Week-In-Review: Market Finally Pulls Back…(A Little)

1 GDPMarket Finally Pulls Back

Overall, the major indices continue trading in a very tight range after a very strong ~10% post-brexit rally. So far, the action is normal and very healthy as the market appears to be pulling back from very extended conditions. Remember, there are two ways a market can pullback after a big rally: mover lower or move sideways. Right now, the latter is occurring and that is the more bullish scenario. As we have said for the past few weeks, the key now is to analyze the health of this consolidation to see if this is an orderly/healthy consolidation or something more severe. So far, the action is healthy except for a little selling in two areas: gold/silver stocks and healthcare/biotech stocks. It is also important to note that the S&P 500 has closed near 2,183 for the past 4 weeks. That’s healthy as it shows a relatively tight pattern after a big rally. Looking forward, the bulls remain in control until support is breached (50 day moving average and then the former chart highs: Dow 18,351 and S&P 500 2,134). Since Brexit, market pullbacks have only lasted a few days, which illustrates strong investor appetite for stocks. It would be great to see a light volume pullback into support, then see the market rally sharply after support is defended. Until support breaks, the short, intermediate and long term trend remains up for Wall Street.

Mon-Wed Action:

Stocks were quiet on Monday as oil prices fell by over -3%. In recent sessions, oil flirted with resistance near $50/barrel and is now pulling back a bit. In M&A news, Pfizer ($PFE) said it will acquire Medivation ($MDVN) for $81.50/share, or about $14 billion in cash. Medivation has one big cancer drug that attracted Pfizer to the deal. Pfizer out bid four other firms. A few biotech stocks rallied on the news. Technically, the market continues acting well as it remains perched just below record highs.
Stocks rallied on Tuesday as investors digested the latest round of mixed economic and earnings data. Shares of Best Buy Co. Inc. ($BBY) gapped up after the retail giant reported earnings. The company said online sales helped last quarter and they are going to do more to win market share back from Amazon.com (AMZN). On the economic front, a few European PMIs were released and they did not show a major post brexit slowdown, as so many people had feared. In the U.S., new home sales in July unexpectedly jumped to the highest level in almost nine years. New home sales came in at 654k, beating estimates for 580k. A slew of housing stocks rallied on the news. Separately, the Markit Manufacturing PMI for August, came in at 52.1, missing estimates for 53.2.
Stocks slid on Wednesday, dragged lower by a steep decline in Gold and Silver. Gold and Silver stocks have been one of the strongest areas in the market all year but are now in pullback mode as they recently placed a near term top and broke below their respective 50 DMA lines on Wednesday. Economic data was mixed. Existing home sales slid by -3.2% last month to 5.39 million units, missing the Street’s estimate for 5.52 million. A separate report showed that home prices edged higher by 0.2%, also missing estimates for a gain of +0.3%.

Thur & Fri Action:

Thursday was a relatively quiet day on Wall Street as the market continues to digest the recent and strong post-brexit rally. So far, the action remains healthy as the major indices continue to move sideways and we are not seeing any heavy selling underneath the surface. Stocks opened lower on Friday as the market continued pulling back from extended levels.

Market Outlook: Stocks Are Strong

Stocks are strong. The market finally broke out of its very long trading range after Brexit and ahead of earnings season. The fundamental driver continues to be easy money from global central banks. Economic and earnings data remain mixed at best which means easy money is here to stay. As always, keep your losses small and never argue with the tape. Schedule a complimentary appointment today if you want to talk to Adam about your portfolio. Visit: 50Park.com

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Sarhan in CNBC: Stocks close mixed after Fed commentary; Nasdaq snaps 8-week win streak

U.S. stocks closed mixed on Friday, with utilities lagging, as investors digested remarks made by Federal Reserve Chair Janet Yellen and Vice Chairman Stanley Fischer.
“I don’t think she said anything we didn’t already know, but people were trying to make something bullish out of it,” said JJ Kinahan, chief strategist at TD Ameritrade. “Then Fischer said two rate hikes were possible” and stocks went lower.
The Dow Jones industrial average closed about 50 points lower after briefly falling more than 100 points. Earlier, Fischer told CNBC next week’s jobs report would weigh on the Fed’s rate hike decision. The Dow gained 123.68 points at session highs and traded in a range of 236.75 points.
“I think the market is starting to second guess what she said,” said Daniel Deming, managing director at KKM Financial. “I think the market is trying to assess the real probability of a rate hike” in the near term.
The benchmark S&P 500 closed 0.15 percent lower, with utilities falling more than 2 percent, while the Nasdaq composite ended 0.13 percent higher.
“I think it’s Fischer’s comments” that dragged the market lower, said Robert Pavlik, chief market strategist at Boston Private Wealth, noting that the three major indexes were higher before Fischer spoke and began falling after he made his remarks.

