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- View Full Coverage on Google News
Tag Archives: Bearish
Dow falls nearly 500 points after strong data, bearish comments by David Tepper
U.S. stocks traded lower on Thursday, erasing most of their gains from their biggest rally in three weeks after a round of upbeat economic data and a warning from hedge-fund titan David Tepper that he was “leaning short” against both stocks and bonds on expectations the Federal Reserve and other central banks will continue tightening into 2023.
Positive economic news can be a negative for stocks by underlining expectations that monetary policy makers will remain aggressive in their efforts to quash inflation.
What’s happening
-
The Dow Jones Industrial Average
DJIA,
-1.51%
fell 472 points, or 1.4%, to 32,903. -
The S&P 500
SPX,
-1.99%
shed 71 points, or 1.8%, to 3,807. -
The Nasdaq Composite
COMP,
-2.84%
fell 272 points, or 2.5%, to 10,437.
A day earlier, all three major indexes recorded their best gain in three weeks as the Dow advanced 526.74 points.
What’s driving markets
Investors saw another raft of strong economic data Thursday morning, including a revised reading on third-quarter gross domestic product which showed the U.S. economy expanded more quickly than previously believed. Growth was revised up to 3.2%, up from 2.9% from the previous revision released last month.
See: Economy grew at 3.2% rate in third quarter thanks to strong consumer spending
The number of Americans who applied for unemployment benefits in the week before Christmas rose slightly to 216,000, but new filings remained low and signaled the labor market is still quite strong. Economists polled by The Wall Street Journal had forecast new claims would total 220,000 in the seven days ending Dec 17.
“Jobless claims ticking slightly up but coming in below expectations could be a sign that the Fed’s wish of a slowing labor market will have to wait until 2023. While weekly jobless claims aren’t the best indicator of the overall labor market, they have remained in a robust range these last two months suggesting the labor market remains strong and has withstood the Fed’s tightening, at least for the time being,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office, in emailed comments.
“While weekly jobless claims aren’t the best indicator of the overall labor market, they have remained in a robust range these last two months suggesting the labor market remains strong and has withstood the Fed’s tightening, at least for the time being,” he wrote. “It’s no surprise to see the market take a breather today after yesterday’s rally as investors parse through earnings data, and despite some beats this week, expectations that earnings will remain as resilient in 2023 may be overblown.”
Stocks were feeling pressure after Appaloosa Management’s Tepper shared a cautious outlook for markets based on the expectation that central bankers around the world will continue hiking interest rates.
“I would probably say I’m leaning short on the equity markets right now because the upside-downside doesn’t make sense to me when I have so many people, so many central banks, telling me what they are going to do, what they want to do, what they expect to do,” Tepper said in a CNBC interview.
Key Words: Billionaire investor David Tepper would ‘lean short’ on stock market because central banks are saying ‘what they’re going to do’
A day earlier, the Conference Board’s consumer confidence survey came in at an eight-month high, which helped stoke a rally in stocks initially spurred by strong earnings from Nike Inc. and FedEx Corp. released Tuesday evening. This optimistic outlook helped stocks clinch their best daily performance in three weeks.
Volumes are starting to dry up as the year winds down, making markets more susceptible to bigger moves. According to Dow Jones Market Data, Wednesday saw the least combined volume on major exchanges since Nov. 29.
Read: Is the stock market open on Monday after Christmas Day?
In other economic data news, the U.S. leading index fell a sharp 1% in November, suggesting that the U.S. economy is heading toward a downturn.
Many market strategists are positioned defensively as they expect stocks could tumble to fresh lows in the new year.
See: Wall Street’s stock-market forecasts for 2022 were off by the widest margin since 2008: Will next year be any different?
Katie Stockton, a technical strategist at Fairlead Strategies, warned clients in a Thursday note that they should brace for more downside ahead.
“We expect the major indices to remain firm next week, helped by oversold conditions, but would brace for more downside in January given the recent downturn,” Stockton said.
Others said the latest data and comments from Tepper have simply refocused investors on the fact that the Fed, European Central Bank and now the Bank of Japan are preparing to continue tightening monetary policy.
“Yesterday was the short covering rally, but the bottom line is the trend is still short and we’re still fighting the Fed,” said Eric Diton, president and managing director of the Wealth Alliance.
Single-stock movers
-
AMC Entertainment Holdings
AMC,
-14.91%
was down sharply after the movie theater operator announced a $110 million equity capital raise. -
Tesla Inc.
TSLA,
-8.18%
shares continued to tumble as the company has been one of the worst performers on the S&P 500 this year. -
Shares of Verizon Communications Inc.
VZ,
-0.53%
were down again on Thursday as the company heads for its worst year on record. -
Shares of CarMax Inc.
KMX,
-6.60%
tumbled after the used vehicle seller reported fiscal third-quarter profit and sales that dropped well below expectations. -
Chipmakers and suppliers of equipment and materials, including Nvidia Corp.
NVDA,
-8.60%,
Advanced Micro Devices
AMD,
-7.17%
and Applied Materials Inc.
AMAT,
-8.54%,
were lower on Thursday.
