NEW YORK >>Analysts expect swings to continue to rattle markets for weeks, if not months, as investors wait for more clarity on several key issues. At the head of the list of uncertainties is what to do with Big Tech stocks, which critics have long said were due for a slide after soaring too high through the summer. Despite optimism around most of the market, crude continues to sputter. That could be something to watch as the week advances, because slow demand for crude could suggest economic softness. In the long-run, does consistent market timing really matter to be a successful investor? Former New York Giants football player Chris Canty has put his 10,000 square-foot Alpine home on the market for $3.99 million. As the U.K. enters its fourth round of trade talks with the U.S. this week, Washington will be looking to push its own regulatory standards on the country, and drive it away from EU’s, an international trade policy expert has told CNBC. BTIG’s Julian Emanuel predicts another correction will hit stocks before Election Day.
NEW YORK >>Analysts expect swings to continue to rattle markets for weeks, if not months, as investors wait for more clarity on several key issues. At the head of the list of uncertainties is what to do with Big Tech stocks, which critics have long said were due for a slide after soaring too high through the summer.
Wall Street closed out its worst week since June with another day of churning trading Friday, as big technology stocks resumed their suddenly weakened ways.
The S&P 500 rose 1.78, or 0.1%, to 3,340.97, but only after a roller-coaster day where a gain of 0.9% gave way to a loss of 0.9%. It kept swinging up and down after that, the latest examples of the lightning-quick shifts in momentum that have rocked Wall Street recently. Through the tumultuous week, the S&P 500 lost 2.5% to clinch its its first back-to-back weekly loss in four months.
The Nasdaq composite, which includes many of the superstar tech stocks that have been the focus of the market’s recent selling, lost 66.05, or 0.6%, to 10,853.55 after also flip-flopping between gains and losses. Its 4.1% drop for the week was its worst since market panic was peaking about the new coronavirus and stocks hit a bottom in late March.
The Dow Jones Industrial Average rose 131.06, or 0.5%, to 27,665.64, but not before careening between a gain of 294 points and a loss of 86 points.
“The technology sell-off continues,” said Phil Orlando, chief equity market strategist at Federated Hermes. “We don’t think this is anything more than a technical pullback that’s cleansing. It’s healthy and was anticipated.”
Apple, Amazon and others soared through the pandemic as their businesses boomed despite the recession. The coronavirus accelerated a shift to online life that’s benefited them, and a pile-on of investors into Big Tech sent their share prices soaring to levels that critics said were overvalued.
Apple had a nearly irrepressible run this summer where it rose in 12 out of 13 weeks. Zoom Video Communications surged above $450 per share earlier this month after starting the year at less than $70.
That all came to an abrupt halt last week. Worries that the stocks had gotten overheated helped send the S&P 500 to its worst three-day run in nearly three months, and the Nasdaq composite slid 10%. Tech stocks recovered a bit Wednesday, and they seemed to regain their stride Thursday morning, only for an afternoon swoon to batter them again.
On Friday, tech stocks again swung from gains to losses. The fluctuations came even after Oracle reported stronger profit for its latest quarter than analysts expected. After leaping as much as 7.9% in the morning, its stock slipped 0.6%.
Big Tech and the high-growth area of the stock market “just got ahead of itself,” said Jason Pride, chief investment officer of private wealth at Glenmede. “It doesn’t matter how it got there; it matters that it got there, and now we’re kind of deflating that overvaluation a little bit.”
After rising as much as 1.5% shortly after trading began, Apple fell back to a loss of 1.3%. It dropped 7.4% over the week, its worst since March. Movements for it and other Big Tech stocks matter more than ever for broad market indexes because their immense size means they can influence the S&P 500 almost by themselves. Five Big Tech companies make up nearly 23% of the index’s entire value.
One big factor that remains in the stock market’s favor is the Federal Reserve, which continues to pump aid into the economy. It has slashed short-term interest rates to record lows and bought up all kinds of bonds to support markets. It also said recently it will keep delivering stimulus even if inflation rises above its target level, as long as inflation had been well under it before then.
A report Friday showed that inflation remains low, though it was higher than economists expected. Consumer prices rose 1.3% in August from a year earlier, a shade above the 1.2% that investors were expecting.
The yield on the 10-year Treasury slipped to 0.66% from 0.68% late Thursday.
Unprecedented amounts of aid from Congress, along with the Federal Reserve, also helped the stock market halt its nearly 34% plummet in late March.