Fischer spoke after Yellen, who said in a much-anticipated speech Friday at the central bank’s annual Jackson Hole summit that the case for a rate hike has gained strength “in recent months.”
Market expectations for a rate hike in September, the Fed’s next meeting, were at 30 percent Friday afternoon, according to the CME Group’s FedWatch tool.
“I think, overall, investors expect a rate hike, but they expect it later this year,” said Kate Warne, investment strategist at Edward Jones. “What we saw was Yellen not changing expectations very much.”
Phil Blancato, CEO of Ladenburg Thalmann Asset Management said “the reality is they don’t have enough to move rates in September … and they certainly don’t want to get in front of an election.”
He added, however, if the U.S. continues to add jobs at a rate of more than 200,000 per month heading to year’s end, he wouldn’t be surprised to see the Fed raise rates by 50 basis points in December.
U.S. stocks initially whipsawed after Yellen’s speech, with the three major indexes falling to just above break-even before hitting session highs.
“I think what happens is when Janet Yellen says something like the labor market is strengthening, the market says ‘sell,’ and it’s not until we digest the full speech that we go higher,” said Adrian Day, CEO of Adrian Day Asset Management. “The want to raise rates, but they want everything to be perfect before they do so.”
“There was nothing new that came out of that speech,” said Chuck Self, CIO at iSectors. “We continue to believe there will be no rate hike this year,” he said.
Ahead of the speech, the Dow was up about 50 points, while the S&P and the Nasdaq were up more than 0.2 percent.
“When the volume is low a few big trades can easily move the market higher or lower,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab.
Yellen delivered her speech against a backdrop of narrow trading and hawkish remarks from two of her top lieutenants, New York Fed President William Dudley and Fischer.
Naeem Aslam, chief market analyst at Think Markets, said in a note to clients ahead of the speech “the Fed is still data dependent and the labour market is something which they keep a very close eye on.”
Dow Jones industrial average intraday chart
Source: FactSet
The three major indexes were on track to post weekly losses, with the Nasdaq on the verge of snapping an eight-week winning streak. Stocks, however, have held in a narrow range, as the S&P hasn’t closed 1 percent higher or lower for 34 straight sessions.
“I think the market is very much like Janet Yellen,” said Interview with Rob Bartenstein, CEO of Kestra Private Wealth Services, noting it’s a market that wants to receive data before reacting. “The data has been reasonably good … but next week we have a jobs report and that could move the markets.”
Investors also digested the second read on second-quarter U.S. GDP, which showed growth of 1.1 percent, down from the initial read of 1.2 percent.
“The economy could be back to that Goldilocks economy we saw a few years ago,” said Adam Sarhan, CEO at Sarhan Capital. “Yellen has all the flexibility to be dovish in September if she wants.”
Other data released Friday included August consumer sentiment, which fell slightly.
U.S. Treasurys traded lower, with the two-year note yield higher at 0.84 percent and the benchmark 10-year yield at 1.62 percent.
The U.S. dollar traded in a wide range, rising more than 0.8 percent against a basket of currencies after trading lower earlier in the session.
Gold futures for December delivery settled $1.30 higher at $1,325.90 per ounce, well off session highs.
In oil markets, U.S. crude settled 0.65 percent higher at $47.64 a barrel after the Saudi energy minister subdued down expectations that the Saudi Arabia might agree next month to limit output.
Symbol
Name
Price
Change
%Change
DJIA Dow Industrials 18395.40
-53.01 -0.29%
S&P 500 S&P 500 Index 2169.04
-3.43 -0.16%
NASDAQ NASDAQ 5218.92
6.71 0.13%
The Dow Jones industrial average fell 53.01 points, or 0.29 percent, to close at 18,395.4, with Verizon leading decliners and Merck the top advancer.
The S&P 500 dropped 3.43 points, or 0.16 percent, to 2,169.04, with utilities leading seven sectors lower and health care the top riser.

The Nasdaq closed 6.71 points higher, or 0.13 percent, at 5,218.92.
About nine stocks declined for every five advancers at the New York Stock Exchange, with an exchange volume of 807.85 million and a composite volume of 3.279 billion at the close.

LINK: 
http://www.cnbc.com/2016/08/26/us-markets.html

Thurs Market Recap- Sarhan in Reuters: Financials lift Wall Street as rate hike optimism grows

Thu Aug 25, 2016 11:42am EDT
Wall Street reversed course to eke out small gains on late on Thursday morning as financial stocks gained after two more Federal Reserve officials said the case for an interest rate hike was strengthening.
Their comments followed the hawkish tone set by key Fed policymakers in recent days and came ahead of Fed Chair Janet Yellen’s speech on Friday at Jackson Hole, which will be assessed to see if she takes an aggressive stance.
“I do think it is time to move that rate,” Kansas City Fed President and voting member, Esther George, told CNBC, while Dallas Fed President Robert Kaplan said the central bank was “moving toward being able to take another step.”
Following the comments, traders sharply increased their expectations hike in September to 24 percent from 18 percent, while they are pricing in a roughly 55 percent chance of a December hike, according to CME Group’s FedWatch program.
Six of the 10 major S&P 500 indexes were higher, with the biggest boost coming from the financial sector’s .SPSY 0.44 percent gain. Financials stand to gain the most from higher rates.
“There is healthy skepticism about the Fed raising rates ahead of Yellen’s comments tomorrow,” said Adam Sarhan, chief executive officer at Sarhan Capital.
“Throughout this year they flirt with the idea of a rate hike, but when push comes to shove, they back off and kick the can down the road.”
At 11:32 a.m. EDT the Dow Jones Industrial Average .DJI was up 10.86 points, or 0.06 percent, at 18,492.34.
The S&P 500 .SPX was up 2.91 points, or 0.13 percent, at 2,178.35 and the Nasdaq Composite .IXICwas up 11.34 points, or 0.22 percent, at 5,229.04.
Data on Thursday showed an unexpected drop in jobless claims last week and a rise in new orders for manufactured capital goods in July, also suggesting that the economy was resilient enough to absorb a rate hike.
The materials sector’s .SPLRCM 0.57 percent gain was the biggest among the S&P sectors, while the energy index’s .SPNY 0.14 percent drop, despite higher oil prices, led the decliners.
Mylan (MYL.O) rose 2.3 percent to $44.16 after the drugmaker said it would reduce the out-of-pocket cost of its allergy treatment EpiPen.
Tiffany (TIF.N) rose 5.6 percent to $72.67 after the jeweler reported an unexpected rise in quarterly profit. The stock was the top percentage gainer on the S&P 500.
Advancing issues outnumbered decliners on the NYSE by 1,780 to 1,010. On the Nasdaq, 1,628 issues rose and 1,007 fell.
The S&P 500 index showed 5 new 52-week highs and no new lows, while the Nasdaq recorded 48 new highs and 17 new lows.
LINK: 
http://www.reuters.com/article/us-usa-stocks-idUSKCN1101JP