Dow Jones Futures: Stock Market Selling Resumes As This Bull Case Turns Bearish; FedEx Dives
Dow Jones futures fell overnight, along with S&P 500 futures and Nasdaq futures, with FedEx (FDX) plunging overnight on weak earnings and guidance. The stock market rally continued to weaken, with the major indexes wiping out Wednesday’s slim-to-modest bounce, while Treasury yields are near long-term highs.
X
The market is still coming to grips with Tuesday’s hot CPI inflation report, which upended the bull case of the Federal Reserve slowing rate hikes soon.
Adobe (ADBE) crashed on mixed results and a $20 billion acquisition. Oil and natural gas stocks fell with energy prices, but solar and lithium stocks also took hefty losses.
Neurocrine Biosciences (NBIX) and Vertex Pharmaceuticals (VRTX) continue to act well, though they haven’t been easy to trade either.
Meanwhile, megacap techs continue to weaken. Apple (AAPL), which on Monday flashed an early buy signal, undercut short-term lows Thursday. Microsoft (MSFT) is nearing its June lows while Google parent Alphabet (GOOGL) set a 19-month closing low.
NBIX stock is on IBD Leaderboard. Microsoft and Google stock are on IBD Long-Term Leaders. VRTX stock is on the IBD Big Cap 20.
FedEx Earnings
After the close, FedEx reported fiscal first-quarter earnings fell 21% vs. a year earlier vs. views for an 18% gain. Revenue rose modestly but slightly missed forecasts. The shipping giant also pulled fiscal 2023 guidance and announced sweeping cost-cutting measures as it faces declining shipping volumes. FedEx had been scheduled to release Q1 results on Sept. 22.
FDX stock plunged 17% in overnight trading. Archrival UPS (UPS) sank 6%. Amazon.com (AMZN) fell 2%. Amazon has reduced its ties with FedEx, but the warning may be bad news for e-commerce overall.
Separately, General Electric (GE) said continued supply-chain issues are pressuring cash flow. GE stock fell 4% overnight.
Dow Jones Futures Today
Dow Jones futures dropped 0.5% vs. fair value. S&P 500 futures fell 0.6%. Nasdaq 100 futures declined 0.75%.
The 10-year Treasury yield fell 1 basis point to 3.45%.
China’s economy showed signs of perking up last month amid new stimulus measures. August industrial production grew 4.2% vs. a year earlier, topping views for 3.8%. Retail sales rose 5.4%, besting forecasts for 3.5%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally
The stock market rally opened higher Thursday but that didn’t last, as selling soon took hold.
Jobless claims fell yet again to a three-month low, but other data, including August retail sales, generally pointed to a weaker economy than expected, but with easing price pressures. The Atlanta Fed’s GDPNow tool estimates Q3 GDP growth of just 0.5% vs. its outlook for 2.5% back in August.
The Dow Jones Industrial Average fell 0.6% in Thursday’s stock market trading. The S&P 500 index lost 1.1%. The Nasdaq composite gave up 1.4%. The small-cap Russell 2000 lost 0.7%.
Apple stock sank 1.9% to 152.37, undercutting the low of its already hefty handle. After gapping up above its 50-day and 200-day lines Monday, shares plunged back below those key levels in Tuesday’s market meltdown.
Microsoft stock sank 2.7% to 245.38 Thursday, the lowest point since its mid-June bottom. Google stock fell 2% to 102.91, not undercutting its May 24 intraday low but the worst close since April 2022.
U.S. crude oil prices sank 3.8% to $85.10 a barrel. Natural gas prices plunged 8.7% as an averted rail strike will keep coal shipments going. Natgas had spiked on Wednesday.
The 10-year Treasury yield rose 5 basis points to 3.46%, despite the lackluster economic data. That’s just below the 11-year high of 3.48% set on June 14. The one-year yield has topped 4%.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) slumped 2.1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) lost 1%. The iShares Expanded Tech-Software Sector ETF (IGV) gave up 3.2%, with Adobe and MSFT stock major components. The VanEck Vectors Semiconductor ETF (SMH) retreated 1.8%.
SPDR S&P Metals & Mining ETF (XME) declined 2.75%. The Energy Select SPDR ETF (XLE) fell 2.6% and the Financial Select SPDR ETF (XLF) edged up 0.3%. The Health Care Select Sector SPDR Fund (XLV) climbed 0.6%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) rose 2.2% and ARK Genomics ETF (ARKG) 1.8%.
Five Best Chinese Stocks To Watch Now
NBIX Stock
NBIX stock rose 2.5% to 106.93 on Thursday. Neurocrine Biosciences now has a flat base with a 109.36 buy point, according to MarketSmith analysis. Shares have flashed some early entries in the last couple of weeks, but quickly pulled back. Soon after Wednesday’s open, NBIX stock skidded to 100.46, testing its 50-day line and the top of a prior base. In theory, a trader could have bought Neurocrine as it rebounded from its 50-day line, but it would have taken a brave soul to place that bet given the market conditions.
The relative strength line is at a new high, reflecting NBIX stock’s strong outperformance in a weak market.
VRTX Stock
VRTX stock climbed 1% to 287.67, just below 50-day line. Vertex Pharmaceuticals flashed some early buy signals late last week, but fell 4.4% on Tuesday, dropping below its 50-day.
In a few days, Vertex stock may have its own flat base.