But it looks less likely by the day that Congress will approve more support for the limping economy before the November elections, even though investors say such stimulus is crucial after unemployment benefits and other stimulus have expired. Senate Democrats on Thursday shot down a scaled-back package proposed by Republicans, saying it shortchanged too many needs.
AP business writer Yuri Kageyama contributed to this story.
Author: By Stan Choe, Damian J. Troise and Alex Veiga Associated Press
Merger Monday: Weekend M&A News Appears To Lift Market’s Sagging Spirits
Maybe a little M&A can warm up a market that’s been cooling in the fall breeze.
Two big mergers and acquisitions over the weekend—along with media reports that China had chosen Oracle (ORCL) to be the technology partner with TikTok—appeared to lift spirits on Wall Street this morning following the first back-to-back weekly losses since May. Stocks were up in pre-market trading, and that includes the sputtering Tech sector.
The other big M&A news was in Health, with Gilead (GILD) announcing the purchase of a cancer drug company for $21 billion. Both GILD and biotech in general haven’t performed too well in the market most of this year, but this news might send some cheer by raising hopes of more biotech deals.
We’ve had a massive pullback in Tech, and because the Tech names compose so much of the market’s valuation, the effect on major indices isn’t pretty. The S&P 500 Index (SPX) had been up 10% year-to-date before Tech took a tumble. Now it’s up about 4%. The Nasdaq 100 (NDX) had been up 35% year-to-date, and now is up “just” 27%.
This drop actually could be healthy, because maybe, just maybe, a market swing toward more cyclical and value stocks appears to be gathering a little steam (see more below).
One of the biggest worries in August was near-term valuations, with major indices so dependent on a few “mega-caps” that kept going up while most of the rest of the market cooled its heels. What would be nice to see is other sectors like Consumer Discretionary and Financials get into the game. Arguably, Financials could play a key role in any leg up in the market, so it was great to see that sector rise nearly 0.7% on Friday.
There’s just a sprinkling of earnings in coming days (more on that below), but we also have a Fed meeting. It’s getting harder and harder to imagine the Fed doing or saying anything it hasn’t already since the crisis began, and it’s basically promised no rate moves for years. That kind of limits the drama that investors used to enjoy (or dread) going into “Fed day.”
As we always say, Fed Chairman Jerome Powell’s press conference on Wednesday afternoon is worth watching, even without the drama. It’s possible he’ll repeat what he’s said in the past about fiscal help needing to accompany monetary help for the economy. This could have more impact based on the Senate failing to approve a stimulus bill last week and the election now being just seven weeks away.
It’s a big week for AAPL as the company is expected to unveil new products tomorrow at a virtual event. Sometimes these events can have an impact on stock price, so be ready.
This doesn’t appear to be an iPhone-related event. The invitation to media says “Time Flies,” indicating the announcement is related to the Apple Watch, not iPhones, Bloomberg News reported last week. The new iPhones won’t launch until October, Bloomberg said.
AAPL is preparing new high-end and low-end Apple Watches as well as a redesigned iPad Air with an edge-to-edge screen, according to Bloomberg. It’s also working on a smaller HomePod and the first pair of Apple-branded over ear headphones for release as early as later this year.
So maybe we’ll get a look at some of those products tomorrow, and investors shouldn’t necessarily see them as lesser. AAPL has been focused on services and wearables more and more in recent years, and those areas make up a much bigger part of profits and sales than they used to. Last year, Forbes said AAPL’s wearables could eventually be a $100 billion business.
Another positive development has been the way volatility turned south on Friday and into Monday. The Cboe Volatility Index (VIX) took a beating and dropped to below 27, from highs of 38 just over a week earlier. Typically, but not always, a big drop in the VIX can suggest calmer and perhaps more positive waters ahead.
Still, things could continue to be choppy as we’re in this weird period where there hasn’t been as much COVID-19 news and earnings season is still a month away. That means if any outside news event could send the market tumbling or flying, that’s what tends to happen. So it’s not necessarily time yet to unbuckle. Some people are starting to wonder about election jitters working their way in, but people probably won’t start planning for that for a few more weeks.
CHART OF THE DAY: SPX INFLECTION POINT? The S&P 500 Index (SPX—candlestick) briefly moved below its … [+] 50-day moving average (blue line) Friday but then closed above it, possibly a positive sign for technical traders. It does remain way above its 200-day moving average (red line), but the premium has come down from 15% to 7% over the last two weeks. Data Source: S&P Dow Jones Indices. Chart source: The thinkorswim® platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.