Tuesday Stock Market Review- Sarhan in CNBC: Stocks rise, led higher by materials; Nasdaq hits record high

Tuesday, August 23, 2016 4pm EST
U.S. stocks traded higher on Tuesday, with materials gaining about 1 percent, as investors looked ahead to Federal Reserve Chair Janet Yellen‘s speech at the end of the week.
“I think we’re transitioning from an interest-rate-driven market … to an earnings-driven market,” said Jeffrey Saut, chief investment strategist at Raymond James. “If the market is going to get hit, it’s going to be by something unforeseen. Otherwise, I think we go higher.”
The Dow Jones industrial average briefly gained 100 points before holding about 25 points higher, with Nike contributing the most gains. The benchmark S&P 500 gained approximately 0.25 percent, with materials leading, and came within less than a point of hitting its all-time intraday high.
The Nasdaq composite gained 0.35 percent and broke above its previous all-time high of 5,271.36 as Apple gained 0.4 percent.
“I’m not surprised the market did not go down; I am surprised it shot up so quickly,” said Adrian Day, CEO of Adrian Day Asset Management. “I think what the market is saying is it’s not concerned over a rate hike in the near term.”
“What we’re seeing since Brexit, … is a relentless underlying strength in the market,” said Adam Sarhan, CEO at Sarhan Capital. “The market refuses to fall.”

Stocks have recently traded in a very tight range, amid low volume and volatility. The CBOE Volatility index (VIX), widely considered the best gauge of fear in the market, posted one of its best trading days since Brexit on Monday, but has held at near two-year lows.
The S&P posted its 31st straight session without a 1 percent move on a closing basis on Monday. Still, the three major indexes have managed to post record highs recently.
“We’ve had a quiet market that has lacked volatility for about a month,” said Tom Wright, director of equities at JMP Securities.
Raymond James’ Saut said “the past 30 days have been the least volatile in over two decades.”
On the data front, new home sales for July unexpectedly surged, reaching their highest level in almost nine years. Other data released Tuesday included the Markit Manufacturing PMI for August, which came in at 52.1.
“We know for a while the ever rising cost of renting was an invite to builders to build lower priced homes and hopefully the July data is a sign that they are stepping up and providing them. The demand is there when rents are rising by 4-5% every year. On the other hand, this doesn’t change what is likely a secular down shift in the homeownership rate which is at the lowest level since 1965 as of Q2,” Peter Boockvar, chief market analyst at The Lindsey Group said in Tuesday a note to clients.
Investors were also preparing for Yellen’s speech, due Friday at 11 a.m.
“So far the chances are more or less half and half that the Fed may take another stab at the interest rate. It may be safe to say that traders are somewhat prepared for this, therefore it will be no big surprise if the Fed does increase the interest rate this year,” Naeem Aslam, chief market analyst at Think Markets, said in a Tuesday note to clients.
Market expectations for a September rate hike were 18 percent Tuesday, according to the CME Group’s FedWatch tool.
“Depending on the tone of her speech, that could change drastically,” JMP’s Wright said. “I think the market will be range-bound until then.”
“That’s going to be the massive event this week, other than GDP,” Sarhan said. “I think she’s got two speeches: one if GDP misses and one for if GDP beats.”
The second read for second-quarter GDP is due Friday at 8:30 a.m.
Investors also digested quarterly results from Best Buy and Toll Brothers, among other firms. Best Buy shares soared 18.9 percent after beating expectations on both earnings and revenue. Toll Brothers’ stock gained about 8.4 percent.
U.S. crude erased losses in midmorning trade to close 1.46 percent higher at $48.10 per barrel, after Reuters reported Iran is sending positive signals that it may support joint action to prop up oil prices, citing sources.
U.S. Treasurys traded lower, with the two-year note yield near 0.75 percent and the benchmark index around 1.55 percent. The dollar traded flat against a basket of currencies, with the euro near $1.131 and the yen around 100.19.
Overseas, European equities rose, with the Stoxx 600 index rising 0.93 percent. Asian stocks closed mixed overnight, with the Nikkei 225falling 0.61 percent and the Shanghai composite gaining 0.16 percent.
Symbol
Name
Price
 
Change
%Change
DJIA Dow Industrials 18550.28   20.86 0.11%
S&P 500 S&P 500 Index 2187.35   4.71 0.22%
NASDAQ NASDAQ 5261.48   16.88 0.32%
The Dow Jones industrial average rose 22 points, or 0.12 percent, to 18,551, with Nike leading advancers and Wal-Mart the greatest decliner.
The S&P 500 gained 5 points, or 0.24 percent, to 2,187, with materials leading eight sectors higher, while consumer staples and utilities lagged.

The Nasdaq advanced 17 points, or 0.33 percent, to 5,262.
About two stocks advanced for every decliner at the New York Stock Exchange, with an exchange volume of 484 million and a composite volume of 2.416 billion in afternoon trade.
Gold futures for December delivery rose $2.70 to settle at $1,346.10 per ounce.
On tap this week:
*Planner subject to change.
Tuesday
Earnings: Intuit, Trina Solar
Wednesday
Earnings: HP, Royal Bank of Canada, Guess, Express, WPP Group, Heico, Williams-Sonoma, Workday
9 a.m. FHFA home prices
9:45 a.m. Manufacturing PMI
10 a.m. Existing home sales
1 p.m. $34 billion 5-year note auction
Thursday
Earnings: Toronto-Dominion Bank, Canadian Imperial Bank, Tiffany, Movado, Burlington Stores, Dollar General, Dollar Tree, Michaels Cos, Autodesk, GameStop, Pure Storage, Splunk
8:30 a.m. Initial claims, durable goods
1 p.m. $28 billion 7-year note auction
Friday
Earnings: Big Lots
Fed Chair Janet Yellen speaks at Jackson Hole, Wyoming
8:30 a.m. Real GDP Q2 (second); international trade
9:45 a.m. Services PMI
10 a.m. Consumer sentiment

