Stocks Rally Ahead of Long Weekend

Adam Sarhan  |

 

Stocks edged higher last week as investors digested the latest round of mixed economic and earnings data. In the short term, the market looks a little extended and due for a little pullback to digest its recent gain. The big take-away is that the stock market remains strong as we have yet to see any conclusive "data" that suggests the Fed should raise rates anytime soon. In fact, most of the data continues to be lackluster at best which means the "data-dependent" Fed will likely not raise rates anytime soon (which, for now, is bullish for stocks). Looking at earnings, so far,approximately 481 companies in the S&P 500 (96%) have reported Q1 results and 63% have had a positive EPS surprise and 33% had a negative EPS surprise with the reminder meeting estimates. The fact that the market has edged higher since earnings season began bodes well for this aging bull market and suggests higher prices will likely follow, for now. History shows us that some of the market's strongest performers occur from big gaps up on earnings and some of the weakest stocks gap down after reporting numbers.

The big winners (so far) from earnings season include: Amazon.com (AMZN) , Netflix (NFLX) , Hasbro (HAS) , Domino’s Pizza (DPZ) , Skechers (SKX) , Dunkin (Donuts) Brands Group (DNKN) , Microsoft Corp (MSFT) , O’Reilly Automotive (ORLY) , and YUM Brands (YUM) , Skywest (SKYW) , Web.com (WWWW) , Equinix (EQIX) , Styngenta (SYT) , Nutri System (NTRI) , Brink's Co (BCO) , Teradyne Inc (TER) , Skyworks Solutions (SWKS) , GoPro (GPRO) , Estee Lauder (EL) , Abiomed Inc (ABMD) , Golar LNG ($GLNR), Energizer Holdings (ENR) , RetailMeNot, Inc (SALE) , Herbalife (HLF) , BlueBird Bio (BLUE) , HubSpot Inc ($HUBS), Alibaba Group (BABA) , Qorvo Inc ($QRVO), Visteon Copr (VC) , and Norwegian Cruise Line Holdings (NCLH) .

On the downside: Whole Foods Market (WFM) , Keurig Green Mountain (GMCR) , Kate Spade ($KATE), Lannett Co (LCI) , Nu Skin (NUS) , Terra Nitrogen (TNH) , Tumi Holdings (TUMI) , Noodles & Company (NDLS) , Qualys  (QLYS) , Groupon Inc (GRPN) , News Corporation (NWSA) , Vitamin Shoppe Inc, (VSI) , Fossil Inc (FOSL) , Frontier Communication (FTR) , TriNet Group ($TNET), Zulily Inc (ZU) , Weight Watchers (WTW) , Walter Energy Inc. (WLT) , Skullcandy (SKUL) Twitter (TWTR) , Yelp (YELP) , LinkedIn (LNKD) , Constant Contact (CTCT) , Accuray (ARAY) , Cooper Tire & Rubber (CTB) , Abaxis (ABAX) , Texas Instruments (TXN) , Buffalo Wild Wings (BWLD) , Baidu Inc. (BIDU) , Stratasys (SSYS) , Harman (HAR) , Nokia (NOK) , Travelers (TRV) , 3M (MMM) , Chipotle (CMG) , Pulte Group ($PHM), Biogen Inc (BIIB) , Generac Holdings (GNRC) , First Solar (FSLR) , and American Express (AXP) , just to name a few. 

Monday-Wednesday's Action: Economy Data Is Not Impressive

Stocks rallied on Monday helping the Dow Jones Industrial Average and the benchmark S&P 500 hit new record highs. Stocks rallied after the National Association of Home Builders' survey missed estimates and showed builder confidence fell two points in May. Separately, European stock markets and the Euro were under slight pressure after rumor spread that Greece was on the verge of bankruptcy. Greek bond yields soared, with the 10-year jumping a whopping 7%, after a leaked internal memo from the International Monetary Fund showed the country had little chance of making the June 5 payment. Spanish and Italian bond yields also jumped more than 7% on related fears. 

Stocks ended mixed on Tuesday as the U.S. dollar soared and a slew of commodities fell. Overseas, the euro tanked (greenback surged) after Benoit Coeure, an executive member of the European Central Bank, said the central bank plans to "front load" its QE (bond buying) program in the early part of the summer. This basically means they are pumping even more money into the system to help boost asset prices and, in turn, send their equity markets higher and the euro lower.  In the U.S., housing starts jumped +20.2% in April to 1.135 million, beating estimates for 1.019M. 
 
Stocks were quiet on Wednesday as the greenback edged higher as a slew of currencies and commodities fell. The Dow transports fell 1.5% and remained under serious pressure. A slew of airline stocks were hammered and Southwest (SAVE) plunged over 8.5% at one point in the day. At 2pm EST, the Federal Reserve released the minutes of their latest Fed meeting which reiterated their recent data-dependent stance. Chicago Fed President Charles Evans said in Munich that a rate hike is not likely to be appropriate until early 2016.

Thursday-Friday’s Action: Stocks Flirt With New Highs

On Thursday, stocks were quiet as investors digested the latest round of mixed economic data. Existing home sales fell 3.3% in April, missing estimates for a gain of 1% to 5.24 million units. A separate report showed that manufacturing PMI came in at 53.8 in May, missing estimates for a gain of 54.5. The May U.S. Philadelphia Fed Index rose to 6.7, missing estimates for 8.0. The Conference Board said its leading indicator index, which forecasts future economic activity, rose by 0.7%, beating estimates for a 0.3% gain.  Weekly jobless claims fell to  274k, slightly above the 271k forecast. The 4-week moving average remains the lowest since April 2000. Stocks drifted lower on Friday as the transports continue to drag stocks lower. The consumer price index (CPI) rose by 0.1%, matching estimates. Core prices (which strip out food and energy) rose by 0.3%, the fastest gain since January 2013.

