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Michael Lebowitz and Lance Roberts



Articles by Michael Lebowitz and Lance Roberts

Stocks Hit All-Time Highs As Rally Continues

1 day ago

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After six exciting green days, stocks hit all-time highs on Thursday as the rally continues. This morning, futures are softer following weak earnings reports from Snapchat (SNAP) and Intel (INTC).

Earnings continue to dominate the news feeds and push individual stocks and markets around. Expect those stocks with earnings announcements to have larger than normal moves. Jerome Powell speaks this morning at 11 am ET. Pay attention to whether or not he sticks with the plans for QE as the recent Fed minutes discuss.

We suspect he will.

What To Watch Today

Economy

At 9:45 ET this morning we will see:

Markit U.S. Manufacturing PMI, October preliminary (60.5 expected, 60.7 in September)Markit U.S. Services PMI, October preliminary (55.2 expected, 54.9 in

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Stocks Climb Toward Highs As Earnings Roll In

2 days ago

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Yesterday, stocks advanced for the 6th day heading towards previous highs as earnings roll in. With little economic news on the calendar, there was little to worry traders currently. The S&P closed inches shy of a record high, while the Dow Jones Industrial Average did set a new high. The NASDAQ fell slightly as technology got weighed down by rising interest rates.

The volatility and downward momentum of just a few weeks ago seems like a long-lost nightmare. The trend is clearly upward, although a test of the 50-dma is still in order to confirm the recent break above resistance.

What To Watch Today

Economy

8:30 a.m. ET: Initial jobless claims, week ended Oct. 16 (297,000 expected, 293,000 during prior week)8:30 a.m. ET: Continuing claims, week ended Oct.

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Bitcoin and $BITO Mania Grip the Stock Market

3 days ago

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$BITO, the first Bitcoin ETF was issued Tuesday morning. The ETF provides retail investors their first true access to Bitcoin without having to open up a crypto wallet account. BITO tracks bitcoin futures and is expected to track the cryptocurrency much closer than the Grayscale Trust (GBTC).

Stocks rallied alongside BITO and posted a fifth straight green day. The index is now well established above its 50dma and aiming for new record highs. However, not surprisingly, the market surge has quickly taken the index back to overbought conditions short-term. Such suggests we could see some consolidation, or a potential retest of the 50-dma, before attempting all-time highs.

What To Watch Today

Economy

7:00 a.m. ET: MBA mortgage applications, week ended Oct. 15

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China Slows As The S&P 500 Goes Into Rally Mode

4 days ago

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Despite China’s economic growth coming to a standstill, with only 0.2% growth in Q3, the S&P 500 was in rally mode. While stocks grind higher, bond traders are warning of slowing growth in the U.S. ahead. Treasury yields curves are flattening as the probability for the Fed to increase interest rates rises. Based on the market-implied expectations, traders now think the Fed will raise rates by 25 basis points twice next year.

U.S. stock futures ticked up as a slew of companies released earnings, which investors parsed for insight into how corporates are faring with inflation and supply-chain disruptions. Via the WSJ:

“Futures for the S&P 500 rose 0.4% Tuesday, indicating that the broad market index will rise after the New York opening bell. Contracts for the

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S&P 500 Retakes 50-dma As Bulls Swoop In

5 days ago

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The S&P 500 finished the week above its 50-dma after bulls sparked a mid-week rally that carried into Friday’s close. The yield curve flattened last week as 10Y Treasury yields gave up a few basis points, while 2Y yields increased due to rising inflation expectations. Earnings will be the primary focus this week as we get into the thick of reporting season.

This morning futures are slightly lower which is not surprising after a big move last week. A test of the 50-dma that holds will be a bullish indication setting the markets up for a test of all-time highs. Upside momentum is returning to the markets and in the process, the technical damage done to stocks from early September through early October is getting repaired.

The big concern in the near term remains the

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Bulls Charge As Earnings Season Gets Underway

8 days ago

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Yesterday, the “Bulls” gained control of the ball from the “Bears” as earnings season got underway. After a successful retest of the 100-dma, the bulls charged to the critical 50-dma resistance level. The S&P 500 remains stuck between the 50-dma and the 100-dma over the last month. However, with the “seasonally strong” period of the year underway, the bulls look like they will attempt a run to all-time highs.

There are quite a few headwinds that could still trip up the bulls, so it is worth keeping some risk controls in place. In addition, as we have noted previously, breath and participation remain weak, which historically tends to limit upside in the near term.