 
Link: 
http://www.cnbc.com/2016/08/23/us-markets.html

Sarhan in CNBC: US Stocks Open Lower As Oil Falls 2 pct; Yellen Speech Eyed

Monday, August 22, 2016
U.S. stocks opened lower on Monday as investors looked ahead to a key speech from the top Federal Reserve official and digested falling oil prices.
The Dow Jones industrial average opened about 70 points lower, with Goldman Sachs and Chevron contributing the most losses. The S&P 500 began Monday trading about 0.3 percent lower, with energy leading nine sectors lower. The Nasdaq composite fell 0.2 percent, with Apple falling approximately half a percent, while the iShares Nasdaq Biotechnology ETF (IBB) rose more than 1 percent.
“It’s good to see the market sit tight here,” said Adam Sarhan, CEO at Sarhan Capital. “It shows the market is taking a pause to set up for the next move higher.”
Stocks posted new record highs last week, despite the S&P notching its 30th straight session without a 1 percent move on a closing basis, its longest streak since 2014.
Fed Chair Janet Yellen is scheduled to deliver a speech Friday on the U.S. economy and monetary policy at the Economic Policy Symposium at Jackson Hole, Wyoming.
Yellen’s remarks will be delivered following hawkish rhetoric from Fed Vice Chairman Stanley Fischer and New York Fed President William Dudley.

“Now we don’t know for sure if Mr. Dudley and Mr. Fischer alerted Mrs. Yellen to the content of their thoughts before they expressed them or if she even agrees with them but if Yellen concurs on Friday, the short term rate markets will have to adjust, along with many other markets, especially the brain washed equity markets,” said Peter Boockvar, chief market analyst at The Lindsey Group.
Market expectations for a September rate hike were just 18 percent, according to the CME Group’s FedWatch tool. However, expectations for a December hike were near 50 percent.
“This has been the Fed’s MO: The [talk up a rate hike] and then they back off. I expect the same from Janet Yellen,” said Sarhan.
Meanwhile, in oil markets, U.S. crude dropped more than 2.5 percent to trade at $47.24 a barrel, as analysts cast doubt the upcoming producer talks would lead to a curtailing oversupply.
“I think the [stock] market is going to take its cue from energy, and that’s going to be a problem,” said Art Hogan, chief market strategist at Wunderlich Securities. “I think we’re in a wait-and-see mode until 11 a.m. Friday.
There are no major economic data reports due Monday, but the second read on second-quarter GDP is scheduled for release Friday.
In corporate news, Dow-component Pfizer agreed to buy U.S. drug company Medivation for $81.50 a share, or about $14 billion. Medivation shares surged more than 20 percent in the premarket, while Pfizer’s stock fell nearly 1 percent.
U.S. Treasurys traded mixed, with the two-year note yield holding around 0.75 percent and the benchmark 10-year yield near 1.55 percent. The dollar rose about 0.1 percent against a basket of currencies, with the euro near $1.131 and the yen near 100.32.
In Europe, stocks traded lower, with the Stoxx 600 index falling 0.1 percent. In Asia, stocks closed mostly lower, with the Shanghai composite slipping 0.75 percent and the Nikkei 225 gaining 0.32 percent.
Symbol
Name
Price
 
Change
%Change
DJIA Dow Industrials 18487.31
 
-65.26 -0.35%
S&P 500 S&P 500 Index 2177.40
 
-6.47 -0.30%
NASDAQ NASDAQ 5230.68
 
-7.70 -0.15%
 
On tap this week:
*Planner subject to change.
Monday
Earnings: Nordson, Premier
Tuesday
Earnings: Bank of Montreal, Best Buy, Toll Brothers, J.M. Smucker, Intuit, Trina Solar
10 a.m. New home sales
1 p.m. $26 billion 2-year note auction
Wednesday
Earnings: HP, Royal Bank of Canada, Guess, Express, WPP Group, Heico, Williams-Sonoma, Workday
9 a.m. FHFA home prices
9:45 a.m. Manufacturing PMI
10 a.m. Existing home sales
1 p.m. $34 billion 5-year note auction
Thursday
Earnings: Toronto-Dominion Bank, Canadian Imperial Bank, Tiffany, Movado, Burlington Stores, Dollar General, Dollar Tree, Michaels Cos, Autodesk, GameStop, Pure Storage, Splunk
8:30 a.m. Initial claims, durable goods
1 p.m. $28 billion 7-year note auction
Friday
Earnings: Big Lots
Fed Chair Janet Yellen speaks at Jackson Hole, Wyoming
8:30 a.m. Real GDP Q2 (second); international trade
9:45 a.m. Services PMI
10 a.m. Consumer sentiment

 
LINK:
http://www.cnbc.com/2016/08/22/us-markets.html

Week-In-Review: Bulls Still In Control

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1 SPX- Stocks are strong

Bulls Still In Control

The market ended mixed to as it pauses to digest the very strong post-brexit rally. So far, the action is normal and very healthy as the market appears to be pulling back from very extended conditions. The key now is to analyze the health of this pullback to see if this is an orderly/healthy pullback or something more severe. Remember, markets do not go straight up and it is perfectly normal to see the market pullback after a very strong rally (S&P 500 jumped ~10% since Brexit!). Looking forward, the bulls remain in control until support is breached (former chart highs: Dow 18,351 and S&P 500 2,134). The next level of support to watch after that is their respective 50 day moving average lines. Since Brexit, market pullbacks have only lasted a few days, which illustrates strong investor appetite for stocks. It would be great to see a light volume pullback into support, then see the market rally sharply after support is defended. Until support breaks, the short, intermediate and long term trend remains up for Wall Street.

