Blain here: Hi everyone, just wanted to give you a notice that we will be doing our quarterly STTG reader survey tomorrow so there will be no market recap. As always, it is just a few questions and we really appreciate hearing from you on how we are doing. See you then!
Indexes bounced back from oversold levels but until proven otherwise this is just the natural ebb and flow of a downturn. The S&P 500 gained 0.82% and the NASDAQ continues to lag, gaining 0.57%. There was a key retail sales report which lifted spirits but truthfully generally when a market gets too extreme short term one way or the other any excuse to move in the other direction for a short period of time will do.
The Commerce Department said retail sales increased 1.1 percent last month, the biggest gain since September 2012, with receipts rising in nearly all categories. February’s increase was raised to 0.7 percent from a previously reported 0.3 percent. Economists had expected retail sales, which account for a third of consumer spending, to advance only 0.8 percent last month.
With the indexes there is not much change here despite the bounce. Until a change in trend appears, patience is a virtue.
It is worth pointing out the 10 year Treasury yield – we are near the 2.60% level that has provided a floor repeatedly in 2014. Yields tend to dive when people rush into bonds during periods of market turmoil… or if they think the economy is slowing down. If we see this 2.60% level broken for any period of time it would be a cautionary signal. If we see a bounce from here, it would just be business as usual.
There will be a lot of interesting earnings later this week so we’ll highlight some key ones. For today, the main one was Citigroup (C) which reported quarterly earnings that beat expectations, aided by a smaller loss on its troubled assets even as its revenue declined. However, not a very nice chart for now.
There are not that many places where we can see strength outside of consumer staples and utilities but here are a few – Kodiak Oil & Gas (KOG) and Steel Dynamics (STLD) – these are both resource stocks obviously.
Taiwan Semiconductor (TSM) is another – as we highlighted Friday with the Brazilian stocks and charts of the emerging markets ETF over the past few weeks, we have seen buyers rotate out to these type of markets.
Bespoke Investment Group had an interesting blurb today about Tuesdays in 2014 – while this is not a long term trend of any sort it is an interesting observation:
If it weren’t for Tuesdays this year, the S&P 500 would be doing a whole lot worse than it already is. Below is a look at the average change of the S&P 500 by weekday this year. As shown, Tuesday is the only trading day of the week that has averaged gains, and the Tuesday gain has been significant at +0.55%. And it’s not just one big up Tuesday that is causing the average Tuesday return to be so high this year. As shown in the table below, there have been 14 Tuesdays so far this year, and the S&P has been up on 12 of them. Since March 18th, in the face of a very weak tape, the last four Tuesdays have all been higher. Hopefully for market bulls, the Tuesday trade holds up again tomorrow.