Support Group: There isn’t a lot of conviction in the market the way there was two weeks ago when it seemed everyone was piling into Tech. The market looks to be in search of a “settle in” level. It wouldn’t be too surprising to see a test of recent highs, followed possibly by a test of the lows as the market seeks some sort of trading range. The SPX had two daily lows of 3329 last week, but managed to finish slightly above that on Friday at 3340, which was above an earlier intraday low that briefly took it below its 50-day moving average of 3322. That was a nice recovery and might give things a bit of momentum into the new week. Holding the 50-day average might suggest the market has pretty decent support there and trigger technical buying.
The SPX remains way above its 200-day moving average of just under 3100, and historically, when you have big premiums to the 200-day, you often see pressure. That could be one reason the rally broke down as September opened. That said, we’ve gone from having a 15% premium at the start of the month to a 7% premium now. That’s still historically on the high side, however. And price-to-earnings ratios remain eye-popping for many Tech stocks even after all the recent selling.
LEN said then it saw a quick turnaround in demand last spring after the pandemic shut things down in March and most of April, and that momentum appeared to be growing as summer drew near. Now we’ll get a chance to hear whether that momentum got sustained in what turned out to be a more difficult environment than some might have expected, as caseloads rose in parts of the country through July and August. One thing to listen for is whether LEN plans to continue buying land for development, because this can help tell you if they’re optimistic or pessimistic about the market going forward. Trends like people moving to the suburbs or out of apartments due to the pandemic also could be highlighted on the call.
If these sectors share anything in common, it’s their international exposure. As the dollar continues to weaken, investors might be looking for companies with big revenue from overseas where the dollar weakness helps make U.S. products more accessible. The weak dollar might be providing a catalyst to some of these companies, and maybe that’s what could help some of these struggling sectors see more love even as Tech gets a bit subdued.
Overall, you could argue that’s a healthy development. It means the market might be getting back more toward an equilibrium, and that people are starting to invest in more of the companies associated with economic improvement and reopening.
TD Ameritrade® commentary for educational purposes only. Member SIPC.
Author: JJ Kinahan
Simple Market Timing Strategies That Work – September 14, 2020
Have you ever dreamed of being that one in a million investor who has the talent to perfectly time the markets?
Indeed, even among those investors who don’t try to consistently time the markets, many think they can still call a top and act opportunistically. It’s at these times when an investor who speculates often sits on the sidelines and looks for better opportunities to put money into the market.
Giving up too soon at the first sign of inconvenience often leads to missed opportunities among numerous individuals who try to trade on their own retirement. For example, many investors have forfeited immense chances waiting for the Consumer Staples stocks to correct, only see the latter achieve new highs, move higher and drive the buyer markets to record levels: Adecoagro S.A. (AGRO – Free Report) , Albertsons Companies, Inc. (ACI – Free Report) , Archer Daniels Midland Company (ADM – Free Report) , Inter Parfums, Inc. (IPAR – Free Report) , New Age Beverage Corporation (NBEV – Free Report)
Fear and greed often lead investors into behavioral traps since most investors are followers who react, rather than anticipate market moves.
Productive market timing requires three key parts: 1) A dependable sign for when to get in and out of stocks. 2) The ability to follow up on the sign rapidly and precisely. 3) The ability to be completely unemotional and trust in the signal no matter the current market environment.
Market timing is commonly perceived as the ability to guess the exact market top or bottom and make moves accordingly. However, there is a less common, rather straightforward market timing strategy that has been utilized effectively by insightful financial specialists like Warren Buffet for a considerable length of time.
Rule 1: Why trying to time the tops and bottoms of the market is a dead end.
Abandoning the objective to time the tops and bottoms conclusively gives you the flexibility to profit, and extends your chance to benefit from the equity markets over the long-term whether your specific market timing calls are right or wrong.
Rule 2: Make an effort not to sell in the midst of little crashes. Muster the courage to trust your gut and buy best in class stocks at a discount.
Warren Buffett has made his fortune based off this simple rule. He cautions not to sell during little crashes, and encourages enduring them by concentrating on the long haul.
There is a key distinction between a small correction and a market crash. If you own shares of a company that is well – established and has strong fundamentals, they are probably going to rebound to their pre – crash prices eventually, thereby rendering holding on a wise decision. Warren Buffett takes this thought one step further by often buying outsized positions in value stocks he likes across the board when markets turn, essentially leveraging his bottoms-up analysis and stock picking acumen.