Mon-Wed Action:

On Monday, stocks rallied along side oil prices on hopes of a possible supply cut. On Monday, Russian Energy Minister Alexander Novak told a Saudi newspaper that his country was consulting with Saudi Arabia and other large oil producers to take measures to stabilize oil prices. In the U.S., the Empire State Manufacturing Survey fell to negative -4.21, missing estimates for +2.5. On a more positive note, The National Association of Home Builders said its housing market index came in at 60, matching estimates. Every month, The National Association of Home Builders asks its members (home builders) to rate the general economy and provide their view on the housing market. The report has been hovering near 60 for the past few months.
On Tuesday, the market ended lower after the Yen rallied sharply overnight. The Yen is considered a risk-off asset class and tends to do well when stocks (risk-on) fall. Economic data was light. The Consumer Price Index (CPI) was unchanged which matched estimates and continues to show inflation remains a non-event right now. Elsewhere, housing starts jumped to a 5 month high of 1.211M units, beating estimates for 1.180M. Even though housing starts were strong, building permits were flat which could be a subtle sign of fatigue.
Stocks opened lower on Wednesday but closed higher after the Fed released the minutes of its latest meeting. The minutes showed that the Fed is split and is still waiting for more data to be released. When push comes to shove, they are always data dependent and keep teasing of more rate hikes at nearly every meeting for the past few years. Yet, when the rubber hits the road, they back off and do nothing.

Thur & Fri Action:

Thursday was a relatively quiet day on Wall Street as the market continues to digest the recent and strong post-brexit rally. So far, the action remains healthy as the major indices continue to move sideways and we are not seeing any heavy selling underneath the surface. Stocks opened lower on Friday as the market continued pulling back from extended levels.

Market Outlook: Stocks Are Strong

Stocks are strong. The market finally broke out of its very long trading range after Brexit and ahead of earnings season. The fundamental driver continues to be easy money from global central banks. Economic and earnings data remain mixed at best which means easy money is here to stay. As always, keep your losses small and never argue with the tape. Schedule a complimentary appointment today if you want to talk to Adam about your portfolio. Visit: 50Park.com

Schedule A Complimentary Portfolio Review

Let’s Talk… 

Sarhan in CNBC: US Stocks Close Mostly Higher After Fed Minutes; Utilities Jump More Than 1 pct

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Wednesday, August 17, 2016 4pm EST
U.S. stocks closed mostly higher on Wednesday as investors digested the release of the Federal Reserve’s July meeting.
The Dow Jones industrial average held about 4 points higher, with 3M contributing the most gains. The S&P 500 traded approximately 0.1 percent higher, with utilities advancing more than 1 percent. The Nasdaq composite underperformed, slipping 0.12 percent, still off its session lows.
U.S. Treasurys traded higher after the minutes were released, with the two-year note yield at 0.73 percent and the benchmark 10-year yield at 1.55 percent.
“It appears there are not a lot of fireworks … that came out of this set of minutes,” said Bill Northey, chief investment officer at the Private Client Group at U.S. Bank. He also said “this is setting up for one more move” which, in his opinion, will take place in December.
Some voting Federal Reserve policymakers expect that a U.S. interest rate increase will be needed soon, although there is general agreement that more data is needed before such a move, according to the minutes from the Fed’s July policy meeting.
“Some … members anticipated that economic conditions would soon warrant taking another step in removing policy accommodation,” the Fed said in the minutes..
Mark Spellman, portfolio manager at Alpine Funds, said after the minutes were released that “the market doesn’t believe what they say, though.” “In the last couple of days, you had some Fed governors saying the market isn’t discounting enough of a chance of a rate hike — and the minutes that, too.”
Still, he said “in those minutes, I don’t think there’s anything that’s going to change a lot of opinions” about the Fed.
About 20 minutes before the minutes were released, the Dow traded about 10 points higher, while the benchmark S&P 500 held near flat. The Nasdaq held slightly lower.
“The vast majority of Fed meeting and/or Fed minute days we open lower and then we continue with an upward bias,” Adam Sarhan, CEO of Sarhan Capital, said ahead of the minutes’ release. “Buyers are stepping in on hopes that easy money will continue. Until that changes, easy money should be bought, not sold.”
Mark Heppenstall, CIO of Penn Mutual Asset Management, said “the path of least resistance until after Labor Day is higher,” even after the Fed minutes were released, noting he thinks the Fed will not raise rates until after the elections are over. “I think if we get another strong jobs report, that could change things.”
The Dow fell as much as 80 points at its session lows, before the three major indexes began paring losses in early afternoon trade.
“There is some anxiety that the Fed may not be as dormant as some people might think,” Bruce McCain, chief investment strategist at Key Private Bank, said before the minutes were released.
Investors were looking for signs and clues about when the next rate hike will be coming, particularly after hawkish comments made by some Fed officials.
“We got some vocal Fed [officials] suggesting a rate hike soon, but I don’t think they will hike in September,” said Peter Cardillo, chief market economist at First Standard Financial.
On Tuesday, New York Fed President William Dudley said a rate hike could come next month. Meanwhile, Atlanta Fed President Dennis Lockhart said the U.S. economy is strong enough to withstand at least one increase this year.

“His message was clear: the market is far too complacent about the rate hike and this was enough to prop up the dollar,” Naeem Aslam, chief market analyst at Think Markets, said in a Wednesday note to clients, referring to Dudley’s comments.
Market expectations for a September rate hike fell to 12 percent from 18 percent Wednesday, according to the CME Group’s FedWatch tool.
“Everything is predicated on the fact that we’ve had a pretty solid run,” said Art Hogan, chief market strategist at Wunderlich Securities. “I think the big thing is whether we should react to a more hawkish Fed. … I would argue we shouldn’t.”
Stocks have traded in a very tight range amid low volume and little volatility recently. In fact, the S&P has gone 27 straight trading days without moving 1 percent in any direction on a closing basis. The CBOE Volatility index (VIX), widely considered the best gauge of fear in the market, traded near lower, near 12.5.
U.S. stocks fell on Tuesday, a day after the three major indexes posted simultaneous record highs.
“Yesterday was odd because the dollar was lower against most major currencies and we still sold off,” said Robert Pavlik, chief market strategist at Boston Private Wealth.
The U.S. dollar fell nearly 1 percent against a basket of currencies Tuesday. It fell about 0.2 percent Wednesday. The yen was flat versus the greenback, near 100.3, while the euro held near $1.1286.
On the oil front, U.S. crude rose 0.45 percent to settle at $46.79 a barrel, after Energy Information Administration data showed oil inventories decreased by 2.5 million barrels last week.
Wall Street also digested a number of quarterly reports before the bell, including Lowe’s and Target.
Overseas, European stocks fell, with the Stoxx 600 index slipping 0.83 percent. In Asia, stocks closed mixed, with the Nikkei 225 rising 0.9 percent and the Shanghai composite ending marginally lower.
Symbol
Name
Price
 