What To Watch Today

Economy

8:30 a.m. ET: Empire Manufacturing, October (25.0 expected,

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The Fed’s FOMC Minutes Suggests Taper Will Start In November

9 days ago

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The Fed’s FOMC minutes from the September meeting suggest the Fed will taper its asset purchases by $15 trillion a month starting in November. At that pace, the current $120 trillion of QE will get zeroed out by July. Currently, there was no timeline to raise interest rates, but over the last few weeks, Fed Funds futures have priced in greater odds of rate hikes in 2022.

For instance, the June 2022 contract now implies a 25% chance of a tightening by June. The odds were near zero in mid-September. The December 2022 contract suggests a 100% chance of a 25bps rate hike and a 50% chance of a second hike by the end of the year.

With more certainty around the Fed’s next steps, the markets are entering a new regime. Is your portfolio ready?

What To Watch Today

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Inflation Is On Today’s Docket As Fed Gears For Taper

10 days ago

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Today we will get the latest reading on inflation as the Fed tapering QE in November seems to be a foregone conclusion by the markets. At this point, today’s CPI report, tomorrow’s PPI release, and other inflation data, along with continuing improvement in the labor markets are key factors for investors to watch. It is these economic stats that will help guide the Fed’s pace of reducing QE. JOLTS information, discussed below, provides more evidence the labor market is healing nicely.

What To Watch Today

Economy

7:00 a.m. ET: MBA Mortgage Applications, week ended Oct. 8 (-6.9% during prior week)8:30 a.m. ET: Consumer price index, month-over-month, September (0.3% expected, 0.3% during prior month)8:30 a.m. ET: CPI excluding food and energy,

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Market Sell-Off Sets Up Critical Test Of Support

11 days ago

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The market’s sell-off yesterday sets up a critical test of support at the 100-dma. Last week, the market was able to regain the 100-dma as stocks rallied off lower support. The decline yesterday left stocks touching the running moving average. It is a critical technical juncture for stocks. If stocks can hold the 100-dma, it will provide a support level stocks can build off of for a push higher to the 50-dma. A failure of that support will lead to a retest of recent lows or potentially more. With a lot of economic news and earnings releases this week, it is hard to guess where markets will head to next.

What To Watch Today

Economy

6:00 a.m. ET: NFIB Small Business Optimism, September (99.5 expected, 100.1 during prior month)10:00 a.m. ET: JOLTS Job

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Market Futures Sink As Oil Breaks Above $80

12 days ago

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This morning market futures are pointing lower as oil breaks above $80 and bond yields rise. Furthermore, investors need to fasten their seat belts, for a busy week full of economic data, Fed minutes, and corporate earnings. The market gets a rest from data today due to the Columbus day holiday. Between CPI, PPI, Retail Sales, and JOLTs, all set for release this week, the Fed will have a new round of data to guide their tapering decision. Expect more tug of war in the markets as investors deal with new data.

What To Watch Today

Economy

No notable reports scheduled for releaseEarnings

No notable reports scheduled for releasePolitics

The U.S. House of Representatives and Senate are both out of session until Oct. 18.The World Bank Group and

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The Bulls Have The Ball And Are Running For The 50-dma

15 days ago

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After Wednesday’s impressive rebound the bulls are regaining confidence and attempted a run for the 50-dma yesterday. With control back in their hands, the first big test will be getting the ball past the 50-dma for an attempt at the “end zone” of all-time highs. The bears will likely set us a strong defensive front at the 50-dma, leading to a battle royale for market control in the coming days. Today’s BLS unemployment report may play a big role in picking the winner of this battle.

This morning futures are flattish (at the time of this writing) as we await the employment report at 7:30 am this morning. Will the report be strong enough to cement the Fed’s “taper” decision in November? Or, will a weak report potentially put a pause on the reduction of liquidity? For

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Futures Higher On Short-Term Debt Ceiling Resolution

16 days ago

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Futures are rising again this morning after a short-term resolution to the debt-ceiling got offered by Senate Minority Leader, Mitch McConnell. Investors have been on a roller coaster since last Friday with the market swinging between support and the 100-dma. The wild-ride on Wednesday, not only retested recent support level lows, but took out the 100-dma by the close. A follow-through rally today could put the market on track to retest the 50-dma.

