US Strategy – Churning

The Financials (XLF) went from the worst performing sector on Wednesday to the best performing sector yesterday.  As a result, the XLF moved back to bullish TRADE and TREND.  Yesterday, the S&P 500 closed at 1,093, up 1.1%.  So much for the big "correction," CRASH CALLERS got run over again!   

 

On the MACRO front, the markets support came from a key batch of economic data out of China that helped put the global RECOVERY trade on the front burner. Also, the trend of better-than-expected Q3 earnings continued yesterday, especially in Technology and Healthcare. A bounce in the dollar early in the day, weighed on The Energy sector. 

 

Yesterday, initial jobless claims rose 11,000 to 531,000 for the week-ended October 17th.  Although the four-week moving average continued to trend lower.  Lastly on the MACRO front, leading indicators rose a better-than-expected 1% month to month in September, marking a sixth consecutive monthly increase.

 

The portfolio activity included buying the Taiwan Index fund (EWT) and shorting the Consumer Discretionary (XLY).  We bought more SONC and shorted Nokia (NOK).  From a Research perspective, Rebecca Runkle remains bearish on both NOK and RIMM; she likes AAPL and MOT.  Nokia is up here on the day, so we'll take that as our entry point.

 

Yesterday, only three sectors outperformed the S&P 500 and every sector was up on the day.   The three best performing sectors were Financials (XLF), Consumer Discretionary (XLY) and Materials (XLB), while Energy (XLE), Consumer Staples (XLP) and Utilities (XLU) were the bottom three. 

 

The NAR is due to report at 10am existing homes sales.  A Bloomberg survey suggests that sales improved in September to the highest level in two years.  The survey suggests that sales rose 4.9% to a 5.35 million annual rate; the improvement would be the fifth in six months. 

 

Today, the set up for the S&P 500 is: TRADE (1,071) and TREND is positive (1,009).   The Research Edge quantitative models have 9 of 9 sectors in the S&P 500 positive on TREND and 9 of 9 sectors are positive from the TRADE duration.  Yesterday, the Financials moved back to positive on both durations.           

 

The Research Edge Quant models have 1.0% upside and 2.0% downside in the S&P 500.  At the time of writing the major market futures were up. 

 

The Research Edge MACRO team.

 

 

US Strategy – Churning	 - charthp1

 

US Strategy – Churning	 - s pperf

US Strategy – Churning	 - s plevels

 

 


Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more