form of a few things - it would be performance dependent forward guidance. ... He’s going to make it clear until the economy is at full employment and inflation is at least at target, if not above.”
Zandi said Powell may discuss yield curve controls, which would mean the Fed would set targets for interest rate levels in the Treasury market, and make purchases to influence rates. Some economists believe the Fed will adopt that tool before the end of the year.
“I think he’s going to more clearly define the amount of QE they’re doing going forward. He’ll try to preserve some optionality, but he’ll try to make it known, they’re buying a lot of bonds for a long time to come,” Zandi said.
But the hearings could be more politicized, and Powell may be criticized by Congress for helping financial markets more than Main Street, said John Briggs, head of strategy at NatWest Markets. “I’d be surprised if there’s a lot new, given it comes on the heels of the FOMC meeting,” Briggs said.
“Stocks take an escalator up, but an elevator down.” — Old investment axiom
The saying above sure happened yesterday. In the end, the S&P 500 Index fell 5.9% for the worst day since March 16 and the first three-day losing streak in more than three months. What does it mean? We’ve been on record that we expect some type of well-deserved pullback or at least consolidation after the 45% bounce off of the March 23 lows and the best 50-day rally ever. Then add in the fact that June has been the worst month of the year for stocks since 2000 and some type of weakness is perfectly logical here and now.
“In many ways, this is one of the most overbought stock markets we’ve ever seen. Now the catch to this is previous times we’ve seen major levels similar to now have been closer to the beginning of bull markets than the end of bull markets,” explained LPL Financial Senior Market Strategist Ryan Detrick.
This is now one of the greatest surges off a major low ever. It is perfectly normal to see a drawdown of double digits after the initial surge weakens. This could be happening now.
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We’ve shown that huge up months like April tend to eventually resolve higher, but some near-term weakness is possible.
(CLICK HERE FOR THE CHART!)
Also, when more than 90% of the stocks in the S&P 500 are above their 50-day moving average, this shows solid longer-term results. Again, suggesting that very overbought isn’t always a bad thing.
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There was a huge spike in stocks marking new monthly highs, again historically an overbought signal. This opens the door for some near-term weakness, but is a very positive sign longer-term.
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Last, in the LPL Chart of the Day, the S&P 500 was recently more than 13% above the 50-day moving average, one of the highest levels ever. The good news is one-year later stocks were higher every single time. Yet another clue that historically overbought isn’t always a bad thing for the bulls.
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A record run, over-the-top excitement from small traders, the Nasdaq at 10,000, historically high multiples, and seasonality all could be a factor in why a pullback here could be perfectly normal. In fact, if you are bullish, after a 45% rally, one of the best things would be for prices to reset some here over the coming months. We would be a buyer of weakness and use it as an opportunity for longer-term price appreciation.
We have all been gobsmacked by velocity and strength of this V-shaped rally off the March 23 bear market low. For the record this rally became an official Ned Davis Research defined bull market on May 26 when DJIA was up 30% from the low when it made a new recovery high after 50 calendar days (see NDR definitions below). And this was on the back of the shortest bear market on record, which lasted only 40 days. Today’s market comeuppance is an important reminder that we need to be patient with this market and heed our cautious analysis and stance.
This is still the “Worst Six Months” and as we warned in the May Outlook when the market is down during the “Best Six Months” (November-April) as they were in 2020, the “Worst Six Months” (May-October) were down or flat 86% of the time with a median S&P decline of -6.7% since 1950.
Other seasonal indicators are also flashing the caution sign. This year’s negative January Barometer and breached December DJIA low, point to possible retests of the lows and choppy, volatile trading over the next several months. See the updated composite graph of the seasonal pattern for these 22 years since 1950 in the June Outlook.
It appears that quite a fair amount of hope was built into the rally. Lots of hope that everything is just going back to the way it was real soon. But COVID cases are on the climb again and folks are concerned that a pause and/or reverse of reopening could delay the economic recovery and derail the bull. Up until the past few days it felt like mid-February again with the market ignoring economic and corporate data as momentum pushed everything higher.
The jobs report was a bit unbelievable and then Fed Chairman Powell’s candor and reserved outlook at yesterday’s press conference put the fear right back into the market today. Meanwhile the Atlanta Fed’s GDPNow model currently estimates that 2020 Q2 GDP growth will be down -48.5%.
Sentiment had also become rather exuberant as the Weekly CBOE Equity Only Put/Call ratio we track in the “Pulse of the Market” hit 0.43 last week – its lowest level since the week ending 4/10/2010 about three weeks before the infamous flash crash. Investor’s Intelligence Advisors Sentiment survey Bullish advisors are now up to 56.9%. Correction advisors are down to 22.5% while Bearish advisors have slipped further to 20.6%, putting us at caution levels.
Technically, things deteriorated rapidly today. After blasting through several levels of resistance we have been tracking as shown in the chart here S&P 500 stalled at 3210 and plunged 5.9% today through 3115 support/resistance and closed just below 3010 support/resistance which sits at the 2019 summer highs. The next major support level below here is 2725 right near where the 50-day moving average turned up in mid-May, which would be a 15.7% correction from the recent recovery high reached this past Monday, June 8.
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Ned Davis Research bull and bear market definitions:
A cyclical bull market requires a 30% rise in the DJIA after 50 calendar days or a 13% rise after 155 calendar days. Reversals of 30% in the Value Line Geometric Index since 1965 also qualify. A cyclical bear market requires a 30% drop in the DJIA after 50 calendar days or a 13% decline after 145 calendar days. Reversals in the Value Line Geometric Index also qualify. Bull and bear markets are measured at peak and trough dates, so both the time and price criteria must be met as of the peak and trough dates.
The second Triple Witching Week (Quadruple Witching if you prefer) of the year brings on some volatile trading with losses frequently exceeding gains. NASDAQ has the weakest record on the first trading day of the week. Triple-Witching Friday is usually better, DJIA has been up ten of the last seventeen years.
Full-week performance is choppy as well, littered with greater than 1% moves in both directions. The week after Triple-Witching Day is horrendous. This week has experienced DJIA losses in 26 of the last 30 years with an average decline of 1.07%. S&P 500 and NASDAQ have fared slightly better during the week after over the same 30-year span, declining 0.72% and 0.23% respectively on average.
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Monday 6.15.20 Before Market Open:
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Monday 6.15.20 After Market Close:
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NONE.
Tuesday 6.16.20 Before Market Open:
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Tuesday 6.16.20 After Market Close:
(CLICK HERE FOR TUESDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!)
Wednesday 6.17.20 Before Market Open:
([CLICK HERE FOR WEDNESDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!]())
NONE.
Wednesday 6.17.20 After Market Close:
(CLICK HERE FOR WEDNESDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!)
Thursday 6.18.20 Before Market Open:
(CLICK HERE FOR THURSDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!)
Thursday 6.18.20 After Market Close:
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Friday 6.19.20 Before Market Open:
(CLICK HERE FOR FRIDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!)
NONE.
Friday 6.19.20 After Market Close:
([CLICK HERE FOR FRIDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!]())
NONE.
**Kroger Co. (KR) is confirmed to report earnings at approximately 8:30 AM ET on Thursday, June 18, 2020. The consensus earnings estimate is $0.88 per share on revenue of $40.12 billion and the Earnings Whisper ® number is $0.98 per share. Investor sentiment going into the company's earnings release has 85% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 22.22% with revenue increasing by 7.70%. Short interest has increased by 55.5% since the company's last earnings release while the stock has drifted higher by 5.3% from its open following the earnings release to be 12.5% above its 200 day moving average of $28.68. Overall earnings estimates have been revised higher since the company's last earnings release. On Wednesday, May 13, 2020 there was some notable buying of 10,009 contracts of the $36.00 put expiring on Friday, July 17, 2020. Option traders are pricing in a 8.6% move on earnings and the stock has averaged a 4.4% move in recent quarters.
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**MFA Financial Inc (MFA) is confirmed to report earnings at approximately 8:30 AM ET on Tuesday, June 16, 2020. Investor sentiment going into the company's earnings release has 30% expecting an earnings beat. Short interest has increased by 122.9% since the company's last earnings release while the stock has drifted lower by 67.1% from its open following the earnings release to be 55.0% below its 200 day moving average of $5.80. Overall earnings estimates have been unchanged since the company's last earnings release. On Tuesday, June 9, 2020 there was some notable buying of 9,992 contracts of the $4.00 call expiring on Friday, June 19, 2020. The stock has averaged a 1.2% move on earnings in recent quarters.
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**Groupon, Inc. (GRPN) is confirmed to report earnings at approximately 4:10 PM ET on Tuesday, June 16, 2020. The consensus estimate is for a loss of $1.92 per share on revenue of $400.24 million and the Earnings Whisper ® number is ($1.85) per share. Investor sentiment going into the company's earnings release has 35% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 3,940.00% with revenue decreasing by 30.80%. Short interest has decreased by 20.4% since the company's last earnings release while the stock has drifted higher by 1,026.9% from its open following the earnings release to be 47.9% below its 200 day moving average of $41.78. Overall earnings estimates have been revised lower since the company's last earnings release. On Friday, June 5, 2020 there was some notable buying of 6,979 contracts of the $1.50 call expiring on Friday, June 19, 2020. Option traders are pricing in a 2.7% move on earnings.