If the market can muster a couple of days of a rally, and clear the 50-dma, we will likely trigger the all-important MACD “seasonal buy” signal. Such would confirm the official start of the seasonally strong period. While it is very possible we have seen the highs for this year, the markets are oversold enough now for a 3-4%

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Market Set To Drop After Rebound Over Debt Ceiling Woes

17 days ago

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The market is set to drop after yesterday’s rebound as debt ceiling woes continue. From a frenzied Friday to manic Monday, a rebound on Tuesday, it has been a rocky start to October. However, don’t believe the media hype that recent market gyrations are abnormal. They are not. In fact, since 2019, the S&P 500 changes by .87% a day on average. Over each of the last four days, it has moved on average by only 1.28% per day- not much more than average. Ignore the media hype and focus on the technicals. With yesterday’s gains, we are not out of the woods but there are not many signs of significant trouble ahead either.

What To Watch Today

The Debt Ceiling – It’s Bad Either Way

“With just under two weeks to go before the pivotal Oct. 18 deadline, Treasury

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Will Stocks Bounce After a Manic Monday

18 days ago

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The equity markets took it on the chin on a manic Monday following frenzied buying on Friday. As the saying goes “volatility begets volatility,” and such is the market environment we are now in. Interestingly, however, implied volatility (VIX) is rising but not at rates that should leave us concerned, at least not yet.

While seasonality is coming into favor, sentiment is getting to more bearish extremes which tends to be a good contrarian indicator.

What To Watch Today

Economy

8:30 a.m. ET: Trade balance, August (-$70.8 billion expected, -$70.1 billion in July)9:45 a.m. ET: Markit U.S. services PMI, September final (54.4 expected, 54.4 in prior print)9:45 a.m. ET: Markit U.S. composite PMI, September final (54.5 in prior print)10:00 a.m. ET: ISM Services

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Is The Great September “Bear Market” Over?

19 days ago

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Can we call the September “bear market” over? The bull market regained its strut with Friday’s surge above the 100-dma, which improves the odds of a resumption of the upward trend. It’s too early to tell if the last two weeks were just a bump in the road or something more serious.

However, as discussed in this past weekend’s newsletter:

“It is worth noting there are two primary support levels for the S&P. The previous July lows (red dashed line) and the 200-dma. Any meaningful decline occurring in October will most likely be an excellent buying opportunity particularly when the MACD buy signal gets triggered.The rally back above the 100-dma on Friday was strong and sets up a retest of the 50-dma. If the market can cross that barrier, we will trigger the seasonal MACD

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Stock Futures Slump To Kick Off The Seasonally Strong Period.

22 days ago

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Stock futures slump to kick off the seasonally strong fourth quarter of the year. As expected, the market did sell off to the 5% correction level in September, as discussed in August. We do not expect a major correction in October, but a further correction is possible with the 200-dma the likely limit of that decline. That would be in the vicinity of the 10% decline from the recent August/September highs noted previously.

It is important to keep emotions under control and maintain the proper perspective of the current correction. Such can be difficult with the media pumping headlines about the correction, making it seem like we are in the middle of a full-on crash. However, this remains a well-controlled, normal, and needed correction to work off the recent overbought

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Market Futures Surge On Hopes For A “Continuing Resolution”

23 days ago

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This morning, market futures surged on hopes of a “continuing resolution” to avert a “shutdown.” Last night the Democrats appeared to buckle under the pressure of a looming “shutdown” with Chuck Schumer, Senate Majority Leader, suggesting a vote on a “Continuing Resolution (C.R.)” is forthcoming. The C.R., a stop-gap measure in place of a budget, will provide funding for the government through December 3rd. At that point, another C.R. will have to get passed to fund the rest of the fiscal year.

For the unfamiliar, before 2008, Congress would pass an actual budget itemizing spending needs that would get passed and funded. However, starting with the Obama administration, such arcane methods of managing government got dropped for the use of C.R.’s instead, which take last

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Rate Surge Sends Stocks Tumbling. Worst Day Since March

24 days ago

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The interest rate surge sent stocks tumbling in the worst day since March. The ongoing “debt ceiling debate,” the specter of a government shutdown, and potential of a “technical default,” sent interest rates higher as bond traders positioned for the worse. Treasury Secretary Janet Yellen has warned Congress that the debt limit must be raised or suspended by Oct. 18.

“The U.S. has seen three Republican and three Democratic administrations since the 1980s, but no matter who is in the White House, U.S. debt has been rising steadily throughout the years, also expanding the debt ceiling in the process.“

While almost nobody expects Uncle Sam will stop paying his bills, Washington’s highly partisan atmosphere is enough to give investors a serious gut check, especially

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Market Futures Drop, Yields Spike, Over Debt Default Worries.