When It Comes to Trading Your Retirement, A Risk Adjusted Trading Strategy Should be Followed
It’s just human that many surrender to emotions and attempt and game the framework by timing the market. But, think about this: Nobel Laureate William Sharpe found in 1975 that a market timer would need to be precise 74% of the time to beat a passive portfolio. Indeed, even a slight outperformance most likely wouldn’t justify the efforts – and given that even the specialists for the most part come up short at it, market timing shouldn’t be your exclusive methodology for investing, particularly when it comes to building your retirement nest egg.
Actively trading for alpha, outsized, short – term gains through market timing and other high – risk trading strategies is fine with a small portion of your investable assets, but for your longer – term retirement assets, a “risk -adjusted focused” investment solution generally makes more sense.
If you’d like to learn how to ‘super-charge’ your retirement assets, get our free report:
Will You Retire as a Multi-Millionaire? 7 Things You Can Do Now.
Author: Zacks Investment Research
Former Giant and ESPN personality Chris Canty puts Alpine home on market for $4M
Giants fans flush with cash can now buy a former Big Blue player’s mansion.
Chris Canty’s 10,000 square-foot Alpine home is on the market for $3.99 million, an asking price that is down 18% from the $4.9 million he paid for the home in 2009.
Canty, a Bronx native, played 11 seasons in the NFL as a defensive end, including four for the Giants from 2009 to 2012. He earned a Super Bowl ring with the Giants in 2011.
He is co-host of the “DiPietro, Canty & Rothenberg” ESPN Radio show and founded the Chris Canty Foundation, a youth development organization that uses the platform of sports to effect positive change.
The brick colonial-style home at 26 Berkery Drive is built on approximately an acre of land with a multitude of accouterments, such as a large wine cellar, movie theater, six fireplaces, spacious gourmet kitchen, full-house generator and an elevator.
It has six bedrooms and seven bathrooms, including a master suite with dual walk-in closets, a sitting room with a fireplace, a master bath with a steam shower and Jacuzzi; and a great room with vaulted ceilings and a wet bar.
Story continues after gallery
Igor Beyder, co-owner of Beyder and Co., the luxury real estate firm in Closter that is selling Canty’s home, told NorthJersey.com that his client still lives in the home, but plans to live in New York City, where his radio show is broadcast from.
Beyder said Canty’s is the second home on the same block he has listed at for about the same price. A home at 27 Berkery Place that was owned by veteran record executive Paul Rosenberg sold for $3.9 million.
REAL ESTATE:Former Devils player’s Alpine mansion now listed at $16M after price slash
ALPINE:Host is arrested and charged in large outdoor Alpine party that was singled out by Murphy
Canty’s house was built in 2008, according to public records, and is assessed at $3.85 million with annual property taxes of nearly $30,000. It has been listed for sale since May. Realtor.com first reported the listing.
Canty’s home is not the only celebrity abode for sale in Alpine, one of the expensive ZIP codes in America.
Former New Jersey Devils hockey star Ilya Kovalchuk has his French chateau-inspired mansion on Frick Drive on the market for $15.99 million, a $2 million drop from its initial listing price last year.
Realtor.com reported a surge in interest in luxury homes in May. In Bergen County, where Alpine is located, views per luxury listing ($2.39 million and up) soared 30% year-over-year in May. List prices rose 6.3% in Bergen.
Ricardo Kaulessar is a local reporter for NorthJersey.com. For unlimited access to the most important news from your local community, please subscribe or activate your digital account today.
U.S. will use trade talks to pull UK into its ‘regulatory orbit,’ expert says
British Prime Minister Boris Johnson shakes hands with U.S. President Donald Trump onstage during the annual NATO heads of government summit on December 4, 2019.
Steve Parsons-WPA Pool | Getty Images
As the U.K. enters its fourth round of trade talks with the U.S. this week, Washington will be looking to push its own regulatory standards on the country, and drive it away from EU’s, an international trade policy expert has told CNBC.
Negotiators meet at a pivotal point in the U.K.’s path to establishing its post-Brexit trading relationship with the European Union. British Prime Minister Boris Johnson’s government has proposed an Internal Market Bill which will see it breach international law by violating Britain’s Withdrawal Agreement with the bloc.
The controversial legislation has led to divisions between the U.K. and Europe, and could provide an opportunity for the U.S. to push its own agenda.
Brian Pomper, international trade expert, lobbyist and partner at Akin Gump Strauss Hauer & Feld, said the overarching aim for the U.S. will be to pull the U.K. closer to its own regulatory worldview.