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**JinkoSolar Holding Co., Ltd. (JKS) is confirmed to report earnings at approximately 6:45 AM ET on Monday, June 15, 2020. The consensus earnings estimate is $0.75 per share on revenue of $1.00 billion. Investor sentiment going into the company's earnings release has 62% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 400.00% with revenue increasing by 15.27%. Short interest has decreased by 4.0% since the company's last earnings release while the stock has drifted lower by 4.0% from its open following the earnings release to be 6.6% below its 200 day moving average of $19.11. Overall earnings estimates have been revised lower since the company's last earnings release. On Monday, June 8, 2020 there was some notable buying of 3,793 contracts of the $25.00 call expiring on Friday, June 19, 2020. Option traders are pricing in a 15.7% move on earnings and the stock has averaged a 8.7% move in recent quarters.
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**Oracle Corp. (ORCL) is confirmed to report earnings at approximately 4:00 PM ET on Tuesday, June 16, 2020. The consensus earnings estimate is $1.17 per share on revenue of $10.85 billion and the Earnings Whisper ® number is $1.22 per share. Investor sentiment going into the company's earnings release has 61% expecting an earnings beat The company's guidance was for earnings of $1.20 to $1.28 per share. Consensus estimates are for year-over-year earnings growth of 0.86% with revenue decreasing by 2.57%. Short interest has decreased by 12.2% since the company's last earnings release while the stock has drifted higher by 16.7% from its open following the earnings release to be 2.2% below its 200 day moving average of $53.02. Overall earnings estimates have been revised lower since the company's last earnings release. On Monday, June 8, 2020 there was some notable buying of 25,106 contracts of the $60.00 call expiring on Friday, June 19, 2020. Option traders are pricing in a 6.7% move on earnings and the stock has averaged a 6.1% move in recent quarters.
(CLICK HERE FOR THE CHART!)
**Lennar Corp. (LEN) is confirmed to report earnings at approximately 6:00 AM ET on Tuesday, June 16, 2020. The consensus earnings estimate is $1.29 per share on revenue of $5.73 billion. Investor sentiment going into the company's earnings release has 61% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 0.77% with revenue increasing by 3.00%. Short interest has decreased by 0.4% since the company's last earnings release while the stock has drifted higher by 97.6% from its open following the earnings release to be 5.8% above its 200 day moving average of $56.00. Overall earnings estimates have been revised lower since the company's last earnings release. On Wednesday, June 10, 2020 there was some notable buying of 7,571 contracts of the $65.00 call expiring on Friday, June 19, 2020. Option traders are pricing in a 10.4% move on earnings and the stock has averaged a 4.1% move in recent quarters.
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**CarMax, Inc. (KMX) is confirmed to report earnings at approximately 6:50 AM ET on Friday, June 19, 2020. The consensus estimate is for a loss of $0.08 per share on revenue of $2.39 billion and the Earnings Whisper ® number is $0.01 per share. Investor sentiment going into the company's earnings release has 27% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 105.03% with revenue decreasing by 55.46%. Short interest has increased by 0.1% since the company's last earnings release while the stock has drifted higher by 83.6% from its open following the earnings release to be 5.8% above its 200 day moving average of $85.05. Overall earnings estimates have been revised lower since the company's last earnings release. On Tuesday, June 2, 2020 there was some notable buying of 1,017 contracts of the $92.50 put expiring on Friday, June 19, 2020. Option traders are pricing in a 12.1% move on earnings and the stock has averaged a 4.5% move in recent quarters.
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**Townsquare Media, Inc. (TSQ) is confirmed to report earnings at approximately 7:00 AM ET on Monday, June 15, 2020. The consensus earnings estimate is $0.10 per share on revenue of $95.77 million and the Earnings Whisper ® number is $0.08 per share. Investor sentiment going into the company's earnings release has 62% expecting an earnings beat Consensus estimates are for year-over-year earnings growth of 11.11% with revenue increasing by 2.23%. On Monday, June 8, 2020 there was some notable buying of 624 contracts of the $7.50 call expiring on Friday, June 19, 2020.
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**H&R Block Inc. (HRB) is confirmed to report earnings at approximately 4:20 PM ET on Tuesday, June 16, 2020. The consensus earnings estimate is $3.01 per share on revenue of $1.73 billion and the Earnings Whisper ® number is $2.23 per share. Investor sentiment going into the company's earnings release has 37% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 30.32% with revenue decreasing by 25.83%. Short interest has decreased by 31.1% since the company's last earnings release while the stock has drifted lower by 6.5% from its open following the earnings release to be 15.3% below its 200 day moving average of $21.09. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, May 29, 2020 there was some notable buying of 11,609 contracts of the $17.00 put expiring on Friday, June 19, 2020. Option traders are pricing in a 12.9% move on earnings and the stock has averaged a 3.5% move in recent quarters.
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**Motorcar Parts of America, Inc. (MPAA) is confirmed to report earnings at approximately 8:00 AM ET on Monday, June 15, 2020. Investor sentiment going into the company's earnings release has 45% expecting an earnings beat. Short interest has decreased by 22.3% since the company's last earnings release while the stock has drifted lower by 18.9% from its open following the earnings release to be 7.1% below its 200 day moving average of $17.10. Option traders are pricing in a 16.4% move on earnings and the stock has averaged a 7.1% move in recent quarters.
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Federal Reserve Chairman Jerome Powell is expected to reassure markets next week the central bank will do whatever it takes to help the economy heal. That should be enough to keep investors moving into stocks that benefit from an economic rebound and push the S&P 500 into the green for 2020.
Stocks could be caught in a tug-of-war in the week ahead, as investors weigh the potential positives of a reopening economy against worry that the coronavirus continues to spread.
In the past week, the S&P 500′s sharp gains briefly drove the index into positive territory for the year, before a bruising sell-off at the end of the week. Stocks were more than 47% above the March 23 low before investors got spooked by signs the coronavirus is picking up in some areas.
The Fed also dampened sentiment when it released economic forecasts Wednesday that showed a slow recovery and interest rates at zero through the end of 2022. Investors will hear more of the same when Fed Chairman Jerome Powell speaks before Congress this Tuesday and Wednesday in his semi-annual economic testimony. He may provide more clarity on the Fed’s bond buying and other policy moves.
Retail sales for May are released Tuesday, and that will be an important look at consumer spending activity. It is the most important data in the coming week, other than the weekly jobless claims report on Thursday.
Stocks rose on Friday with the S&P 500 up more than 1% after Thursday’s sharp sell-off that sent the index down nearly 6%. Treasury yields, which move opposite price, also moved sharply lower as investors moved to the safety of bonds. The 10-year yield was back to 0.70%, well off the high of 0.95% in the week earlier.
“We’ve been overbought for awhile and digesting gains would be natural,” said Sam Stovall, chief investment strategist at CFRA.
Stovall said the fact that 97% of the S&P 500 companies’ stocks were above their 50-day moving average this past week was a warning. The 50-day moving average is a momentum indicator, and if a stock or index rises above it, it is usually a positive, but if they all do, it’s a contrarian warning.
“Historically that’s just too high ... and also the P/E on the S&P was 25.1 of forward 12-months earnings, which is a 52% premium to the P/E average since 2000,” he said. The P/E, or the price-to-earnings ratio, is an important tool to value stocks, and it averages around 16.5 times.
In the sell-off, stocks that would benefit from the economy’s reopening were the hardest hit. Investors had been jumping into those names, driving them higher at a dizzying pace. They were also the sectors that were last to join the rally, like banks, casinos, airlines and hotels.
“Once the pullback runs its course I think investors will move back again into the sectors and subsectors that were most beaten up in the bear market,” said Stovall.
Scott Redler, partner with T3Live.com, said he lightened up his holdings earlier in the week. “There were some clues early in the week that the market was vulnerable, like when the S&P closed below 3,191 on Tuesday. You had some feverish trading in some of the very speculative names,” he said.
Stovall said other headwinds hang over the market, and one big one is the upcoming presidential election, which could become a bigger influence on the market. RealClearPolitics has President Donald Trump trailing former Vice President Joseph Biden by 8.1 points in the latest average of polls.
“Trump’s numbers are just looking so bad, and if the Fed needs to keep interest rates at zero and we have the potential for a resurgence in Covid cases, then Trump is not going to benefit from an economic recovery, and as a result, that gives Biden a better chance of being elected,” said Stovall. “It’s not necessarily that the market dislikes Biden, but they dislike uncertainty. And a decline in equity prices would be representative of that uncertainty.”
Consumer barometer
Retail sales are typically a barometer for consumer spending, and when Americans were shut in their homes they did much less shopping than usual. April data showed a 16.7% drop in sales, but consumers did spend online.
Economists are watching Tuesday’s report on May sales closely, particularly after the May jobs report had a large upside surprise. There were 2.5 million jobs added in May, instead of an expected loss of 8.3 million.
Mark Zandi, chief economist at Moody’s Analytics, said business-to-business spending data for May implies that retail sales were flat compared with April’s depressed level and could be down 22% from a year ago.
Zandi used data from Cortera, which collects information on about $1.5 trillion in business-to-business spending. In an analysis of spending by retailers in May, it found there were gains from April in some categories, including furniture, gasoline stations and restaurants.
“Clothing and sporting goods store sales have been crushed, and that continued in May. Restaurants, gasoline stations and furniture stores have been hit hard, but showed strong improvement in May. Food and health and personal care stores have done well through the crisis, but gave some of that back in May,” notes Zandi. “Online retailers, general merchandise stores (which includes WalMart and Target), and building material and garden supply stores (Home Depot and Lowes) have navigated the crisis well, and May was another solid month.”
Zandi said weakness in apparel and sporting goods washed out the gains in other areas.