Change
%Change
DJIA Dow Industrials 18572.91
 
20.89 0.11%
S&P 500 S&P 500 Index 2182.16
 
4.01 0.18%
NASDAQ NASDAQ 5228.66
 
1.55 0.03%
The Dow Jones industrial average rose 14 points, or 0.08 percent, to trade at 18,556, with 3M leading advancers and Cisco Systems the biggest laggard.
The S&P 500 gained 2 points, or 0.13 percent, to 2,170, with utilities leading seven sectors higher and consumer discretionary the top decliner.
The Nasdaq dropped 2 points, or 0.05 percent, to 5,224.

Decliners were a step ahead of advancers at the New York Stock Exchange, with an exchange volume of 552 million and a composite volume of 2.69 billion.
Gold futures for December delivery settled $8.10 lower at $1,348.80 per ounce.
Correction: This story has been updated to reflect Dudley and Lockhart spoke on Tuesday, not Wednesday.
—Reuters contributed to this report.
On tap this week:
*Planner subject to change.
Wednesday
Earnings: L Brands, NetApp, Eaton Vance, American Eagle Outfitters, Performance Food, CACI
2 p.m. FOMC minutes
Thursday
Earnings: Wal-Mart, Applied Materials, Gap, Ross Stores, Hormel Foods, Mentor Graphics, Nestle
8:30 a.m. Initial claims; Philadelphia Fed survey
10 a.m. New York Fed President William Dudley
4 p.m. San Francisco Fed President John Williams
Friday
Earnings: Deere, Estee Lauder, Foot Locker, Madison Square Garden, The Buckle

LINK:
http://www.cnbc.com/2016/08/17/us-markets.html

Sarhan in CNBC: US stocks slide, pulling back from record highs; Fed minutes eyed

Tuesday, August 16, 2016 3:25pm
Stocks slipped Tuesday, led lower by telecommunications, as investors awaited the release of the minutes from the Federal Reserve’s July meeting.
“I think we had a little bit of profit taking. We had that trifecta concurrent record high yesterday. Part of it might be driven by the fact that we do have the Fed minutes coming out tomorrow afternoon. I don’t’ think that will be a big impact but sometimes we get a reaction,” said Randy Frederick, managing director, trading and derivatives at Charles Schwab.
The Fed is scheduled to release the minutes of its July meeting Wednesday at 2 p.m. ET.
The three major indexes simultaneously closed at record highs for the second time in less than a week on Monday. Last week, they posted record closes at the same time for the first time since 1999.
The Dow Jones industrial average traded about 60 points lower, with Travelers Companies and Johnson & Johnson contributing the most losses.
“I think it’s more a little bit of profit-taking,” said JJ Kinahan, chief strategist at TD Ameritrade. “This is not wide-spread selling; this is more like sprinkling the infield.”
“I think the market got a little bit overbought and this is just a correction to that overbought condition,” said Bruce Bittles, chief investment strategist at Baird.
The S&P 500 fell 0.4 percent, with telecommunications — down more than 1.5 percent — and utilities lagging.
Kim Forrest, senior equity analyst at Fort Pitt Capital, said “none of the news we got was that negative.” “Unless you’re Hain Celestial, you’re fine.” “I think this is a profit-taking event,” she said.
The Nasdaq composite fell approximately 0.5 percent
“You’re seeing equities around the world a little bit weak and you’ve got some volatility in rates and the FX market,” said Jeremy Klein, chief market strategist at FBN Securities. “I think it’s enough of an excuse to take some profit.”
“We hit a trifecta yesterday, and that’s certainly a reason to take a breather,” said Art Hogan, chief market strategist at Wunderlich Securities. “The magnitude of the move isn’t a big one.” “I think we’re in the middle of a consolidation day,” he said.
“This is a normal pullback after a strong rally,” said Adam Sarhan, CEO of Sarhan Capital.
Investors also kept an eye on the yen, which broke below the key 100 mark for the first time since June after San Francisco Fed President John Williams said in a paper that central banks might have to raise inflation targets, focus more on growth and back much looser fiscal policy in future.
“I think what we’re seeing here, for the first time in a few weeks, is a shift from risk-on assets into risk-off assets,” Sarhan said.
In afternoon trade ET, the yen held near 100.3 against the dollar, while the greenback was down about 0.9 percent versus a basket of currencies. The yen hit a low of 99.53 versus the dollar earlier.
That said, New York Fed President William Dudley said in a Fox Business Network interview the Fed may raise rates as soon as next month. “We’re edging closer towards the point in time where it will be appropriate I think to raise interest rates further,” Dudley said, citing strength in the labor market.
“I think the last think the Fed want’s to see is a bubble in the stock market,” Baird’s Bittles said, adding Dudley’s goal with his remarks was to keep the market on edge.