25 days ago

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This morning market futures are lower, and yields spiking, after Republicans blocked the Democrats attempt to suspend the debt ceiling until after the mid-term elections. While the Democrats are trying to paint the Republicans as “economic destroyers,” the reality is that Democrats can pass a continuing resolution and lift the debt ceiling without any assistance. The Democrats can also pass the $3.5 trillion spending bill, hike taxes, and complete Biden’s agenda without Republican help. The problem for Democrats, is that they will “own it all” heading into the mid-terms, which is why they are pushing for bipartisan support.

However, the threat of a Government shutdown, and potential default, has sent interest rates spiking with the 10-year Treasury now pushing the

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The Correction Is Over As Market Rises. Time To Buy Stocks?

26 days ago

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The correction is now officially over as the market regained its 50-day moving average leading us to buy stocks. With the market finishing in the green on Friday after a large gap down to open the week such confirmed the bullish trend is still intact. This week, chock full of economic data and Fed speakers, will be important to fully determine whether the key support will hold.

What To Watch Today

Economy

8:30 a.m. ET: Durable goods orders, August preliminary (0.6% expected, -0.1% in July)8:30 a.m. ET: Durable goods excluding transportation, August preliminary (0.5% expected, 0.8% in July)8:30 a.m. ET: Non-defense capital goods orders excluding aircraft, August preliminary (0.3% expected, 0.1% in July)8:30 a.m. ET: Non-defense capital goods orders

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Bulls Remain in Charge As Rebound Continues

29 days ago

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Futures are slightly lower this morning after two strong days of gains as bulls remain in charge but the rebound continues. Treasury bonds and the dollar sold off as the risk-on sentiment took hold. The S&P 500 gained 1.2% to close above its 50-day moving average for the first time since last Friday. The 10-Year Treasury yield rose by roughly 7 bps to 1.41%, and the dollar lost 0.46%. Based solely on the sharp rise in bond yields, it appears the initial reaction to the FOMC meeting is signaling that the Fed may be too late to curb inflationary pressures.

Index futures are pointing slightly down this morning, while the longer end of the yield curve is flat to slightly higher. Cryptocurrencies and crypto-related stocks are struggling in response to a new policy out of the

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Stocks Rally As Fed Teases Taper

September 23, 2021

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Stocks rally nearly 1% higher yesterday despite a surprisingly hawkish tone from Fed Chair Jerome Powell teasing taper. Next on the horizon for the bulls is the 50-day moving average at 4435. With taper looming on the horizon will the moving average act as resistance?

If overnight trading is any indication we may answer that question this morning. The NASDAQ is leading the way, up .75% this morning with the S&P and Dow closely behind. S&P 500 futures are less than ten points below the key moving average. The dollar is weaker this morning as the currency markets appear to be taking Powell’s word that the Fed remains on course to start tapering in November and finish in mid-2022.

What To Watch Today

Economy

8:30 a.m. ET: Chicago Fed National Activity

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The Market is Deeply Oversold And Looking For A “Dovish” Fed

September 22, 2021

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As we will discuss, the market is deeply oversold and looking for a “dovish” Fed to spark buying. Traders and investors will be laser-focused on the Fed meeting adjourning at 2 pm ET. Of importance, the decision on taper and their characterization of the economic recovery and inflation. If they do elect to announce a taper schedule, the pace of tapering and any caveats that may delay tapering will be of utmost importance.

Like yesterday markets are opening up a half to one percent higher. Will they hold onto the gains, unlike yesterday? The answer likely lies with the Fed at 2 pm.

What To Watch Today

Economy

7:00 a.m. ET: MBA Mortgage Applications, week ended September 17 (0.3% during prior week)10:00 a.m. ET: Existing home sales, month-over-month, August

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Stocks Bounce Off Hard Off The Lows Reclaiming Losses.

September 21, 2021

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Yesterday, stocks bounced hard off the lows reclaiming a chunk of earlier losses. But, as we will discuss, the 100-dma held firm as the stocks look to be trying to replay the March sell-off. This morning, futures are pointing sharply higher, suggesting the bulls are still roaming.

The benefit of the doubt remains with the bulls, which have repeatedly saved the market after minor losses. Will they come to the rescue again, or do we have to sweat out the 200dma (4105)? Unfortunately, answering the question is a little more complicated than it has been.