Fed ahead
Strategists said Powell did not surprise the market with his comments this past week, but his sober approach reminded investors that the Fed policy will have to be in place for a very long time to pull the economy out of its deep rut. That will keep markets on high alert during his two days of testimony.
“I think the cat’s out of the bag. I don’t think he can sugarcoat it. The thing he’s got to worry about is he needs help. He needs Congress and the administration to come up with another fiscal rescue package. He can’t do it on his own,” said Zandi. “He has to keep the pressure on them and get a piece of legislation before they go on August recess. ... He’s speaking as much to the American people as he is to the policy makers.”
Zandi said the Fed has acted aggressively and swiftly to unfreeze credit markets when they locked up in March, but the economy needs more stimulus ahead of a wave of potential business defaults and with a high level of unemployment. The Fed’s balance sheet has ballooned to $7.2 trillion, and on Wednesday the central bank committed to monthly purchases of $80 billion in Treasury securities and $40 billion in mortgage securities.
“I think he continues to lay the foundation for policy changes to come,” said Zandi. “He’s strongly suggesting there’s going to be more monetary support, and that would come in the form of a few things - it would be performance dependent forward guidance. ... He’s going to make it clear until the economy is at full employment and inflation is at least at target, if not above.”
Zandi said Powell may discuss yield curve controls, which would mean the Fed would set targets for interest rate levels in the Treasury market, and make purchases to influence rates. Some economists believe the Fed will adopt that tool before the end of the year.
“I think he’s going to more clearly define the amount of QE they’re doing going forward. He’ll try to preserve some optionality, but he’ll try to make it known, they’re buying a lot of bonds for a long time to come,” Zandi said.
But the hearings could be more politicized, and Powell may be criticized by Congress for helping financial markets more than Main Street, said John Briggs, head of strategy at NatWest Markets. “I’d be surprised if there’s a lot new, given it comes on the heels of the FOMC meeting,” Briggs said.
“Stocks take an escalator up, but an elevator down.” — Old investment axiom
The saying above sure happened yesterday. In the end, the S&P 500 Index fell 5.9% for the worst day since March 16 and the first three-day losing streak in more than three months. What does it mean? We’ve been on record that we expect some type of well-deserved pullback or at least consolidation after the 45% bounce off of the March 23 lows and the best 50-day rally ever. Then add in the fact that June has been the worst month of the year for stocks since 2000 and some type of weakness is perfectly logical here and now.
“In many ways, this is one of the most overbought stock markets we’ve ever seen. Now the catch to this is previous times we’ve seen major levels similar to now have been closer to the beginning of bull markets than the end of bull markets,” explained LPL Financial Senior Market Strategist Ryan Detrick.
This is now one of the greatest surges off a major low ever. It is perfectly normal to see a drawdown of double digits after the initial surge weakens. This could be happening now.
(CLICK HERE FOR THE CHART!)
We’ve shown that huge up months like April tend to eventually resolve higher, but some near-term weakness is possible.
(CLICK HERE FOR THE CHART!)
Also, when more than 90% of the stocks in the S&P 500 are above their 50-day moving average, this shows solid longer-term results. Again, suggesting that very overbought isn’t always a bad thing.
(CLICK HERE FOR THE CHART!)
There was a huge spike in stocks marking new monthly highs, again historically an overbought signal. This opens the door for some near-term weakness, but is a very positive sign longer-term.
(CLICK HERE FOR THE CHART!)
Last, in the LPL Chart of the Day, the S&P 500 was recently more than 13% above the 50-day moving average, one of the highest levels ever. The good news is one-year later stocks were higher every single time. Yet another clue that historically overbought isn’t always a bad thing for the bulls.
(CLICK HERE FOR THE CHART!)
A record run, over-the-top excitement from small traders, the Nasdaq at 10,000, historically high multiples, and seasonality all could be a factor in why a pullback here could be perfectly normal. In fact, if you are bullish, after a 45% rally, one of the best things would be for prices to reset some here over the coming months. We would be a buyer of weakness and use it as an opportunity for longer-term price appreciation.
We have all been gobsmacked by velocity and strength of this V-shaped rally off the March 23 bear market low. For the record this rally became an official Ned Davis Research defined bull market on May 26 when DJIA was up 30% from the low when it made a new recovery high after 50 calendar days (see NDR definitions below). And this was on the back of the shortest bear market on record, which lasted only 40 days. Today’s market comeuppance is an important reminder that we need to be patient with this market and heed our cautious analysis and stance.
This is still the “Worst Six Months” and as we warned in the May Outlook when the market is down during the “Best Six Months” (November-April) as they were in 2020, the “Worst Six Months” (May-October) were down or flat 86% of the time with a median S&P decline of -6.7% since 1950.
Other seasonal indicators are also flashing the caution sign. This year’s negative January Barometer and breached December DJIA low, point to possible retests of the lows and choppy, volatile trading over the next several months. See the updated composite graph of the seasonal pattern for these 22 years since 1950 in the June Outlook.
It appears that quite a fair amount of hope was built into the rally. Lots of hope that everything is just going back to the way it was real soon. But COVID cases are on the climb again and folks are concerned that a pause and/or reverse of reopening could delay the economic recovery and derail the bull. Up until the past few days it felt like mid-February again with the market ignoring economic and corporate data as momentum pushed everything higher.
The jobs report was a bit unbelievable and then Fed Chairman Powell’s candor and reserved outlook at yesterday’s press conference put the fear right back into the market today. Meanwhile the Atlanta Fed’s GDPNow model currently estimates that 2020 Q2 GDP growth will be down -48.5%.
Sentiment had also become rather exuberant as the Weekly CBOE Equity Only Put/Call ratio we track in the “Pulse of the Market” hit 0.43 last week – its lowest level since the week ending 4/10/2010 about three weeks before the infamous flash crash. Investor’s Intelligence Advisors Sentiment survey Bullish advisors are now up to 56.9%. Correction advisors are down to 22.5% while Bearish advisors have slipped further to 20.6%, putting us at caution levels.
Technically, things deteriorated rapidly today. After blasting through several levels of resistance we have been tracking as shown in the chart here S&P 500 stalled at 3210 and plunged 5.9% today through 3115 support/resistance and closed just below 3010 support/resistance which sits at the 2019 summer highs. The next major support level below here is 2725 right near where the 50-day moving average turned up in mid-May, which would be a 15.7% correction from the recent recovery high reached this past Monday, June 8.
(CLICK HERE FOR THE CHART!)
Ned Davis Research bull and bear market definitions:
A cyclical bull market requires a 30% rise in the DJIA after 50 calendar days or a 13% rise after 155 calendar days. Reversals of 30% in the Value Line Geometric Index since 1965 also qualify. A cyclical bear market requires a 30% drop in the DJIA after 50 calendar days or a 13% decline after 145 calendar days. Reversals in the Value Line Geometric Index also qualify. Bull and bear markets are measured at peak and trough dates, so both the time and price criteria must be met as of the peak and trough dates.
The second Triple Witching Week (Quadruple Witching if you prefer) of the year brings on some volatile trading with losses frequently exceeding gains. NASDAQ has the weakest record on the first trading day of the week. Triple-Witching Friday is usually better, DJIA has been up ten of the last seventeen years.
Full-week performance is choppy as well, littered with greater than 1% moves in both directions. The week after Triple-Witching Day is horrendous. This week has experienced DJIA losses in 26 of the last 30 years with an average decline of 1.07%. S&P 500 and NASDAQ have fared slightly better during the week after over the same 30-year span, declining 0.72% and 0.23% respectively on average.
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- $KR
- $MFA
- $GRPN
- $JKS
- $ORCL
- $LEN
- $KMX
- $TSQ
- $HRB
- $MPAA
- $SWBI
- $CMC
- $RGS
- $TTM
- $HOME
- $JBL
- $DBI
- $AMSWA
- $ABM
- $BNGO
- $CNTG
- $LMB
- $LIVX
- $ALYA
- $GAN
- $INWK
- $VOLT
- $UROV
- $VNCE
Monday 6.15.20 Before Market Open:
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Monday 6.15.20 After Market Close:
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NONE.
Tuesday 6.16.20 Before Market Open:
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Tuesday 6.16.20 After Market Close:
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Wednesday 6.17.20 Before Market Open:
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NONE.
Wednesday 6.17.20 After Market Close:
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Thursday 6.18.20 Before Market Open:
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Thursday 6.18.20 After Market Close:
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Friday 6.19.20 Before Market Open:
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NONE.
Friday 6.19.20 After Market Close:
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NONE.
**Kroger Co. (KR) is confirmed to report earnings at approximately 8:30 AM ET on Thursday, June 18, 2020. The consensus earnings estimate is $0.88 per share on revenue of $40.12 billion and the Earnings Whisper ® number is $0.98 per share. Investor sentiment going into the company's earnings release has 85% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 22.22% with revenue increasing by 7.70%. Short interest has increased by 55.5% since the company's last earnings release while the stock has drifted higher by 5.3% from its open following the earnings release to be 12.5% above its 200 day moving average of $28.68. Overall earnings estimates have been revised higher since the company's last earnings release. On Wednesday, May 13, 2020 there was some notable buying of 10,009 contracts of the $36.00 put expiring on Friday, July 17, 2020. Option traders are pricing in a 8.6% move on earnings and the stock has averaged a 4.4% move in recent quarters.
(CLICK HERE FOR THE CHART!)