Gold futures for December delivery settled up $9.40 at $1,356.90 per ounce after Dudley spoke.
Market expectations for a rate hike next month remained low after Dudley’s interview, however. According to RBS, the odds of a September rate hike rose to 20 percent from 18 percent.
Atlanta Fed President Dennis Lockhart said later on Tuesday that the U.S. economy is likely strong enough to withstand at least one rate hike before the end of the year.
“The market loves easy money, and any data that may suggest a rate hike, will spook investors a little bit,” Sarhan of Sarhan Capital said.
U.S. economic data came in mixed, with the July reading of the consumer price index (CPI) coming in unchanged — matching expectations— and July housing starts coming in at a five-month high. Industrial production for the same month, meanwhile, rose 0.7 percent, more than the 0.3 percent expected increase.
“Bottom line, because the Fed looks at PCE instead of CPI, they can tell themselves that they haven’t met their inflation objectives and thus rationalize a fed funds rate of just .375%. For the rest of us who look at CPI, they have for 9 straight months,” Peter Boockvar, chief market analyst at The Lindsey Group, said in a Tuesday note to clients.
A slew of companies also posted quarterly results, including Dow component Home Depot and Dick’s Sporting Goods.
Overseas, European stocks fell, with the Stoxx 600 index falling 0.79 percent. In Asia, the Nikkei 225 dropped 1.62 percent, while the Shanghai composite slipped 0.49 percent.
Symbol
Name
Price
 
Change
%Change
DJIA Dow Industrials 18582.29
 
-53.76 -0.29%
S&P 500 S&P 500 Index 2181.99
 
-8.16 -0.37%
NASDAQ NASDAQ 5238.93
 
-23.09 -0.44%
The Dow Jones industrial average fell 60 points, or 0.32 percent, to 18,577, with Johnson & Johnson leading decliners and Intel the greatest riser.
The S&P 500 slipped 8 points, or 0.39 percent, to trade at 2,181, with telecommunications leading nine sectors lower and and energy the only advancer.

The Nasdaq fell 24 points, or 0.47 percent, to 5,237.

About two stocks declined for every advancer at the New York Stock Exchange, with an exchange volume of 481 million and a composite volume of 2.39 billion in afternoon trade.
U.S. crude for September delivery settled at its highest level since July 6, at $46.58 a barrel.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded higher, near 12.5.
—Reuters contributed to this report.
On tap this week:
*Planner subject to change.
Tuesday
Earnings: Urban Outfitters, Momo, Popeyes Louisiana Kitchen, Advance Auto Parts, Cree
Wednesday
Earnings: Target, Staples, Lowes, Cisco, L Brands, NetApp, Eaton Vance, American Eagle Outfitters, Performance Food, CACI
2 p.m. FOMC minutes
Thursday
Earnings: Wal-Mart, Applied Materials, Gap, Ross Stores, Hormel Foods, Mentor Graphics, Nestle
8:30 a.m. Initial claims; Philadelphia Fed survey
10 a.m. New York Fed President William Dudley
4 p.m. San Francisco Fed President John Williams
Friday
Earnings: Deere, Estee Lauder, Foot Locker, Madison Square Garden, The Buckle

LINK: 
http://www.cnbc.com/2016/08/16/us-markets.html
 

Week-In-Review: Bulls Keep on Running

1SPXBulls Keep On Running

This very strong bull market continues as the major indices all hit fresh record highs last week for the first time since 1999! In the short term, the market is extended up here and due to pullback after a very strong 8-week ~10% rally. It is also bullish to see that there remains virtually no selling under neath the surface. The very strong and bullish mini sector rotation continues which bodes well for this market. The intermediate and longer term trends also remain up which is very bullish. Earlier this year, the market had every chance in the world to fall and top out. Instead, in January and February the bulls showed up, defended support, and sent stocks soaring to new highs. The fundamental driver has been easy money from the Fed and other global central banks.  Since the historic March 2009 low, that has been “the” bullish driver for stocks. Earnings are literally in a recession. Who cares? Buy stocks. Economic data remains lackluster at best. Who cares, buy stocks. I can go on and on but I hope my point is made. I’m not here to fight or argue with the market. All I’m here to do is shed light on what the market is actually focusing on. This is not “normal” and eventually this big experiment will end. Until it does, I’m very happy to be long and ride this market higher. Looking forward, the bulls remain in control until support is breached (former chart highs: Dow 18,351 and S&P 500 2,134). The next level of support to watch after that is their respective 50 day moving average lines.The fact that the market pullback only lasts a few days, signals strong investor appetite for stocks. Since Brexit, we have noticed the market open lower in the first half of the week then rally and close higher during the latter half of the week. On a weekly basis, that is considered a positive reversal and very bullish. Until support breaks, the short, intermediate and long term trend remains up for Wall Street.

Mon-Wed Action:

On Monday, stocks slid as oil jumped nearly 3% and bounced from oversold levels. Oil bounced after rumors spread that OPEC members are talking about freezing production. Remember, the last time that happened, was in mid-February and oil surged – even though OPEC never freezed production. Technically, oil is just bouncing from deeply oversold levels. Economic data remains light all week. July retail sales will be released Friday. 
Stocks were quiet on Tuesday as economic and earnings data remained relatively thin. Few well known retail stocks fell after reporting disappointing same store sales. Most retail stocks have been in steep downtrends/under-performing badly over the past year or so as consumers shift to online shopping. Amazon (AMZN) has been the key beneficiary of that shift and continues to be a monster stock. In M&A news, Wal-Mart (WMT) said it would buy Jet.com (Amazon’s largest competitor) for $3B to help improve its online experience and access a broader audience. Stocks fell on Wednesday which is perfectly normal after such a strong rally. Oil prices fell which dragged a slew of energy stocks lower. Before the open, Michael Kors ($KORS) reported earnings and beat expectations on both the top line and bottom line but the stock fell 3% on future guidance. Separately, Ralph Lauren ($RL) gapped up after the company reported earnings.