The Fed meets on Wednesday and will likely announce their plans to taper QE in November. Given the Evergrande situation and its effect on domestic and global markets, they may delay announcing “taper” or make it

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Markets Set To Drop As Fed “Taper” Approaches

September 20, 2021

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Markets are set to drop this morning as the Fed “taper” announcement approaches. Market bulls spent the better part of Friday trying to hold 50-dma but failed. At the time of this writing, futures are down sharply point to steep losses at the open.

The sell off isn’t a surprise, as we have noted previously, given the more extreme length of time without a correction of 5% of more. September is historically a weak month, and there has been a steady drumbeat of corporate earnings warnings. While the retail sales numbers were strong, they were primarily a function of “back to school” shopping. Consumer sentiment remains soft, and market internals have been very weak.

The one thing that has remained incredibly strong has been the flow of money into equities this year

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A Financial Crisis Is Brewing in China. Will It Spread?

September 17, 2021

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Evergrande, a Chinese company with over $300 billion in debt, is failing. Will it get bailed out, and if so how? While investors focus on the nuts and bolts of Evergrande, we sense a financial crisis of sorts is brewing in China. Given China is the world’s second-largest economy and driver of global growth, our focus turns to the possibility their financial crisis spreads beyond the Great Wall.

Trading might be volatile today due to quadruple witching in the options and futures markets. That said equities, bonds, and the U.S. dollar are trading relatively flat in pre-market trading this morning. The primary focus today and early next week will be on the Fed’s FOMC policy meeting on Tuesday and Wednesday. It is widely expected they will announce a taper timeline starting

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Investors Show Up To “BTFD.” Will It Stick?

September 16, 2021

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As we suspected investors showed up to BTFD but will it stick?

At a mere 10 points above the 50 dma animal spirits were ignited yesterday. Does yesterday’s bounce signal record highs are straight ahead or is it fools gold? At yesterday’s close, the S&P was only 70 points below the recent all-time high of 4550. The 50 dma sits below at 4430.

Unlike prior BTFD’s in the last few months, equity markets are opening slightly lower, and foreign markets are not jumping on the BTFD bandwagon. Further pressuring confidence, China’s largest real estate developer, Evergrande, is suspending trading in its bonds today. They have over $300 billion in debt outstanding. It is unclear whether the Chinese government will bail out shareholders.

What To Watch Today

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Time To “Buy The Dip” & Bitcoin’s “Golden Cross”

September 14, 2021

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Is it time to “Buy The Dip?” The S&P 500 broke its five-day losing streak, as it rose .25% on Monday to 4470, 1.00% above its 50-day moving average. As we graph in the commentary below, the 50-day moving average has supported the S&P 500 on nine separate occasions in the last year. We have no reason to doubt the power of the trading algorithms this time around, but we must consider a meaningful break of the moving average could put the 200-day moving average in play at 4086.

Markets are opening slightly higher this morning while bonds are giving up some of yesterday’s gains. At 8:30 am ET, CPI provides an update on inflation. Expectations are for the headline monthly number to decline 0.1% from last month’s 0.5%.

What To Watch Today

Economy

6:00 a.m.

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Are Labor Shortages Stoking Inflation Fears At The Fed?

September 10, 2021

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The Fed’s Beige Book, on the heels of a new record number of job openings, seems to be stoking inflation concerns at the Fed. Interestingly, the warnings we quote below from every Fed district are being ignored by the bond markets, as yields decline in recent days.

Pre-market trading is reversing yesterday’s price action. Bonds are opening weaker while most stock indexes have recouped yesterday’s declines. PPI will be released at 8:30 this morning. Investors will keep a close eye on the data as it can serve as a proxy for future profit margins. Higher than expected producer prices along with rising wages will prove troublesome, especially for the manufacturing sector.

What To Watch Today

Economy

8:30 a.m. ET: Producer Price Index, month-over-month,

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Why the Insatiable Demand For U.S. Treasury Notes?

September 9, 2021

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Utilities ran away with first place yesterday rising over 1% despite the S&P being slightly lower. Is the recent bout of strong demand for longer-term Treasury auctions and flight to utilities a message from Mr. Market? The dynamic bears watching closely, given the poor breadth, extreme valuations, and the degree to which markets are extended from moving averages,

Markets are opening weak this morning despite Fed member Raphael Bostic’s dovish comments about tapering. While he thinks taper is in the works, like Powell, he wants the Fed to delay taking action to ensure the recovery remains robust. Dallas Fed President, on the other hand, is not as patient and ready to taper ASAP.

What To Watch Today

Economy

8:30 a.m. ET: Initial jobless claims, week

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