**MFA Financial Inc (MFA) is confirmed to report earnings at approximately 8:30 AM ET on Tuesday, June 16, 2020. Investor sentiment going into the company's earnings release has 30% expecting an earnings beat. Short interest has increased by 122.9% since the company's last earnings release while the stock has drifted lower by 67.1% from its open following the earnings release to be 55.0% below its 200 day moving average of $5.80. Overall earnings estimates have been unchanged since the company's last earnings release. On Tuesday, June 9, 2020 there was some notable buying of 9,992 contracts of the $4.00 call expiring on Friday, June 19, 2020. The stock has averaged a 1.2% move on earnings in recent quarters.
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**Groupon, Inc. (GRPN) is confirmed to report earnings at approximately 4:10 PM ET on Tuesday, June 16, 2020. The consensus estimate is for a loss of $1.92 per share on revenue of $400.24 million and the Earnings Whisper ® number is ($1.85) per share. Investor sentiment going into the company's earnings release has 35% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 3,940.00% with revenue decreasing by 30.80%. Short interest has decreased by 20.4% since the company's last earnings release while the stock has drifted higher by 1,026.9% from its open following the earnings release to be 47.9% below its 200 day moving average of $41.78. Overall earnings estimates have been revised lower since the company's last earnings release. On Friday, June 5, 2020 there was some notable buying of 6,979 contracts of the $1.50 call expiring on Friday, June 19, 2020. Option traders are pricing in a 2.7% move on earnings.
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**JinkoSolar Holding Co., Ltd. (JKS) is confirmed to report earnings at approximately 6:45 AM ET on Monday, June 15, 2020. The consensus earnings estimate is $0.75 per share on revenue of $1.00 billion. Investor sentiment going into the company's earnings release has 62% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 400.00% with revenue increasing by 15.27%. Short interest has decreased by 4.0% since the company's last earnings release while the stock has drifted lower by 4.0% from its open following the earnings release to be 6.6% below its 200 day moving average of $19.11. Overall earnings estimates have been revised lower since the company's last earnings release. On Monday, June 8, 2020 there was some notable buying of 3,793 contracts of the $25.00 call expiring on Friday, June 19, 2020. Option traders are pricing in a 15.7% move on earnings and the stock has averaged a 8.7% move in recent quarters.
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**Oracle Corp. (ORCL) is confirmed to report earnings at approximately 4:00 PM ET on Tuesday, June 16, 2020. The consensus earnings estimate is $1.17 per share on revenue of $10.85 billion and the Earnings Whisper ® number is $1.22 per share. Investor sentiment going into the company's earnings release has 61% expecting an earnings beat The company's guidance was for earnings of $1.20 to $1.28 per share. Consensus estimates are for year-over-year earnings growth of 0.86% with revenue decreasing by 2.57%. Short interest has decreased by 12.2% since the company's last earnings release while the stock has drifted higher by 16.7% from its open following the earnings release to be 2.2% below its 200 day moving average of $53.02. Overall earnings estimates have been revised lower since the company's last earnings release. On Monday, June 8, 2020 there was some notable buying of 25,106 contracts of the $60.00 call expiring on Friday, June 19, 2020. Option traders are pricing in a 6.7% move on earnings and the stock has averaged a 6.1% move in recent quarters.
(CLICK HERE FOR THE CHART!)
**Lennar Corp. (LEN) is confirmed to report earnings at approximately 6:00 AM ET on Tuesday, June 16, 2020. The consensus earnings estimate is $1.29 per share on revenue of $5.73 billion. Investor sentiment going into the company's earnings release has 61% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 0.77% with revenue increasing by 3.00%. Short interest has decreased by 0.4% since the company's last earnings release while the stock has drifted higher by 97.6% from its open following the earnings release to be 5.8% above its 200 day moving average of $56.00. Overall earnings estimates have been revised lower since the company's last earnings release. On Wednesday, June 10, 2020 there was some notable buying of 7,571 contracts of the $65.00 call expiring on Friday, June 19, 2020. Option traders are pricing in a 10.4% move on earnings and the stock has averaged a 4.1% move in recent quarters.
(CLICK HERE FOR THE CHART!)
**CarMax, Inc. (KMX) is confirmed to report earnings at approximately 6:50 AM ET on Friday, June 19, 2020. The consensus estimate is for a loss of $0.08 per share on revenue of $2.39 billion and the Earnings Whisper ® number is $0.01 per share. Investor sentiment going into the company's earnings release has 27% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 105.03% with revenue decreasing by 55.46%. Short interest has increased by 0.1% since the company's last earnings release while the stock has drifted higher by 83.6% from its open following the earnings release to be 5.8% above its 200 day moving average of $85.05. Overall earnings estimates have been revised lower since the company's last earnings release. On Tuesday, June 2, 2020 there was some notable buying of 1,017 contracts of the $92.50 put expiring on Friday, June 19, 2020. Option traders are pricing in a 12.1% move on earnings and the stock has averaged a 4.5% move in recent quarters.
(CLICK HERE FOR THE CHART!)
**Townsquare Media, Inc. (TSQ) is confirmed to report earnings at approximately 7:00 AM ET on Monday, June 15, 2020. The consensus earnings estimate is $0.10 per share on revenue of $95.77 million and the Earnings Whisper ® number is $0.08 per share. Investor sentiment going into the company's earnings release has 62% expecting an earnings beat Consensus estimates are for year-over-year earnings growth of 11.11% with revenue increasing by 2.23%. On Monday, June 8, 2020 there was some notable buying of 624 contracts of the $7.50 call expiring on Friday, June 19, 2020.
(CLICK HERE FOR THE CHART!)
**H&R Block Inc. (HRB) is confirmed to report earnings at approximately 4:20 PM ET on Tuesday, June 16, 2020. The consensus earnings estimate is $3.01 per share on revenue of $1.73 billion and the Earnings Whisper ® number is $2.23 per share. Investor sentiment going into the company's earnings release has 37% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 30.32% with revenue decreasing by 25.83%. Short interest has decreased by 31.1% since the company's last earnings release while the stock has drifted lower by 6.5% from its open following the earnings release to be 15.3% below its 200 day moving average of $21.09. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, May 29, 2020 there was some notable buying of 11,609 contracts of the $17.00 put expiring on Friday, June 19, 2020. Option traders are pricing in a 12.9% move on earnings and the stock has averaged a 3.5% move in recent quarters.
(CLICK HERE FOR THE CHART!)
**Motorcar Parts of America, Inc. (MPAA) is confirmed to report earnings at approximately 8:00 AM ET on Monday, June 15, 2020. Investor sentiment going into the company's earnings release has 45% expecting an earnings beat. Short interest has decreased by 22.3% since the company's last earnings release while the stock has drifted lower by 18.9% from its open following the earnings release to be 7.1% below its 200 day moving average of $17.10. Option traders are pricing in a 16.4% move on earnings and the stock has averaged a 7.1% move in recent quarters.
(CLICK HERE FOR THE CHART!)
Federal Reserve Chairman Jerome Powell is expected to reassure markets next week the central bank will do whatever it takes to help the economy heal. That should be enough to keep investors moving into stocks that benefit from an economic rebound and push the S&P 500 into the green for 2020.
Stocks could be caught in a tug-of-war in the week ahead, as investors weigh the potential positives of a reopening economy against worry that the coronavirus continues to spread.
In the past week, the S&P 500′s sharp gains briefly drove the index into positive territory for the year, before a bruising sell-off at the end of the week. Stocks were more than 47% above the March 23 low before investors got spooked by signs the coronavirus is picking up in some areas.
The Fed also dampened sentiment when it released economic forecasts Wednesday that showed a slow recovery and interest rates at zero through the end of 2022. Investors will hear more of the same when Fed Chairman Jerome Powell speaks before Congress this Tuesday and Wednesday in his semi-annual economic testimony. He may provide more clarity on the Fed’s bond buying and other policy moves.
Retail sales for May are released Tuesday, and that will be an important look at consumer spending activity. It is the most important data in the coming week, other than the weekly jobless claims report on Thursday.
Stocks rose on Friday with the S&P 500 up more than 1% after Thursday’s sharp sell-off that sent the index down nearly 6%. Treasury yields, which move opposite price, also moved sharply lower as investors moved to the safety of bonds. The 10-year yield was back to 0.70%, well off the high of 0.95% in the week earlier.
“We’ve been overbought for awhile and digesting gains would be natural,” said Sam Stovall, chief investment strategist at CFRA.
Stovall said the fact that 97% of the S&P 500 companies’ stocks were above their 50-day moving average this past week was a warning. The 50-day moving average is a momentum indicator, and if a stock or index rises above it, it is usually a positive, but if they all do, it’s a contrarian warning.
“Historically that’s just too high ... and also the P/E on the S&P was 25.1 of forward 12-months earnings, which is a 52% premium to the P/E average since 2000,” he said. The P/E, or the price-to-earnings ratio, is an important tool to value stocks, and it averages around 16.5 times.
In the sell-off, stocks that would benefit from the economy’s reopening were the hardest hit. Investors had been jumping into those names, driving them higher at a dizzying pace. They were also the sectors that were last to join the rally, like banks, casinos, airlines and hotels.
“Once the pullback runs its course I think investors will move back again into the sectors and subsectors that were most beaten up in the bear market,” said Stovall.
Scott Redler, partner with T3Live.com, said he lightened up his holdings earlier in the week. “There were some clues early in the week that the market was vulnerable, like when the S&P closed below 3,191 on Tuesday. You had some feverish trading in some of the very speculative names,” he said.
Stovall said other headwinds hang over the market, and one big one is the upcoming presidential election, which could become a bigger influence on the market. RealClearPolitics has President Donald Trump trailing former Vice President Joseph Biden by 8.1 points in the latest average of polls.