Market Rally Analysis
The stock market rally is showing no appetite for bouncing back. After Wednesday’s tentative, lackluster rebound from Tuesday’s sell-off, the major indexes wiped out those gains easily.
The Nasdaq 100, with Apple, Microsoft and Google stock key weights, undercut its Sept. 6 intraday low. The Nasdaq and S&P 500 have not yet undercut the Sept. 6 lows. but both set their worst closes since July.
The Nasdaq closing below the Sept. 6 low would likely spell the end for the long-ailing market rally.
On a technical basis, the major indexes need to get back above their 50-day moving averages. Their 21-day lines are now below the 50-day.
The looming Fed meeting adds to the risks over the next few days. More broadly, the market will likely struggle to make lasting advances until there is a strong sense that the Fed will slow and soon pause rate hikes. That had been the hope heading into the CPI inflation report on Tuesday. But no longer.
Meanwhile, not only is inflation higher than believed just a few days ago, economic activity is weaker. So the Federal Reserve will be imposing more “pain” amid a struggling economy.
A recession — or a zero-growth economy with tight labor markets — will be tough for businesses to navigate.
Time The Market With IBD’s ETF Market Strategy
What To Do Now
The market rally is once again barely hanging on. Far too many intriguing stocks will flash a buy signal then reverse lower the next day. It’s just an extremely difficult environment to be investing in.
Until the major indexes are back above their 50-day moving averages, investors should have modest exposure, at most, and be extremely cautious about any new buys. Clarity on a Fed rate hike end game would be nice, but that may not come for several weeks or more.
Market conditions could quickly improve or deteriorate. If it’s the former, you’ll want to have an up-to-date watchlist. If it’s the latter, you’ll be glad you worked on watchlists vs. buying new stocks.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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On-chain metrics hint at a bearish outlook for Bitcoin
Blockchain analytics provider Glassnode has depicted a bearish scenario for Bitcoin as on-chain metrics suggest increased selling pressure is imminent.
In its weekly analytics report on Feb. 21, on-chain metrics firm Glassnode said that Bitcoin bulls “face a number of headwinds,” referring to increasingly bearish network data.
The researchers pointed at the general weakness in mainstream markets alongside wider geopolitical issues as the reason for the current risk-off sentiment for crypto assets.
“Weakness in both Bitcoin, and traditional markets, reflects the persistent risk and uncertainty associated with Fed rate hikes expected in March, fears of conflict in Ukraine, as well as growing civil unrest in Canada and elsewhere.”
It added that as the downtrend deepens, “the probability of a more sustained bear market can also be expected to increase.” Bitcoin is currently trading down 47% from its November all-time high and has been down-trending for the past 15 weeks.
A lack of on-chain activity is one of the distinct signals of a bearish Bitcoin market. The number of active addresses or entities is currently at the lower bound of the bear market channel which depicts on-chain activity during periods of sideways or down trending markets, suggesting a decrease in demand and interest.
Glassnode reported that around 219,000 addresses have been emptied over the past month suggesting that it could be the beginning of a period of outflows of users from the network.
It calculated a short-term holder realized price on an aggregate cost basis which worked out at $47,200 meaning that the average loss at current prices is around 22% for those still holding the asset.
“The longer that investors are underwater on their position, and the further they fall into an unrealized loss, the more likely those held coins will be spent and sold.”
There were several other measurements of long and short-term on-chain positions culminating in the conclusion that there is a total of 4.7 million BTC currently underwater. More than half of it, or 54.5% is held by short-term holders (less than 155 days), “whom are statistically more likely to spend it,” it added.
Related: ‘Coin days destroyed’ spike hinting at BTC price bottom? 5 things to watch in Bitcoin this week
Crypto Twitter has also been awash with bearish sentiment over the past few days and the Bitcoin Fear and Greed Index is currently registering a 20 — “extreme fear”.
Not everything will last in crypto.
Quick thoughts on the fallout of a bear market:
— Jason Choi (@mrjasonchoi) February 21, 2022
At the time of writing, BTC prices had fallen 6% over the past 24 hours to trade at $36,738 according to CoinGecko. Bitcoin is now priced very close to its lowest level of 2022, which was just over $35,000 on Jan. 23.
On the positive side, on Feb. 19 Cointelegraph reported that the inactive Bitcoin supply is nearing record levels with more than 60% of BTC remaining unspent for at least a year. 3AC co-founder Zhu Su commented that many people that bought BTC in 2017 and 2018 are still hodling, adding “Anecdotally many of these ppl are staying humble this time and buying every month regardless of what else is happening.”
Dow Jones Futures Rise On U.S.-Russia Meeting After Market Rally Flashes Bearish Signal
Dow Jones futures rose overnight, along with S&P 500 futures and Nasdaq futures, on news of a high-level U.S.-Russia meeting. The stock market rally sold off Thursday, with the S&P 500 tumbling back below its 200-day line as Russia-Ukraine tensions once again were front and center.
X
Roku (ROKU) reported mixed earnings after the close. Roku stock plunged overnight.
Deere (DE) earnings are on tap Friday morning, with DE stock holding around a buy zone. Apple (AAPL) and UNP stock are also showing some strength. But Nvidia (NVDA) sold off following earnings. Tesla (TSLA) reversed downward amid some negative headlines.