Market Outlook: The Central Bank Put Is Alive And Well

Remember, in bull markets surprises happen to the upside. This has been our primary thesis since the end of 2012. We would be remiss not to note that this very strong bull market is aging (celebrated its 6th anniversary in March 2015) and the last two major bull markets ended shortly after their 5th anniversary; 1994-2000 & 2002-Oct 2007). To be clear, the central bank put is very strong and until material damage occurs, the stock market deserves the longer-term bullish benefit of the doubt. As always, keep your losses small and never argue with the tape. Join our free mailing list on FindLeadingStocks.com and get free professional watchlist in your inbox each week.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

Companies

Symbol Name Price Change % Volume
HUBS HubSpot Inc. 184.85 -0.56 -0.30 478,937 Trade
NUS Nu Skin Enterprises Inc. 36.41 -1.33 -3.52 1,092,875 Trade
MMM 3M Company 178.15 0.41 0.23 2,643,095 Trade
CMG Chipotle Mexican Grill Inc. 869.71 -10.13 -1.15 323,418 Trade
BABA Alibaba Group Holding Limited American Depositary Shares each representing one 213.75 -5.38 -2.46 18,143,867 Trade
FTR Frontier Communications Corporation 0.58 -0.01 -1.51 1,604,918 Trade
GPRO GoPro Inc. 4.44 0.02 0.45 3,732,110 Trade
BIDU Baidu Inc. 130.00 -4.20 -3.13 4,309,815 Trade
YELP Yelp Inc. 36.12 0.19 0.53 476,290 Trade
CTCT Constant Contact Inc n/a n/a n/a 0 Trade
FOSL Fossil Group Inc. 8.17 -0.16 -1.86 691,135 Trade
HLF Herbalife Nutrition Ltd. 41.90 -1.79 -4.10 978,743 Trade
TRV The Travelers Companies Inc. 134.78 0.59 0.44 1,755,111 Trade
TUMI Tumi Holdings Inc. n/a n/a n/a 0 Trade
EL Estee Lauder Companies Inc. (The) 205.34 -3.53 -1.69 2,421,063 Trade
DPZ Domino's Pizza Inc 285.10 -2.92 -1.01 479,082 Trade
SSYS Stratasys Ltd. 20.09 -1.51 -6.99 891,724 Trade
BLUE bluebird bio Inc. 87.26 -2.46 -2.74 749,604 Trade
AXP American Express Company 135.11 3.74 2.85 8,612,529 Trade
QRVO Qorvo Inc. 113.39 -5.29 -4.46 2,411,997 Trade
TNET TriNet Group Inc. 56.32 -0.68 -1.19 255,030 Trade
TWTR Twitter Inc. 33.19 -0.70 -2.07 12,336,565 Trade
TXN Texas Instruments Incorporated 130.52 -3.73 -2.78 5,606,800 Trade
NDLS Noodles & Company 7.00 -0.06 -0.78 476,419 Trade
LCI Lannett Co Inc 8.95 -0.85 -8.67 1,613,577 Trade
SKX Skechers U.S.A. Inc. 39.49 -1.10 -2.71 2,006,328 Trade
ABMD ABIOMED Inc. 182.98 -1.48 -0.80 557,906 Trade
GMCR Keurig Green Mountain Inc n/a n/a n/a 0 Trade
NWSA News Corporation 13.94 -0.41 -2.82 1,806,720 Trade
LNKD LinkedIn Corporation Class A n/a n/a n/a 0 Trade
NOK Nokia Corporation Sponsored American Depositary Shares 4.05 -0.01 -0.25 29,042,751 Trade
CTB Cooper Tire & Rubber Company 27.82 -0.71 -2.49 217,188 Trade
NCLH Norwegian Cruise Line Holdings Ltd. 55.84 -2.38 -4.09 2,244,658 Trade
SKUL Skullcandy Inc. n/a n/a n/a 0 Trade
FSLR First Solar Inc. 51.94 -0.08 -0.15 1,729,342 Trade
BIIB Biogen Inc. 278.14 -6.07 -2.14 1,260,633 Trade
PHM PulteGroup Inc. 43.71 -0.14 -0.32 4,147,380 Trade
ARAY Accuray Incorporated 3.93 -0.05 -1.26 779,142 Trade
NFLX Netflix Inc. 353.16 3.56 1.02 17,939,681 Trade
SWKS Skyworks Solutions Inc. 122.31 -5.88 -4.59 7,203,654 Trade
GRPN Groupon Inc. 2.97 -0.05 -1.66 6,044,804 Trade
GNRC Generac Holdlings Inc. 106.67 3.68 3.57 858,662 Trade
ENR Energizer Holdings Inc. 48.43 -0.07 -0.14 758,948 Trade
HAS Hasbro Inc. 104.68 -0.80 -0.76 1,217,452 Trade
QLYS Qualys Inc. 86.75 -0.26 -0.30 268,018 Trade
HAR Harman International Industries Incorporated n/a n/a n/a 0 Trade
AMZN Amazon.com Inc. 1,861.64 -22.94 -1.22 3,766,181 Trade

Comments

Watchlist

Symbol Last Price Change % Change
AAPL

     
AMZN

     
HD

     
JPM

     
IBM

     
BA

     
WMT

     
DIS

     
GOOG

     
XOM

     
BRK.A

     
FB

     
JNJ

     
WFC

     
T

     
NFLX

     
TSLA

     
V

     
UNH

     
PG

     

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