“To that end, a lot of the U.S. priorities go beyond just getting market access into the U.K., but rather are about setting a standard on issues where both countries are already high level, like on intellectual property, digital trade, and financial services. Ideally, the United States could then use this FTA model to pressure the EU,” Pomper told CNBC via email on Friday.
In the context of concurrent Brexit tensions, the U.K. could find itself in the center of a tug of war, with the EU and the U.S. both trying to pull it closer to their respective orbit on regulatory policy. Pomper suggested that far from merely being a pawn here, the U.K. is “smartly using that as leverage in negotiating with the United States.”
“On the other hand, the fact of Brexit means the U.K. really wants a deal (with the U.S.). A key question for the United States is going to be how much regulatory flexibility the U.K. provides itself,” he said.
“The U.K.’s actions vis-à-vis customs checks on the Irish border also could have a very adverse effect on U.S. congressional consideration of the implementing bill.”
House Democrats have voiced staunch opposition to the Internal Market Bill’s changes to the Northern Ireland Protocol, an aspect of the Brexit Withdrawal Agreement designed to prevent a hard border in Ireland.
As well as broad regulatory alignment, the U.S. will be seeking key concessions on digital taxes against American firms, food standards and agriculture, all of which Pomper suggested have bipartisan support in Congress.
In February 2019, the Office of the United States Trade Representative set out some of the White House’s priorities ahead of talks.
These included wider market access for remanufactured goods, comprehensive market access for U.S. agricultural goods and full market access for U.S. pharmaceutical products, among others.
The British government has long insisted that its National Health Services is “not on the table” in discussions, not least because of how deeply unpopular such a move would be domestically. Johnson will also face staunch opposition on food standards, as evidenced in the British outcry over chlorinated chicken.
“I expect that the U.K. will ultimately ‘deal’ on digital services taxes and try to trade it off for certain of its priorities,” Pomper suggested. “I think that food standards and agriculture more generally could be a true sticking point.”
Central to the U.S. negotiating strategy further down the line, however, will be the occupants of the White House, Senate and House of Representatives after November’s elections.
Pomper said the goal is to try to finish negotiations by the beginning of April, the latest a deal can be signed if both parties want to use Trade Promotion Authority procedures that expire July 1, 2021.
“The biggest impact of the political landscape is going to be whether Vice President Biden wins the election and continues to vigorously pursue the FTA in light of his comments that his administration would not focus on new trade agreements,” he added.
Author: Elliot Smith
‘Very abnormal’ trading pattern suggests more market pain is coming, BTIG’s Julian Emanuel warns
BTIG’s Julian Emanuel warns another deep market pullback is coming despite Monday’s comeback.
The firm’s chief equity and derivatives strategist sees evidence in trading activity that retail investors are still over-exposed to the market’s high flyers.
“Rather than fear being priced in the options market, there’s fear of missing out. The price of out of the money calls, as was the case throughout August, is still trading at a premium to the price of out of the money puts,” he told CNBC’s “Trading Nation” on Monday. “That is a very abnormal position.”
According to Emanuel, the situation indicates frothy sentiment.
“That tells us that the public is still very committed — as are the large institutional investors,” he added.
Emanuel believes the backdrop makes stocks vulnerable to downside bigger than a “garden variety pullback.”
He estimates the tech-heavy Nasdaq would fall 15% to 20% from its all-time high hit on Sept. 2. After bouncing back on Monday from its worst week since March, the index is now off more than 8% from its record level.
Emanuel predicts the broader S&P 500 would drop 10% to 15% from its all-time highs because mega cap growth stocks, including Apple, account for such a big portion of it. The index is about 6% off its record high.
He expects a second wave of selling will come before the Nov. 3 presidential election.
“Markets tend to be very uncomfortable with uncertainty,” said Emanuel. “When you look at the election, it’s clear that the rhetoric is going to get nastier.”
Emanuel addressed pullback risks during his ‘Trading Nation” in early August, too. He warned a bubble was brewing in big tech. Less than four weeks later, many of those high flyers dropped into correction territory.
Despite his discouraging forecast, Emanuel contends the bull market is alive. He expects the market to stabilize and a healthy rotation into beaten down economically sensitive stocks will prevail by next year.
“It really comes down to this whole idea particularly of the economy reopening,” Emanuel said. “A lot of the stocks that drove the rally in July and August are the ones that benefited from, for lack of a better word, the Covid trade.”
Author: Stephanie Landsman