Russia Invasion Threat ‘Very High’
Secretary of State Anthony Blinken will meet with Russian Foreign Minister Sergey Lavrov late next week, a State Department spokesman said Thursday night, “provided there is no further Russian invasion of Ukraine.” That raised some hopes for a peaceful resolution to the ongoing Ukraine crisis.
Earlier, President Joe Biden warned that the threat is “very high” that Russia will likely invade Ukraine “in the next several days.”
U.S. officials have said Russia is massing additional forces near the Ukraine border, refuting Kremlin claims that it’s withdrawing some troops.
Russia accused Ukraine of genocide on Thursday, offering a possible pretext to invasion. Moscow also expelled the No. 2 official at the U.S. embassy from the country.
Key Earnings
Roku earnings topped views Thursday night, along with user levels. But revenue came in light and the streaming media platform guided low on Q1 revenue. Roku stock fell 22% overnight. Shares already sold off 10% in Thursday’s regular session to 144.71. Roku stock is set to break below its late January lows to its worst level since mid-2020. Shares peaked at 490.76 in July 2021.
Heading into Friday’s earnings, Deere stock fell 2.6% to 380.53 on Thursday, back below the 388.20 handle buy point. DE stock also seems to be forming a new handle for the broader consolidation going back nine months. The relative strength line for DE stock has been trending higher for several weeks and is at a nine-month highs.
Stocks In Focus
Apple stock fell 2.1% to 168.88 on Thursday, just below its 50-day line. But it’s not far from a cup-with-handle buy point of 176.75. The RS line for AAPL stock is holding at record highs.
Union Pacific (UNP) dipped 1.1% to 250.99. It’s just below a 256.21 buy point in a flat base that’s just 8% deep, according to MarketSmith analysis. The rail operator reclaimed its 50-day line on Tuesday. Even at the traditional buy point, UNP stock would be close to its 50-day line.
On the downside, Nvidia stock tumbled 7.6% on Thursday. Nvidia earnings and guidance were strong late Wednesday, though there were some concerns about margins. NVDA stock had been coming up to short-term highs, a trendline and a falling 50-day line, signaling a possible aggressive entry. But Nvidia stock was turned away hard. The negative Nvidia earnings reaction reflects how unforgiving the current market can be when it comes to earnings.
Tesla stock sank 5.1% to 876.35. On Thursday, the National Highway Traffic Safety Administration announced yet another Tesla probe, this time involving Autopilot “phantom braking” in up to 416,000 Model 3 and Model Y vehicles. Complaints of random, repeated braking, sometimes at highway speeds, have mounted in recent months. Also, Consumer Reports named the Ford Mustang Mach-E as its top EV pick, replacing the Tesla Model 3. TSLA stock has traded relatively tightly in recent weeks after weeks of whipsaw action. But Tesla stock has been hitting resistance at the 21-day moving average. Holding the 200-day line is important, while there is not a clear early entry right now. The official buy point is 1,208.10.
Nvidia and Tesla stocks are on IBD Leaderboard. Nvidia stock also is on the IBD 50 list. Union Pacific (UNP) was Thursday’s IBD Stock Of The Day.
The video embedded in this article discussed the shaky market rally and analyzed Apple stock, Commercial Metals (CMC) and CrowdStrike (CRWD).
Dow Jones Futures Today
Dow Jones futures rose 0.5% vs. fair value on news of the Blinken-Lavrov meeting. S&P 500 futures climbed 0.6% and Nasdaq 100 futures gained 0.8%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally
The stock market rally opened solidly lower and extended losses, with Russia-Ukraine news in focus. The Dow Jones Industrial Average fell 1.8% in Thursday’s stock market trading. The S&P 500 index sank 2.1%. The Nasdaq composite tumbled 2.9%. The small-cap Russell 2000 slumped 2.6%
The 10-year Treasury yield fell 8 basis points to 1.97%. April gold futures rose 1.6% to $1,902 per ounce, the highest price since June. Investors rushed into U.S. Treasuries and gold as safe havens amid Russia fears.
Crude oil futures fell 2% to $91.76 a barrel. While Russia tensions have supported energy prices, Iran claims that a new nuclear deal is nearing. A new Iran nuclear deal would pave the way for a big increase in Iranian oil exports.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) gave up 2.8%, while the Innovator IBD Breakout Opportunities ETF (BOUT) was off 0.8%. The iShares Expanded Tech-Software Sector ETF (IGV) dived 4.4%. The VanEck Vectors Semiconductor ETF (SMH) skidded 4%, with Nvidia stock a major holding.
SPDR S&P Metals & Mining ETF (XME) dipped 0.5% and Global X U.S. Infrastructure Development ETF (PAVE) lost 1.6%. U.S. Global Jets ETF (JETS) descended 2.6%. SPDR S&P Homebuilders ETF (XHB) also fell 2.6%. The Energy Select SPDR ETF (XLE) edged down 0.2% and the Financial Select SPDR ETF (XLF) retreated 2.5%. The Health Care Select Sector SPDR Fund (XLV) gave up 1.6%
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) skidded 6.4% and ARK Genomics ETF (ARKG) sold off 5.45%. Tesla stock remains the No. 1 holding for Ark Invest’s ETFs. Roku stock also is a notable ARK holding.