“Trump’s numbers are just looking so bad, and if the Fed needs to keep interest rates at zero and we have the potential for a resurgence in Covid cases, then Trump is not going to benefit from an economic recovery, and as a result, that gives Biden a better chance of being elected,” said Stovall. “It’s not necessarily that the market dislikes Biden, but they dislike uncertainty. And a decline in equity prices would be representative of that uncertainty.”
Consumer barometer
Retail sales are typically a barometer for consumer spending, and when Americans were shut in their homes they did much less shopping than usual. April data showed a 16.7% drop in sales, but consumers did spend online.
Economists are watching Tuesday’s report on May sales closely, particularly after the May jobs report had a large upside surprise. There were 2.5 million jobs added in May, instead of an expected loss of 8.3 million.
Mark Zandi, chief economist at Moody’s Analytics, said business-to-business spending data for May implies that retail sales were flat compared with April’s depressed level and could be down 22% from a year ago.
Zandi used data from Cortera, which collects information on about $1.5 trillion in business-to-business spending. In an analysis of spending by retailers in May, it found there were gains from April in some categories, including furniture, gasoline stations and restaurants.
“Clothing and sporting goods store sales have been crushed, and that continued in May. Restaurants, gasoline stations and furniture stores have been hit hard, but showed strong improvement in May. Food and health and personal care stores have done well through the crisis, but gave some of that back in May,” notes Zandi. “Online retailers, general merchandise stores (which includes WalMart and Target), and building material and garden supply stores (Home Depot and Lowes) have navigated the crisis well, and May was another solid month.”
Zandi said weakness in apparel and sporting goods washed out the gains in other areas.
Fed ahead
Strategists said Powell did not surprise the market with his comments this past week, but his sober approach reminded investors that the Fed policy will have to be in place for a very long time to pull the economy out of its deep rut. That will keep markets on high alert during his two days of testimony.
“I think the cat’s out of the bag. I don’t think he can sugarcoat it. The thing he’s got to worry about is he needs help. He needs Congress and the administration to come up with another fiscal rescue package. He can’t do it on his own,” said Zandi. “He has to keep the pressure on them and get a piece of legislation before they go on August recess. ... He’s speaking as much to the American people as he is to the policy makers.”
Zandi said the Fed has acted aggressively and swiftly to unfreeze credit markets when they locked up in March, but the economy needs more stimulus ahead of a wave of potential business defaults and with a high level of unemployment. The Fed’s balance sheet has ballooned to $7.2 trillion, and on Wednesday the central bank committed to monthly purchases of $80 billion in Treasury securities and $40 billion in mortgage securities.
“I think he continues to lay the foundation for policy changes to come,” said Zandi. “He’s strongly suggesting there’s going to be more monetary support, and that would come in the form of a few things - it would be performance dependent forward guidance. ... He’s going to make it clear until the economy is at full employment and inflation is at least at target, if not above.”
Zandi said Powell may discuss yield curve controls, which would mean the Fed would set targets for interest rate levels in the Treasury market, and make purchases to influence rates. Some economists believe the Fed will adopt that tool before the end of the year.
“I think he’s going to more clearly define the amount of QE they’re doing going forward. He’ll try to preserve some optionality, but he’ll try to make it known, they’re buying a lot of bonds for a long time to come,” Zandi said.
But the hearings could be more politicized, and Powell may be criticized by Congress for helping financial markets more than Main Street, said John Briggs, head of strategy at NatWest Markets. “I’d be surprised if there’s a lot new, given it comes on the heels of the FOMC meeting,” Briggs said.
“Stocks take an escalator up, but an elevator down.” — Old investment axiom
The saying above sure happened yesterday. In the end, the S&P 500 Index fell 5.9% for the worst day since March 16 and the first three-day losing streak in more than three months. What does it mean? We’ve been on record that we expect some type of well-deserved pullback or at least consolidation after the 45% bounce off of the March 23 lows and the best 50-day rally ever. Then add in the fact that June has been the worst month of the year for stocks since 2000 and some type of weakness is perfectly logical here and now.
“In many ways, this is one of the most overbought stock markets we’ve ever seen. Now the catch to this is previous times we’ve seen major levels similar to now have been closer to the beginning of bull markets than the end of bull markets,” explained LPL Financial Senior Market Strategist Ryan Detrick.
This is now one of the greatest surges off a major low ever. It is perfectly normal to see a drawdown of double digits after the initial surge weakens. This could be happening now.
(CLICK HERE FOR THE CHART!)
We’ve shown that huge up months like April tend to eventually resolve higher, but some near-term weakness is possible.
(CLICK HERE FOR THE CHART!)
Also, when more than 90% of the stocks in the S&P 500 are above their 50-day moving average, this shows solid longer-term results. Again, suggesting that very overbought isn’t always a bad thing.
(CLICK HERE FOR THE CHART!)
There was a huge spike in stocks marking new monthly highs, again historically an overbought signal. This opens the door for some near-term weakness, but is a very positive sign longer-term.
(CLICK HERE FOR THE CHART!)
Last, in the LPL Chart of the Day, the S&P 500 was recently more than 13% above the 50-day moving average, one of the highest levels ever. The good news is one-year later stocks were higher every single time. Yet another clue that historically overbought isn’t always a bad thing for the bulls.
(CLICK HERE FOR THE CHART!)
A record run, over-the-top excitement from small traders, the Nasdaq at 10,000, historically high multiples, and seasonality all could be a factor in why a pullback here could be perfectly normal. In fact, if you are bullish, after a 45% rally, one of the best things would be for prices to reset some here over the coming months. We would be a buyer of weakness and use it as an opportunity for longer-term price appreciation.
We have all been gobsmacked by velocity and strength of this V-shaped rally off the March 23 bear market low. For the record this rally became an official Ned Davis Research defined bull market on May 26 when DJIA was up 30% from the low when it made a new recovery high after 50 calendar days (see NDR definitions below). And this was on the back of the shortest bear market on record, which lasted only 40 days. Today’s market comeuppance is an important reminder that we need to be patient with this market and heed our cautious analysis and stance.
This is still the “Worst Six Months” and as we warned in the May Outlook when the market is down during the “Best Six Months” (November-April) as they were in 2020, the “Worst Six Months” (May-October) were down or flat 86% of the time with a median S&P decline of -6.7% since 1950.
Other seasonal indicators are also flashing the caution sign. This year’s negative January Barometer and breached December DJIA low, point to possible retests of the lows and choppy, volatile trading over the next several months. See the updated composite graph of the seasonal pattern for these 22 years since 1950 in the June Outlook.
It appears that quite a fair amount of hope was built into the rally. Lots of hope that everything is just going back to the way it was real soon. But COVID cases are on the climb again and folks are concerned that a pause and/or reverse of reopening could delay the economic recovery and derail the bull. Up until the past few days it felt like mid-February again with the market ignoring economic and corporate data as momentum pushed everything higher.
The jobs report was a bit unbelievable and then Fed Chairman Powell’s candor and reserved outlook at yesterday’s press conference put the fear right back into the market today. Meanwhile the Atlanta Fed’s GDPNow model currently estimates that 2020 Q2 GDP growth will be down -48.5%.
Sentiment had also become rather exuberant as the Weekly CBOE Equity Only Put/Call ratio we track in the “Pulse of the Market” hit 0.43 last week – its lowest level since the week ending 4/10/2010 about three weeks before the infamous flash crash. Investor’s Intelligence Advisors Sentiment survey Bullish advisors are now up to 56.9%. Correction advisors are down to 22.5% while Bearish advisors have slipped further to 20.6%, putting us at caution levels.
Technically, things deteriorated rapidly today. After blasting through several levels of resistance we have been tracking as shown in the chart here S&P 500 stalled at 3210 and plunged 5.9% today through 3115 support/resistance and closed just below 3010 support/resistance which sits at the 2019 summer highs. The next major support level below here is 2725 right near where the 50-day moving average turned up in mid-May, which would be a 15.7% correction from the recent recovery high reached this past Monday, June 8.
(CLICK HERE FOR THE CHART!)
Ned Davis Research bull and bear market definitions:
A cyclical bull market requires a 30% rise in the DJIA after 50 calendar days or a 13% rise after 155 calendar days. Reversals of 30% in the Value Line Geometric Index since 1965 also qualify. A cyclical bear market requires a 30% drop in the DJIA after 50 calendar days or a 13% decline after 145 calendar days. Reversals in the Value Line Geometric Index also qualify. Bull and bear markets are measured at peak and trough dates, so both the time and price criteria must be met as of the peak and trough dates.
The second Triple Witching Week (Quadruple Witching if you prefer) of the year brings on some volatile trading with losses frequently exceeding gains. NASDAQ has the weakest record on the first trading day of the week. Triple-Witching Friday is usually better, DJIA has been up ten of the last seventeen years.
Full-week performance is choppy as well, littered with greater than 1% moves in both directions. The week after Triple-Witching Day is horrendous. This week has experienced DJIA losses in 26 of the last 30 years with an average decline of 1.07%. S&P 500 and NASDAQ have fared slightly better during the week after over the same 30-year span, declining 0.72% and 0.23% respectively on average.
(CLICK HERE FOR THE CHART!)
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- $KR
- $MFA
- $GRPN
- $JKS
- $ORCL
- $LEN
- $KMX
- $TSQ
- $HRB
- $MPAA
- $SWBI
- $CMC
- $RGS
- $TTM
- $HOME
- $JBL
- $DBI
- $AMSWA
- $ABM
- $BNGO
- $CNTG
- $LMB
- $LIVX
- $ALYA
- $GAN
- $INWK
- $VOLT
- $UROV
- $VNCE
Monday 6.15.20 Before Market Open:
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Monday 6.15.20 After Market Close:
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NONE.
