Wkly Round-Up thru 4/26/19 What Goes Up – Must Keep Going Up??

Hey everyone, this past week’s market performance continues to shine as we are going thru Q1 Earnings Season. And with the first pass view of Q1 US GDP performance surpassing expectations has helped to push markets higher.

Market Soundbites:

• We are seeing record highs in most US Indexes with NQ hitting all-time highs and 2019 highs in the DOW and S&P…which are very close to their all-time highs…Strong US Q1 GDP reading came in at 3.2% helping lift markets into close for the weekend…however we are also seeing a bigger diversion in stock performances since our previous all time highs made this past Sept 2018…looking at the current markets over half of the stocks that were near their peaks are now down….the breadth of the market is narrowing, which is normal as price action moves higher but it does suggest some weakening in momentum…but this also translates more into a “stock picker’s market”, giving those with great chart reading skills an edge…

• Thru this past Friday’s close we’ve seen 236 companies report earnings in the S&P (47%)…and we’re seeing with the lowered expectations of Q1, a beat rate of 80% on EPS which is above average (Q4 saw 73% beat)….but on average, those beating are not moving up as much as those that miss which are being taken to the woodshed (just look at AMZN and 3M/INTC)…and some analysts are not seeing the requisite earnings growth going into Q2 thru Q4 to list these markets even higher as the current forward PE Ratio is still an elevated 17.61…

• And we are seeing the birth of even great stock option trading as the option markets now represent, on a notional basis about 55% of the stock market’s average daily volume and for specific stocks, like AMZN, BA, TSLA, FB ect. the Option Volumes have exceeded their underlying Stock Volume in daily trading…showing market participants are using Options more and more as a trading tool vs just for a hedging instrument…

• Results from a recent Barons Survey of large institutional investors we see the 49% are Bullish, 35% are bearish and 16% are neutral…and 49% believe US Corp Growth will come in somewhere between 0 to 5% for 2019 with over 83% being a net buyer of US Equities in the remainder of 2019…and while the large majority believe the Feds should leave the current interest rates alone, according to the Fed Funds rate it projects about a 63% chance of one rate cut before the end of this year…And regarding a recession the larger percentage believes is will not happen until 2021…gives us a market conundrum of Bonds vs Equities…

Enjoy This Week’s Weekly Round-Up;

Don’t Be A Rat Brain Trader – Be the Red Striped Zebra !!
Trade Smart !!

hpb