Five Best Chinese Stocks To Watch Now
Market Rally Analysis
The stock market rally retreated Thursday amid rising concerns about a Russia invasion of Ukraine.
Setting aside any geopolitical news, the market’s technical action is poor. The S&P 500 index fell sharply back below its 200-day line. The Dow Jones undercut the low of its recent range. The S&P 500 and Nasdaq composite are still technically within a recent range, but closed at their worst levels since late January. The S&P 500 index once again closed below the low of its Jan. 31 follow-through day, a bearish signal. For the first time, the Nasdaq composite also closed below its FTD low.
The risks are growing that the major indexes break below their Jan. 24 lows, signaling a new leg in a market correction.
If the market rally were to rebound, it would face a number of hurdles. The S&P 500 bouncing back above the 200-day line and all the major indexes reclaiming the 21-day lines would be small, initial steps. Moving decisively above their early February highs, which would coincide with the S&P 500’s 50-day line, would be a stronger signal. But there would still be overhead resistance, especially for the growth-heavy Nasdaq.
The headline-driven nature of the market, and the risk that the latest news will be refuted or overtaken moments later, adds to the uncertainty.
Gold and gold stocks are leading right now, which gives a sense of the general market. But if Russia-Ukraine tensions ease, gold and other safe-haven plays could quickly reverse.
Even if the current Russia crisis wanes, the market will still be dealing with hot inflation and a Federal Reserve about to embark on aggressive rate hikes.
Time The Market With IBD’s ETF Market Strategy
What To Do Now
The stock market rally, under pressure for several days, is struggling. The S&P 500 and Nasdaq are threatening to break below their recent ranges. Growth stocks are weak, with a few exceptions such as Apple. Leading stocks are not doing well, outside a few pockets of strength such as energy, fertilizer and hotels. But even those groups can swing dramatically on headlines, and can be hard to hold.
The market is a minefield, with seemingly positive paths quickly turning treacherous. It’s not a good time for significant exposure. If you have some winning stocks, you may want to take at least partial profits to make sure the trades end up positive. If you have losing positions, you should be looking to get out.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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Bitcoin Twitter flips bearish, community responds
As Bitcoin’s (BTC) price slides to 2022 lows, Bitcoin bears have come out to play. Popular names in the BTC space including FTX CEO Sam Bankman-Fried and John Carvalho heeded words of caution overnight, while long-standing gold proponent Peter Schiff and eternal pessimist CryptoWhale were keen to kick the coin while it was down.
A liquidation cascade on Thursday took out more than $318 million BTC positions, over 88% of which were long. The price corrected to around $42,500 per BTC.
News of a mining ban in Kazakhstan and the United States Federal Reserve’s decision to hike rates were likely causes for the slump in crypto market confidence.
Schiff tweeted that if “Bitcoin breaks $42K it’s headed to $30K. If it breaks $30K it could crash to $15k. All this might happen very soon.” He encouraged BTC-leveraged investors to sell now to avoid liquidation at lower prices.
CryptoWhale, a self-proclaimed crypto analyst and perma-bear with upward of 400,000 Twitter followers, said, “Bitcoin is going under $10K this year. Don’t forget that.” A relentless Bitcoin bear, the account has called for a sub-$10,000 BTC since as early as October last year.
Related: Raoul Pal says ‘reasonable chance’ crypto market cap could 100x by 2030
The Bitcoin Fear & Greed Index is at lows not seen since 2021, which is usually the time that BTC OG’s clarion calls are sounded. It registered a score of 15 or extreme fear on Thursday morning.
Bankman-Fried didn’t exactly assuage investors’ concerns about the bearish woes. He recommended that the best thing to do in a bear market is to build before hastily clarifying that “down today doesn’t mean down tomorrow.”
Finally, Carvalho, CEO of recently launched Synonym Software, didn’t mince his words when referring to the recent BTC price movements:
EVERYONE must endure the brutal Bitcoin rite of passage of a bear market where their investments are severely under water.
This includes Elon, Jack, and Saylor.
And you.
— John Carvalho (@BitcoinErrorLog) January 5, 2022
As he points out, the BTC market can be a baptism of fire for newcomers. It could be some time before the bears return to hibernation.
Dow Jones Futures: Stock Market Rally Continues Bearish Trend; Chinese Economic Data Weakens
Dow Jones futures tilted higher Tuesday night, along with S&P 500 futures and Nasdaq futures, as weak Chinese economic data offset a late boost from a Microsoft stock buyback. The stock market rally on Tuesday once again opened higher but then faded, continuing a recent bearish trend. Apple (AAPL) fell as it unveiled the iPhone 13 and other new products.
X
Microsoft (MSFT) late Tuesday announced an 11% quarterly dividend hike to 62 cents a share. The tech giant also announced a $60 billion Microsoft stock buyback program. MSFT stock rose 1% in overnight trade.
Tech giants and chip stocks are holding up reasonably well. MSFT stock, Applied Materials (AMAT), Entegris (ENTG), KLA Corp. (KLAC) and Advanced Micro Devices (AMD) are worth watching. Microsoft, Applied Materials and AMD stock are trying to bounce from their 50-day or 10-week lines. ENTG stock and KLA cleared buy points, at least intraday, after flashing early entries previously.
But investors primarily should be watching, not buying, intriguing stocks as the market rally pulls back.