Tuesday 6.16.20 Before Market Open:
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Tuesday 6.16.20 After Market Close:
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Wednesday 6.17.20 Before Market Open:
([CLICK HERE FOR WEDNESDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!]())
NONE.
Wednesday 6.17.20 After Market Close:
(CLICK HERE FOR WEDNESDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!)
Thursday 6.18.20 Before Market Open:
(CLICK HERE FOR THURSDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!)
Thursday 6.18.20 After Market Close:
(CLICK HERE FOR THURSDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!)
Friday 6.19.20 Before Market Open:
(CLICK HERE FOR FRIDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!)
NONE.
Friday 6.19.20 After Market Close:
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NONE.
**Kroger Co. (KR) is confirmed to report earnings at approximately 8:30 AM ET on Thursday, June 18, 2020. The consensus earnings estimate is $0.88 per share on revenue of $40.12 billion and the Earnings Whisper ® number is $0.98 per share. Investor sentiment going into the company's earnings release has 85% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 22.22% with revenue increasing by 7.70%. Short interest has increased by 55.5% since the company's last earnings release while the stock has drifted higher by 5.3% from its open following the earnings release to be 12.5% above its 200 day moving average of $28.68. Overall earnings estimates have been revised higher since the company's last earnings release. On Wednesday, May 13, 2020 there was some notable buying of 10,009 contracts of the $36.00 put expiring on Friday, July 17, 2020. Option traders are pricing in a 8.6% move on earnings and the stock has averaged a 4.4% move in recent quarters.
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**MFA Financial Inc (MFA) is confirmed to report earnings at approximately 8:30 AM ET on Tuesday, June 16, 2020. Investor sentiment going into the company's earnings release has 30% expecting an earnings beat. Short interest has increased by 122.9% since the company's last earnings release while the stock has drifted lower by 67.1% from its open following the earnings release to be 55.0% below its 200 day moving average of $5.80. Overall earnings estimates have been unchanged since the company's last earnings release. On Tuesday, June 9, 2020 there was some notable buying of 9,992 contracts of the $4.00 call expiring on Friday, June 19, 2020. The stock has averaged a 1.2% move on earnings in recent quarters.
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**Groupon, Inc. (GRPN) is confirmed to report earnings at approximately 4:10 PM ET on Tuesday, June 16, 2020. The consensus estimate is for a loss of $1.92 per share on revenue of $400.24 million and the Earnings Whisper ® number is ($1.85) per share. Investor sentiment going into the company's earnings release has 35% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 3,940.00% with revenue decreasing by 30.80%. Short interest has decreased by 20.4% since the company's last earnings release while the stock has drifted higher by 1,026.9% from its open following the earnings release to be 47.9% below its 200 day moving average of $41.78. Overall earnings estimates have been revised lower since the company's last earnings release. On Friday, June 5, 2020 there was some notable buying of 6,979 contracts of the $1.50 call expiring on Friday, June 19, 2020. Option traders are pricing in a 2.7% move on earnings.
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**JinkoSolar Holding Co., Ltd. (JKS) is confirmed to report earnings at approximately 6:45 AM ET on Monday, June 15, 2020. The consensus earnings estimate is $0.75 per share on revenue of $1.00 billion. Investor sentiment going into the company's earnings release has 62% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 400.00% with revenue increasing by 15.27%. Short interest has decreased by 4.0% since the company's last earnings release while the stock has drifted lower by 4.0% from its open following the earnings release to be 6.6% below its 200 day moving average of $19.11. Overall earnings estimates have been revised lower since the company's last earnings release. On Monday, June 8, 2020 there was some notable buying of 3,793 contracts of the $25.00 call expiring on Friday, June 19, 2020. Option traders are pricing in a 15.7% move on earnings and the stock has averaged a 8.7% move in recent quarters.
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**Oracle Corp. (ORCL) is confirmed to report earnings at approximately 4:00 PM ET on Tuesday, June 16, 2020. The consensus earnings estimate is $1.17 per share on revenue of $10.85 billion and the Earnings Whisper ® number is $1.22 per share. Investor sentiment going into the company's earnings release has 61% expecting an earnings beat The company's guidance was for earnings of $1.20 to $1.28 per share. Consensus estimates are for year-over-year earnings growth of 0.86% with revenue decreasing by 2.57%. Short interest has decreased by 12.2% since the company's last earnings release while the stock has drifted higher by 16.7% from its open following the earnings release to be 2.2% below its 200 day moving average of $53.02. Overall earnings estimates have been revised lower since the company's last earnings release. On Monday, June 8, 2020 there was some notable buying of 25,106 contracts of the $60.00 call expiring on Friday, June 19, 2020. Option traders are pricing in a 6.7% move on earnings and the stock has averaged a 6.1% move in recent quarters.
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**Lennar Corp. (LEN) is confirmed to report earnings at approximately 6:00 AM ET on Tuesday, June 16, 2020. The consensus earnings estimate is $1.29 per share on revenue of $5.73 billion. Investor sentiment going into the company's earnings release has 61% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 0.77% with revenue increasing by 3.00%. Short interest has decreased by 0.4% since the company's last earnings release while the stock has drifted higher by 97.6% from its open following the earnings release to be 5.8% above its 200 day moving average of $56.00. Overall earnings estimates have been revised lower since the company's last earnings release. On Wednesday, June 10, 2020 there was some notable buying of 7,571 contracts of the $65.00 call expiring on Friday, June 19, 2020. Option traders are pricing in a 10.4% move on earnings and the stock has averaged a 4.1% move in recent quarters.
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**CarMax, Inc. (KMX) is confirmed to report earnings at approximately 6:50 AM ET on Friday, June 19, 2020. The consensus estimate is for a loss of $0.08 per share on revenue of $2.39 billion and the Earnings Whisper ® number is $0.01 per share. Investor sentiment going into the company's earnings release has 27% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 105.03% with revenue decreasing by 55.46%. Short interest has increased by 0.1% since the company's last earnings release while the stock has drifted higher by 83.6% from its open following the earnings release to be 5.8% above its 200 day moving average of $85.05. Overall earnings estimates have been revised lower since the company's last earnings release. On Tuesday, June 2, 2020 there was some notable buying of 1,017 contracts of the $92.50 put expiring on Friday, June 19, 2020. Option traders are pricing in a 12.1% move on earnings and the stock has averaged a 4.5% move in recent quarters.
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**Townsquare Media, Inc. (TSQ) is confirmed to report earnings at approximately 7:00 AM ET on Monday, June 15, 2020. The consensus earnings estimate is $0.10 per share on revenue of $95.77 million and the Earnings Whisper ® number is $0.08 per share. Investor sentiment going into the company's earnings release has 62% expecting an earnings beat Consensus estimates are for year-over-year earnings growth of 11.11% with revenue increasing by 2.23%. On Monday, June 8, 2020 there was some notable buying of 624 contracts of the $7.50 call expiring on Friday, June 19, 2020.
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**H&R Block Inc. (HRB) is confirmed to report earnings at approximately 4:20 PM ET on Tuesday, June 16, 2020. The consensus earnings estimate is $3.01 per share on revenue of $1.73 billion and the Earnings Whisper ® number is $2.23 per share. Investor sentiment going into the company's earnings release has 37% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 30.32% with revenue decreasing by 25.83%. Short interest has decreased by 31.1% since the company's last earnings release while the stock has drifted lower by 6.5% from its open following the earnings release to be 15.3% below its 200 day moving average of $21.09. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, May 29, 2020 there was some notable buying of 11,609 contracts of the $17.00 put expiring on Friday, June 19, 2020. Option traders are pricing in a 12.9% move on earnings and the stock has averaged a 3.5% move in recent quarters.
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**Motorcar Parts of America, Inc. (MPAA) is confirmed to report earnings at approximately 8:00 AM ET on Monday, June 15, 2020. Investor sentiment going into the company's earnings release has 45% expecting an earnings beat. Short interest has decreased by 22.3% since the company's last earnings release while the stock has drifted lower by 18.9% from its open following the earnings release to be 7.1% below its 200 day moving average of $17.10. Option traders are pricing in a 16.4% move on earnings and the stock has averaged a 7.1% move in recent quarters.
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Federal Reserve Chairman Jerome Powell is expected to reassure markets next week the central bank will do whatever it takes to help the economy heal. That should be enough to keep investors moving into stocks that benefit from an economic rebound and push the S&P 500 into the green for 2020.
Stocks could be caught in a tug-of-war in the week ahead, as investors weigh the potential positives of a reopening economy against worry that the coronavirus continues to spread.
In the past week, the S&P 500′s sharp gains briefly drove the index into positive territory for the year, before a bruising sell-off at the end of the week. Stocks were more than 47% above the March 23 low before investors got spooked by signs the coronavirus is picking up in some areas.
The Fed also dampened sentiment when it released economic forecasts Wednesday that showed a slow recovery and interest rates at zero through the end of 2022. Investors will hear more of the same when Fed Chairman Jerome Powell speaks before Congress this Tuesday and Wednesday in his semi-annual economic testimony. He may provide more clarity on the Fed’s bond buying and other policy moves.
Retail sales for May are released Tuesday, and that will be an important look at consumer spending activity. It is the most important data in the coming week, other than the weekly jobless claims report on Thursday.