Thur & Fri Action:

Stocks rallied on Thursday, helping the major indices hit fresh record highs. Macy’s (M) and Kohl’s (KSS) were some of the stocks that gapped up after reporting their Q2 results. Shares of Shake Shak (SHAK) gapped down after earnings were announced. Economic data remains mixed. U.S. import prices unexpectedly edged higher in July. Import prices increased by 0.1% in July after an upwardly revised 0.6% reading in June. The Street was expecting import prices to slide by -0.3% in July after a previously reported +0.2% advance in June. In other news, weekly U.S. jobless claims slid to 266,000. Stocks fell on Friday after the government said Retail Sales were flat, missing estimates for a slight gain of 0.4%. On Thursday, Macy’s said it will close 100 stores which was their way of telling us that retail sales are still weak. Overseas, the euro area said GDP rose by 0.3% in the second quarter which matched the Street’s estimate. Stepping back, economic data is blah at best which means, easy money is here to stay for the foreseeable future

Market Outlook: Stocks Are Strong

Stocks are strong. The market finally broke out of its very long trading range after Brexit and ahead of earnings season. The fundamental driver continues to be easy money from global central banks. Economic and earnings data remain mixed at best which means easy money is here to stay. As always, keep your losses small and never argue with the tape. Schedule a complimentary appointment today if you want to talk to Adam about your portfolio. Visit: 50Park.com

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Sarhan In @CNBC: Stocks Slip As Oil Falls; Energy Sheds 1.5%

Stocks fell on Wednesday as the recent rally in equities eased and investors digested falling oil prices, as well as quarterly results from retail firms.
“It looks like a normal, healthy pullback,” said Adam Sarhan, CEO at Sarhan Capital. “Even under the surface, … we see orderly selling.”
“At this point in time, investors are looking for a reason to sell, and they can’t find it,” he said. “As long as these pullbacks are short, the bulls remain in control.”
The benchmark S&P 500 traded about 9 point lower, as energy lagged. The Dow Jones industrial average held about 60 points lower, with ExxonMobil contributing the most losses. The Nasdaq composite underperformed, trading about 0.5 percent lower.
“I think we’ll be relatively flat for a while for two reasons. First, Earnings season is mostly over, and that created positive support for stocks. Second, economic news … is expected to be mixed,” said Kate Warne, investment strategist at Edward Jones. “Overall, we’re looking at a flat market for a while as investors reassess [the recent rally].”
Warne also said this would be a good time for investors to “put money to work.”
Oil futures seesawed Wednesday, with U.S. crude 2.48 percent lower, at $41.71 lower after the Energy Information Administration’s weekly inventories data release. The data showed U.S. commercial crude inventories rose by 1.1 million barrels to a total of 523.6 million last week. Analysts expected the EIA to cite a drawdown of about 1 million barrels each in both domestic crude and gasoline inventories.
David Kelly, chief global strategist at JPMorgan Funds. said a build in inventories may pressure oil prices, but the knock-on effect on equities should not be small. “The world is awash in oil, but it’s not because the economy is faltering,” he said.

Traders work on the floor of the New York Stock Exchange in New York City.
Before the bell, Michael Kors posted quarterly results that beat expectations on both lines, but the stock was down 2.6 percent. Meanwhile, Ralph Lauren shares popped more than 9 percent after its earnings came in sharply above expectations.
“The one think that we’ve found with the consumer … is people have really over-estimated the impact of lower energy prices for the consumer,” said Nick Raich, CEO of The Earnings Scout.
Kohl’s, Macy’s and Nordstrom are scheduled to post results on Thursday.
U.S. stocks have traded in a tight range recently, while the CBOE Volatility index (VIX), widely considered the best gauge of fear in the market, has held near one-year lows. On Wednesday, the Vix traded 7 percent higher, near 12.5.
“Barring a shock, I think the market is going to be pretty quiet over the next few weeks,” JPMorgan’s Kelly said.
“Stretched valuations have made it difficult for value managers to put money to work. The economic data remains mixed as evidenced by yesterday’s lousy Productivity report,” Jeremy Klein, chief market strategist at FBN Securities, said in a Wednesday note to clients.
That said, the S&P and the Nasdaq notched all-time intraday highs Tuesday.
“The bulls have had their way with the bears after the broader indices bottomed in the immediate aftermath of United Kingdom’s referendum pertaining to its status within the European Union. Although a significant amount of long term uncertainty surrounds Brexit, the fears associated with the shocking result on June 23 seems comical in hindsight,” Klein said.
On the data front, the Job Openings and Labor Turnover Summary (JOLTS) report showed an increase to 5.624 million job openings in June.
U.S. Treasurys advanced, with the two-year note yield falling to about 0.7 percent, while the benchmark 10-year yield held around 1.50 percent. The Treasury Department sold $23 billion worth of 10-year notes at a high yield of 1.503. The auction saw weak demand.
The dollar fell against a basket of currencies, with the euro rising to $1.118 and the yen falling to 101.28.
Overseas, European equities traded slightly lower, with the Stoxx 600 index slipping 0.2 percent. In Asia, the Shanghai composite fell 0.23 percent, while the Nikkei 2225 dropped 0.18 percent.
Symbol
Name
Price
 
Change
%Change
DJIA Dow Industrials 18496.15
 
-36.90 -0.20%
S&P 500 S&P 500 Index 2176.08
 
-5.66 -0.26%
NASDAQ NASDAQ 5208.18
 
-17.30 -0.33%
The Dow Jones industrial average traded 60 points lower, or 0.33 percent, at 18,472, with ExxonMobil leading decliners and Walt Disney the top advancer.
The S&P 500 fell 9 point, or 0.43 percent, to 2,172, with energy leading seven sectors lower and consumer staples leading advancers.

The Nasdaq composite fell 27 points, or 0.53 percent, to trade at 5,197.
About nine stocks declined for every five advancers at the New York Stock Exchange, with an exchange volume of 460 million and a composite volume of 2.245 billion in afternoon trade.
Gold futures for December delivery settled $5.20 higher at $1,351.90 per ounce.

LINK: http://www.cnbc.com/2016/08/10/us-markets.html