Microsoft and Apple stock are on IBD Leaderboard. MSFT stock is on IBD Long-Term Leaders. AMAT stock was Tuesday’s IBD Stock Of The Day. ENTG stock was Friday’s Stock Of The Day.
The video embedded in this article analyzed the market action and reviewed Deckers Outdoor (DECK), Microsoft and AMD stock.
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Dow Jones Futures Today
Dow Jones futures were 0.1% above fair value. S&P 500 futures and Nasdaq 100 futures climbed 0.1%.
Microsoft is offering a slim lift to the Dow Jones, S&P 500 and Nasdaq composite, but Dow futures briefly erased modest gains on weak Chinese economic reports.
Chinese retail sales rose just 2.5% vs. a year earlier, far below estimates of 7% and July’s 8.5%. Industrial output climbed 5.3%, missing views for 5.8% and slowing from July’s 6.4%. China’s economy has come under pressure amid Beijing’s crackdown vs. private enterprise and lockdowns in response to various Covid outbreaks.
Early Wednesday, U.S. investors will get the September Empire State manufacturing index and the August industrial production report.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally
The stock market rally opened higher following cooler-than-expected consumer inflation data. But the early modest gains didn’t last.
The Dow Jones Industrial Average sank 0.8% in Tuesday’s stock market trading. The S&P 500 index retreated 0.6%. The Nasdaq composite declined 0.45%. The small-cap Russell 2000 slumped 1.3%.
The Nasdaq has fallen for five straight sessions. The Dow Jones, S&P 500 and Russell 2000 have declined in six of the last seven.
Macau-focused casinos plunged as China mulls new restrictions for the Asian gaming hub. Comcast (CMCSA) tumbled on weaker broadband growth.
Top ETFs
Growth stocks generally did OK overall Tuesday. Meanwhile, many other sectors lost ground.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.25%, after slumping 2.7% on Monday. The Innovator IBD Breakout Opportunities ETF (BOUT) dipped 0.4%. The iShares Expanded Tech-Software Sector ETF (IGV) edged up 0.1%. Microsoft stock is a top IGV holding. The VanEck Vectors Semiconductor ETF (SMH) ticked 0.1% higher. AMD stock, AMAT and KLA are key SMH component.
SPDR S&P Metals & Mining ETF (XME) sank 1.95% and Global X U.S. Infrastructure Development ETF (PAVE) 1.3%. U.S. Global Jets ETF (JETS) fell 1.2%. SPDR S&P Homebuilders ETF (XHB) declined 1.5%. The Energy Select SPDR ETF (XLE) gave up 1.4% and the Financial Select SPDR ETF (XLF) 1.3%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) fell 1.1% and ARK Genomics ETF (ARKG) lost 1.3%.
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Apple iPhone 13 Unveiled
Apple touted four versions of the iPhone 13, offering incremental upgrades to last year’s iPhone 12 series, the company’s first 5G handsets. The Dow Jones tech titan also unveiled the Apple Watch Series 7 wearables, with larger displays and faster charging. Apple also showed off new iPad models.
Apple stock fell nearly 1% to 148.12. It closed just above its 50-day moving average. AAPL stock reversed from record highs last week, losing 3.45% as a federal judge dealt a blow to its App Store money machine.
Stocks To Watch
Microsoft stock rose 0.9% to 299.79 on Tuesday, rebounding slightly from its 10-week line. MSFT stock effectively has a three-weeks tight, offering a 305.94 buy point. That tight action potentially could turn into a flat base, but not until the end of next week. Shares are flirting with breaking a short trend line. Doing so, along with the 10-week line bounce, would provide a slightly early entry.
MSFT stock rose 1% in overnight trade, suggesting a potential buy opportunity Wednesday morning.
AMAT stock edged up 0.5% to 140.14, making a third straight slim gain from its 50-day line. That could offer an early entry. Investors could use either 145.35 or 146.10 as an official buy point. AMAT stock has flirted with new highs for several months, only to pull back.
Entegris stock climbed 3.2% to 128.06, moving above a 126.51 flat-base buy point, according to MarketSmith analysis. That’s after ENTG stock rebounded from its 50-day line starting late last week, offering an early entry.
KLA stock rose as high as 364.79 but faded to close up 0.2% to 356.39. It’s the third straight session in which the chip-gear maker cleared a 356.81 cup-with-handle buy point but failed to close above it. On Thursday, KLA stock flashed an early buy signal, breaking a short trend line and clearing some short-term resistance.
AMD stock advanced 0.9% to 105.73 after finding support at its 10-week line on Monday. Shares are close to breaking a short trend line, which would offer an early entry along with the 50-day bounce. After this week, AMD stock is on track to have a new consolidation with a 122.49 buy point. It would be a base-on-base pattern, sitting on top of a longer cup-with-handle base.
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Market Rally Analysis
Strictly looking at the closes, the stock market rally is in the midst of a normal pullback. The S&P 500 index is drifting toward its 50-day line while the Nasdaq composite is around its 21-day moving average. The Dow Jones keeps hitting resistance at its 50-day line. The Russell 2000 has fallen through its 50-day and is closing in on its 200-day line.
The S&P 500 has rebounded from near its 50-day line multiple times in recent months. Perhaps the market rally will do so again, creating another wave of buying opportunities. But that hasn’t happened yet.