Stocks rose on Friday with the S&P 500 up more than 1% after Thursday’s sharp sell-off that sent the index down nearly 6%. Treasury yields, which move opposite price, also moved sharply lower as investors moved to the safety of bonds. The 10-year yield was back to 0.70%, well off the high of 0.95% in the week earlier.
“We’ve been overbought for awhile and digesting gains would be natural,” said Sam Stovall, chief investment strategist at CFRA.
Stovall said the fact that 97% of the S&P 500 companies’ stocks were above their 50-day moving average this past week was a warning. The 50-day moving average is a momentum indicator, and if a stock or index rises above it, it is usually a positive, but if they all do, it’s a contrarian warning.
“Historically that’s just too high ... and also the P/E on the S&P was 25.1 of forward 12-months earnings, which is a 52% premium to the P/E average since 2000,” he said. The P/E, or the price-to-earnings ratio, is an important tool to value stocks, and it averages around 16.5 times.
In the sell-off, stocks that would benefit from the economy’s reopening were the hardest hit. Investors had been jumping into those names, driving them higher at a dizzying pace. They were also the sectors that were last to join the rally, like banks, casinos, airlines and hotels.
“Once the pullback runs its course I think investors will move back again into the sectors and subsectors that were most beaten up in the bear market,” said Stovall.
Scott Redler, partner with T3Live.com, said he lightened up his holdings earlier in the week. “There were some clues early in the week that the market was vulnerable, like when the S&P closed below 3,191 on Tuesday. You had some feverish trading in some of the very speculative names,” he said.
Stovall said other headwinds hang over the market, and one big one is the upcoming presidential election, which could become a bigger influence on the market. RealClearPolitics has President Donald Trump trailing former Vice President Joseph Biden by 8.1 points in the latest average of polls.
“Trump’s numbers are just looking so bad, and if the Fed needs to keep interest rates at zero and we have the potential for a resurgence in Covid cases, then Trump is not going to benefit from an economic recovery, and as a result, that gives Biden a better chance of being elected,” said Stovall. “It’s not necessarily that the market dislikes Biden, but they dislike uncertainty. And a decline in equity prices would be representative of that uncertainty.”
Consumer barometer
Retail sales are typically a barometer for consumer spending, and when Americans were shut in their homes they did much less shopping than usual. April data showed a 16.7% drop in sales, but consumers did spend online.
Economists are watching Tuesday’s report on May sales closely, particularly after the May jobs report had a large upside surprise. There were 2.5 million jobs added in May, instead of an expected loss of 8.3 million.
Mark Zandi, chief economist at Moody’s Analytics, said business-to-business spending data for May implies that retail sales were flat compared with April’s depressed level and could be down 22% from a year ago.
Zandi used data from Cortera, which collects information on about $1.5 trillion in business-to-business spending. In an analysis of spending by retailers in May, it found there were gains from April in some categories, including furniture, gasoline stations and restaurants.
“Clothing and sporting goods store sales have been crushed, and that continued in May. Restaurants, gasoline stations and furniture stores have been hit hard, but showed strong improvement in May. Food and health and personal care stores have done well through the crisis, but gave some of that back in May,” notes Zandi. “Online retailers, general merchandise stores (which includes WalMart and Target), and building material and garden supply stores (Home Depot and Lowes) have navigated the crisis well, and May was another solid month.”
Zandi said weakness in apparel and sporting goods washed out the gains in other areas.
Fed ahead
Strategists said Powell did not surprise the market with his comments this past week, but his sober approach reminded investors that the Fed policy will have to be in place for a very long time to pull the economy out of its deep rut. That will keep markets on high alert during his two days of testimony.
“I think the cat’s out of the bag. I don’t think he can sugarcoat it. The thing he’s got to worry about is he needs help. He needs Congress and the administration to come up with another fiscal rescue package. He can’t do it on his own,” said Zandi. “He has to keep the pressure on them and get a piece of legislation before they go on August recess. ... He’s speaking as much to the American people as he is to the policy makers.”
Zandi said the Fed has acted aggressively and swiftly to unfreeze credit markets when they locked up in March, but the economy needs more stimulus ahead of a wave of potential business defaults and with a high level of unemployment. The Fed’s balance sheet has ballooned to $7.2 trillion, and on Wednesday the central bank committed to monthly purchases of $80 billion in Treasury securities and $40 billion in mortgage securities.
“I think he continues to lay the foundation for policy changes to come,” said Zandi. “He’s strongly suggesting there’s going to be more monetary support, and that would come in the form of a few things - it would be performance dependent forward guidance. ... He’s going to make it clear until the economy is at full employment and inflation is at least at target, if not above.”
Zandi said Powell may discuss yield curve controls, which would mean the Fed would set targets for interest rate levels in the Treasury market, and make purchases to influence rates. Some economists believe the Fed will adopt that tool before the end of the year.
“I think he’s going to more clearly define the amount of QE they’re doing going forward. He’ll try to preserve some optionality, but he’ll try to make it known, they’re buying a lot of bonds for a long time to come,” Zandi said.
But the hearings could be more politicized, and Powell may be criticized by Congress for helping financial markets more than Main Street, said John Briggs, head of strategy at NatWest Markets. “I’d be surprised if there’s a lot new, given it comes on the heels of the FOMC meeting,” Briggs said.
“Stocks take an escalator up, but an elevator down.” — Old investment axiom
The saying above sure happened yesterday. In the end, the S&P 500 Index fell 5.9% for the worst day since March 16 and the first three-day losing streak in more than three months. What does it mean? We’ve been on record that we expect some type of well-deserved pullback or at least consolidation after the 45% bounce off of the March 23 lows and the best 50-day rally ever. Then add in the fact that June has been the worst month of the year for stocks since 2000 and some type of weakness is perfectly logical here and now.
“In many ways, this is one of the most overbought stock markets we’ve ever seen. Now the catch to this is previous times we’ve seen major levels similar to now have been closer to the beginning of bull markets than the end of bull markets,” explained LPL Financial Senior Market Strategist Ryan Detrick.
This is now one of the greatest surges off a major low ever. It is perfectly normal to see a drawdown of double digits after the initial surge weakens. This could be happening now.
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We’ve shown that huge up months like April tend to eventually resolve higher, but some near-term weakness is possible.
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Also, when more than 90% of the stocks in the S&P 500 are above their 50-day moving average, this shows solid longer-term results. Again, suggesting that very overbought isn’t always a bad thing.
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There was a huge spike in stocks marking new monthly highs, again historically an overbought signal. This opens the door for some near-term weakness, but is a very positive sign longer-term.
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Last, in the LPL Chart of the Day, the S&P 500 was recently more than 13% above the 50-day moving average, one of the highest levels ever. The good news is one-year later stocks were higher every single time. Yet another clue that historically overbought isn’t always a bad thing for the bulls.
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A record run, over-the-top excitement from small traders, the Nasdaq at 10,000, historically high multiples, and seasonality all could be a factor in why a pullback here could be perfectly normal. In fact, if you are bullish, after a 45% rally, one of the best things would be for prices to reset some here over the coming months. We would be a buyer of weakness and use it as an opportunity for longer-term price appreciation.
We have all been gobsmacked by velocity and strength of this V-shaped rally off the March 23 bear market low. For the record this rally became an official Ned Davis Research defined bull market on May 26 when DJIA was up 30% from the low when it made a new recovery high after 50 calendar days (see NDR definitions below). And this was on the back of the shortest bear market on record, which lasted only 40 days. Today’s market comeuppance is an important reminder that we need to be patient with this market and heed our cautious analysis and stance.
This is still the “Worst Six Months” and as we warned in the May Outlook when the market is down during the “Best Six Months” (November-April) as they were in 2020, the “Worst Six Months” (May-October) were down or flat 86% of the time with a median S&P decline of -6.7% since 1950.
Other seasonal indicators are also flashing the caution sign. This year’s negative January Barometer and breached December DJIA low, point to possible retests of the lows and choppy, volatile trading over the next several months. See the updated composite graph of the seasonal pattern for these 22 years since 1950 in the June Outlook.
It appears that quite a fair amount of hope was built into the rally. Lots of hope that everything is just going back to the way it was real soon. But COVID cases are on the climb again and folks are concerned that a pause and/or reverse of reopening could delay the economic recovery and derail the bull. Up until the past few days it felt like mid-February again with the market ignoring economic and corporate data as momentum pushed everything higher.
The jobs report was a bit unbelievable and then Fed Chairman Powell’s candor and reserved outlook at yesterday’s press conference put the fear right back into the market today. Meanwhile the Atlanta Fed’s GDPNow model currently estimates that 2020 Q2 GDP growth will be down -48.5%.
Sentiment had also become rather exuberant as the Weekly CBOE Equity Only Put/Call ratio we track in the “Pulse of the Market” hit 0.43 last week – its lowest level since the week ending 4/10/2010 about three weeks before the infamous flash crash. Investor’s Intelligence Advisors Sentiment survey Bullish advisors are now up to 56.9%. Correction advisors are down to 22.5% while Bearish advisors have slipped further to 20.6%, putting us at caution levels.
Technically, things deteriorated rapidly today. After blasting through several levels of resistance we have been tracking as shown in the chart here S&P 500 stalled at 3210 and plunged 5.9% today through 3115 support/resistance and closed just below 3010 support/resistance which sits at the 2019 summer highs. The next major support level below here is 2725 right near where the 50-day moving average turned up in mid-May, which would be a 15.7% correction from the recent recovery high reached this past Monday, June 8.