Meanwhile, bullish opens, weak closes are not a good sign. That’s a hallmark of weak markets. As a practical matter, strong opens will lure investors in as stocks flash buy signals, only to be down within a few minutes.
Growth stocks have held up better than most in the recent pullback, though it’s hit or miss. Speculative growth, as shown by ARKK and ARKG, is not acting well overall. Meanwhile, steelmakers and homebuilders have struggled. Energy stocks, which have been coming back, struggled on Tuesday. Financials and retailers have been mixed.
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What To Do Now
With the market rally pulling back to test key support levels, don’t cheat and try to bet on a rebound. It’s not a great time to be adding exposure. Instead, investors likely should be trimming some holdings, even if it’s simply from cutting losers and trimming some winners.
Instead of trying to step on the gas in a choppy or weak market, keep reworking those watchlists. Spot potential setups so you can act quickly as the market shapes up again.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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Bitcoin prepares for $50K showdown as futures traders turn ‘modestly bearish’ on BTC
Bitcoin (BTC) edged closer to $50,000 on Aug. 22 as concerns over a bearish downturn made a timely reappearance.
“Modestly bearish” signs accompany $50,000 run-up
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting a high of $49,830 on Bitstamp Sunday — itself a three-month record.
The weekend had proven the staying power of higher levels, with even lower volumes failing to spark a comedown.
“So far, so good for BTC,” trader and analyst Rekt Capital summarized.
Nonetheless, as $50,000 loomed, concerns began to mount about the overall strength of the market.
As noted by monitoring resource Material Indicators, trader habits were hinting at belief in lower levels returning. One futures setup involved $32,000 and $34,000 for the August and September end-of-month settlements respectively.
This, the account argued, was “modestly bearish.”
“In addition, we still have a lot of 50k puts, suggesting we get rejected here,” it added, also highlighting the “overhepositive funding rates across trading platforms.
Such a perspective naturally grates with the overall consensus among analysts, notably with the stock-to-flow models and their creator’s “worst case scenario” for minimum prices each month.
For August, this stands at $47,000, while September’s $43,000 expectation is only lower for technical reasons, PlanB explained this week.
September $43K floor / worst case is not a typo. The small dip is caused by the data. However, it is a worst case estimate, my base case is of course the S2F estimate. Also, October $63K worst case / floor is more in line again. So Sep is just a data blip, nothing to worry about. https://t.co/tj6SSwSzKR
— PlanB (@100trillionUSD) August 16, 2021
$50,000 points way to all-time highs
Similarly optimistic, but just as level-headed, was the popular trader known as John Wick on Twitter.
Related: Price analysis 8/20: BTC, ETH, ADA, BNB, XRP, DOGE, DOT, SOL, UNI, BCH
“So far a bit of supply front running fears of $50k distribution,” he said as part of comments on Bitcoin tackling the signficiant $50,000 mark.
“If we can get past this area of resistance I’ll feel even more confident about ATH’s this year.”
AT the time of writing, BTC/USD traded at just above $49,000 ahead of the return of professional traders and institutions Monday.
Where Does Wall Street Think Oil Is Heading?
After a volatile week of reversals and re-reversals, oil prices have rebounded a bit again on Wednesday thanks to an overall risk-on theme returning to the markets after the Senate passed the crucial $1 trillion infrastructure spending bill. September WTI crude (CL1:COM) closed +2.7% to $68.29/bbl, while October Brent (CO1:COM) settled +2.3% to $70.63/bbl.
The biggest challenge for oil markets has been the fast-spreading Covid-19 Delta variant hurting confidence about a global economic recovery, with market participants watching the rapidly swelling infection figures with considerable alarm. Even more worrying are new developments in China, the world’s biggest crude importer and once the world’s Covid-19 epicenter, after Beijing imposed new lockdowns in at least 144 of the worst-hit areas nationwide in a bid to stop the spread. Beijing has opted to employ its tried-and-tested method of targeted lockdown that has been successful in stopping at least 30 Covid-19 flare-ups in the past.
Adding to the pressure on the oil bulls are reports that the Biden administration is worried about high oil prices and wants OPEC+ to increase production in order to lower prices for consumers. According to the report, U.S. officials spoke this week with representatives from several OPEC members, including Saudi Arabia and the United Arab Emirates.
The Biden administration is reportedly saying the July OPEC+ agreement to gradually ease production cuts into next year is not enough during a “critical moment in the global recovery.“
Bullish: some analysts are saying that the worst could be in the rearview mirror, and oil prices could have established a new floor.
When the July WTI contract managed to close Monday above the July low at $66.41/bbl, it marked that level as a “line in the sand for the oil market.”If support holds, which it likely will as long as the news flow regarding COVID does not continue to materially deteriorate, then WTI will remain range-bound between aforementioned support at $66 and resistance from July at $75 a barrel,” Tom Essaye of the Sevens Report has told MarketWatch.
Related: How Can Emerging Markets Capitalize On Geothermal Energy’s Potential? As with every other sector, there’s a pretty big dichotomy in Wall Street regarding the oil price outlook, with both strongly bullish and strongly bearish views.
The good news: Wall Street remains largely bullish about the oil price trajectory.
Here are different oil price outlooks by a cross-section of Wall Street experts.
The Bulls:
UBS
Treasury yields have climbed sharply over the past year, with the 10-year note going from 0.675% to 1.356% currently. Indeed, Treasury yields are now matching the overall S&P 500 (NYSEARCA:SPY) dividend yield.
UBS maintains a pro-cyclical bias, expecting rates to climb further. With a strong tilt to recovery, UBS says it favors Energy (NYSEARCA:XLE), Consumer Discretionary (NYSEARCA:XLY), Financials (NYSEARCA:XLF) and Industrials (NYSEARCA:XLI).
“Overall, our outlook for growth in the economy and corporate profits remains unchanged and our fixed income team expects interest rates to reverse course and for the 10-year Treasury yield to rise toward 2% by the end of the year. We therefore view the recent underperformance of cyclical segments as temporary.”
Bank of America
Back in June, a Bank of America analyst made waves after predicting that oil prices could be headed to $100.
BofA commodities strategist Francisco Blanch said he sees a case for $100 a barrel oil in 2022 as the world begins facing an oil supply crunch:
“First, there is plenty of pent up mobility demand after an 18 month lockdown. Second, mass transit will lag, boosting private car usage for a prolonged period of time. Third, pre-pandemic studies show more remote work could result in more miles driven, as work-from-home turns into work-from-car. On the supply side, we expect government policy pressure in the U.S. and around the world to curb capex over coming quarters to meet Paris goals. Secondly, investors have become more vocal against energy sector spending for both financial and ESG reasons. Third, judicial pressures are rising to limit carbon dioxide emissions. In short, demand is poised to bounce back and supply may not fully keep up, placing OPEC in control of the oil market in 2022,” explained Blanch.
Blanch’s bullish prediction is so far the boldest by mainstream Wall Street banks.
Goldman Sachs
Two months ago, U.S. investment bank Goldman Sachs predicted that Brent would reach $80 a barrel in the summer.
Well, that was before the Delta variant started running riot everywhere.
Goldman Sachs has now lowered its forecast after the latest pandemic trends, but still expects Brent crude oil to average $75 a barrel in the third quarter.
Related: New Energy Companies Post Mixed Earnings Despite Pivot To Renewables
Regarding the worrying trend of rising inflation, Goldman Sachs shares the Fed’s view that the price pressures are largely transitory and should subside in the coming months. However, should high inflation persist beyond six months, Goldman says companies with pricing power are likely to do well. Sectors that have historically done well in high-inflation environments are Energy, Real Estate (NYSEARCA:XLRE), Health Care (NYSEARCA:XLV) and Consumer Staples (NYSEARCA:XLP).
The Bears:
Morgan Stanley
A few days ago, Morgan Stanley went full bear on the energy sector, saying it prefers the Utilities sector due to the latter’s superior defensive qualities.
“With our more defensive tilt and the risk reward skews outlined above, we’re changing our order of preference between Utilities and Energy,” Morgan Stanley says.
MS raised Utilities to Equal Weight from Underweight and downgraded Energy to Underweight from Equal Weight.
Over the past week, XLU was one the best-performing sectors after climbing 4.9% while Energy was lower among the cyclicals, up a mere 0.2%.
Nevertheless, MS says it “maintain a positive bias given strong free cash flow projections, but given our more cautious view on risk assets, the limited house upside forecast for oil, the importance of rate of change in oil price to sector performance, our revisions breadth analysis above, and a worsening technical picture for Energy equities, our top down preference skews more negative pending a price reset.“
So, MS might not be so bearish after all.
Here’s a rundown of the latest brokerage forecasts for 2021 average prices per barrel for Brent and WTI:
Brokerage/Agency Brent/WTI Date Revised
Barclays $69.00/$67.00 July 22
Goldman Sachs Commodities Research $72.70/$69.80 July 20
Credit Suisse $70.00/$67.00 July 18
ABN Amro $66.00/$63.00 June 23
Citi Research $72.00/$64.00 June 22
BofA Global Research $68.00/$65.00 June 20
Societe Generale $64.00 — June 8
Commerzbank $65.00 $62.00 May 6
Barclays $66.00/$62.00 March 23
BofA Global Research $63.00 $60.00 March 15
Societe Generale $65.60 – March 9
Goldman Sachs Equity Research $72.61/$69.75 March 5
Commerzbank $62.00/$59.00 March 5
Goldman Sachs Commodities Research $72.70/$69.80 March 5
ABN Amro $63.00/$60.00 March 5
JP Morgan $67.00/$65.00 March 4
ING Economics $65.00 – March 4
UBS* $75.00 – March 4
Goldman Sachs Commodities Research $68.90/$66.00 +March 1
Barclays $62.00/$58.00 Feb. 25
BofA Global Research $60.00/$57.00 Feb. 22
UBS* $68.00/$65.00 Feb. 16
ABN Amro $55.00/$51.00 Feb. 12
Barclays $55.00/$52.00 Jan. 25
ANZ $57.90/$55.30 Jan. 15
Citi Research $59.00 – Jan. 8
Standard Chartered $51.00/$49.00 Jan. 6
UBS* $63.00/$60.00 Jan. 6
* indicates end-of-period forecast
+ Denotes forecast as of March 1, and not revision date.
By Alex Kimani for Oilprice.com
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