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Ned Davis Research bull and bear market definitions:
A cyclical bull market requires a 30% rise in the DJIA after 50 calendar days or a 13% rise after 155 calendar days. Reversals of 30% in the Value Line Geometric Index since 1965 also qualify. A cyclical bear market requires a 30% drop in the DJIA after 50 calendar days or a 13% decline after 145 calendar days. Reversals in the Value Line Geometric Index also qualify. Bull and bear markets are measured at peak and trough dates, so both the time and price criteria must be met as of the peak and trough dates.
The second Triple Witching Week (Quadruple Witching if you prefer) of the year brings on some volatile trading with losses frequently exceeding gains. NASDAQ has the weakest record on the first trading day of the week. Triple-Witching Friday is usually better, DJIA has been up ten of the last seventeen years.
Full-week performance is choppy as well, littered with greater than 1% moves in both directions. The week after Triple-Witching Day is horrendous. This week has experienced DJIA losses in 26 of the last 30 years with an average decline of 1.07%. S&P 500 and NASDAQ have fared slightly better during the week after over the same 30-year span, declining 0.72% and 0.23% respectively on average.
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- $KR
- $MFA
- $GRPN
- $JKS
- $ORCL
- $LEN
- $KMX
- $TSQ
- $HRB
- $MPAA
- $SWBI
- $CMC
- $RGS
- $TTM
- $HOME
- $JBL
- $DBI
- $AMSWA
- $ABM
- $BNGO
- $CNTG
- $LMB
- $LIVX
- $ALYA
- $GAN
- $INWK
- $VOLT
- $UROV
- $VNCE
Monday 6.15.20 Before Market Open:
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Monday 6.15.20 After Market Close:
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Tuesday 6.16.20 Before Market Open:
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Tuesday 6.16.20 After Market Close:
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Wednesday 6.17.20 Before Market Open:
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Wednesday 6.17.20 After Market Close:
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Thursday 6.18.20 Before Market Open:
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Thursday 6.18.20 After Market Close:
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Friday 6.19.20 Before Market Open:
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NONE.
Friday 6.19.20 After Market Close:
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NONE.
**Kroger Co. (KR) is confirmed to report earnings at approximately 8:30 AM ET on Thursday, June 18, 2020. The consensus earnings estimate is $0.88 per share on revenue of $40.12 billion and the Earnings Whisper ® number is $0.98 per share. Investor sentiment going into the company's earnings release has 85% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 22.22% with revenue increasing by 7.70%. Short interest has increased by 55.5% since the company's last earnings release while the stock has drifted higher by 5.3% from its open following the earnings release to be 12.5% above its 200 day moving average of $28.68. Overall earnings estimates have been revised higher since the company's last earnings release. On Wednesday, May 13, 2020 there was some notable buying of 10,009 contracts of the $36.00 put expiring on Friday, July 17, 2020. Option traders are pricing in a 8.6% move on earnings and the stock has averaged a 4.4% move in recent quarters.
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**MFA Financial Inc (MFA) is confirmed to report earnings at approximately 8:30 AM ET on Tuesday, June 16, 2020. Investor sentiment going into the company's earnings release has 30% expecting an earnings beat. Short interest has increased by 122.9% since the company's last earnings release while the stock has drifted lower by 67.1% from its open following the earnings release to be 55.0% below its 200 day moving average of $5.80. Overall earnings estimates have been unchanged since the company's last earnings release. On Tuesday, June 9, 2020 there was some notable buying of 9,992 contracts of the $4.00 call expiring on Friday, June 19, 2020. The stock has averaged a 1.2% move on earnings in recent quarters.
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**Groupon, Inc. (GRPN) is confirmed to report earnings at approximately 4:10 PM ET on Tuesday, June 16, 2020. The consensus estimate is for a loss of $1.92 per share on revenue of $400.24 million and the Earnings Whisper ® number is ($1.85) per share. Investor sentiment going into the company's earnings release has 35% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 3,940.00% with revenue decreasing by 30.80%. Short interest has decreased by 20.4% since the company's last earnings release while the stock has drifted higher by 1,026.9% from its open following the earnings release to be 47.9% below its 200 day moving average of $41.78. Overall earnings estimates have been revised lower since the company's last earnings release. On Friday, June 5, 2020 there was some notable buying of 6,979 contracts of the $1.50 call expiring on Friday, June 19, 2020. Option traders are pricing in a 2.7% move on earnings.
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**JinkoSolar Holding Co., Ltd. (JKS) is confirmed to report earnings at approximately 6:45 AM ET on Monday, June 15, 2020. The consensus earnings estimate is $0.75 per share on revenue of $1.00 billion. Investor sentiment going into the company's earnings release has 62% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 400.00% with revenue increasing by 15.27%. Short interest has decreased by 4.0% since the company's last earnings release while the stock has drifted lower by 4.0% from its open following the earnings release to be 6.6% below its 200 day moving average of $19.11. Overall earnings estimates have been revised lower since the company's last earnings release. On Monday, June 8, 2020 there was some notable buying of 3,793 contracts of the $25.00 call expiring on Friday, June 19, 2020. Option traders are pricing in a 15.7% move on earnings and the stock has averaged a 8.7% move in recent quarters.
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**Oracle Corp. (ORCL) is confirmed to report earnings at approximately 4:00 PM ET on Tuesday, June 16, 2020. The consensus earnings estimate is $1.17 per share on revenue of $10.85 billion and the Earnings Whisper ® number is $1.22 per share. Investor sentiment going into the company's earnings release has 61% expecting an earnings beat The company's guidance was for earnings of $1.20 to $1.28 per share. Consensus estimates are for year-over-year earnings growth of 0.86% with revenue decreasing by 2.57%. Short interest has decreased by 12.2% since the company's last earnings release while the stock has drifted higher by 16.7% from its open following the earnings release to be 2.2% below its 200 day moving average of $53.02. Overall earnings estimates have been revised lower since the company's last earnings release. On Monday, June 8, 2020 there was some notable buying of 25,106 contracts of the $60.00 call expiring on Friday, June 19, 2020. Option traders are pricing in a 6.7% move on earnings and the stock has averaged a 6.1% move in recent quarters.
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**Lennar Corp. (LEN) is confirmed to report earnings at approximately 6:00 AM ET on Tuesday, June 16, 2020. The consensus earnings estimate is $1.29 per share on revenue of $5.73 billion. Investor sentiment going into the company's earnings release has 61% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 0.77% with revenue increasing by 3.00%. Short interest has decreased by 0.4% since the company's last earnings release while the stock has drifted higher by 97.6% from its open following the earnings release to be 5.8% above its 200 day moving average of $56.00. Overall earnings estimates have been revised lower since the company's last earnings release. On Wednesday, June 10, 2020 there was some notable buying of 7,571 contracts of the $65.00 call expiring on Friday, June 19, 2020. Option traders are pricing in a 10.4% move on earnings and the stock has averaged a 4.1% move in recent quarters.
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**CarMax, Inc. (KMX) is confirmed to report earnings at approximately 6:50 AM ET on Friday, June 19, 2020. The consensus estimate is for a loss of $0.08 per share on revenue of $2.39 billion and the Earnings Whisper ® number is $0.01 per share. Investor sentiment going into the company's earnings release has 27% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 105.03% with revenue decreasing by 55.46%. Short interest has increased by 0.1% since the company's last earnings release while the stock has drifted higher by 83.6% from its open following the earnings release to be 5.8% above its 200 day moving average of $85.05. Overall earnings estimates have been revised lower since the company's last earnings release. On Tuesday, June 2, 2020 there was some notable buying of 1,017 contracts of the $92.50 put expiring on Friday, June 19, 2020. Option traders are pricing in a 12.1% move on earnings and the stock has averaged a 4.5% move in recent quarters.
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**Townsquare Media, Inc. (TSQ) is confirmed to report earnings at approximately 7:00 AM ET on Monday, June 15, 2020. The consensus earnings estimate is $0.10 per share on revenue of $95.77 million and the Earnings Whisper ® number is $0.08 per share. Investor sentiment going into the company's earnings release has 62% expecting an earnings beat Consensus estimates are for year-over-year earnings growth of 11.11% with revenue increasing by 2.23%. On Monday, June 8, 2020 there was some notable buying of 624 contracts of the $7.50 call expiring on Friday, June 19, 2020.
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**H&R Block Inc. (HRB) is confirmed to report earnings at approximately 4:20 PM ET on Tuesday, June 16, 2020. The consensus earnings estimate is $3.01 per share on revenue of $1.73 billion and the Earnings Whisper ® number is $2.23 per share. Investor sentiment going into the company's earnings release has 37% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 30.32% with revenue decreasing by 25.83%. Short interest has decreased by 31.1% since the company's last earnings release while the stock has drifted lower by 6.5% from its open following the earnings release to be 15.3% below its 200 day moving average of $21.09. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, May 29, 2020 there was some notable buying of 11,609 contracts of the $17.00 put expiring on Friday, June 19, 2020. Option traders are pricing in a 12.9% move on earnings and the stock has averaged a 3.5% move in recent quarters.
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**Motorcar Parts of America, Inc. (MPAA) is confirmed to report earnings at approximately 8:00 AM ET on Monday, June 15, 2020. Investor sentiment going into the company's earnings release has 45% expecting an earnings beat. Short interest has decreased by 22.3% since the company's last earnings release while the stock has drifted lower by 18.9% from its open following the earnings release to be 7.1% below its 200 day moving average of $17.10. Option traders are pricing in a 16.4% move on earnings and the stock has averaged a 7.1% move in recent quarters.
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