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Weekly Market Recap Dec 10, 2017

Courtesy of Blain.

Before we talk about the stodgy ole stock market, anyone see that Bitcoin?  $11K last week – $16K this week…. and as I write this bitcoin futures are up over $18K. Just another week in the life…. (here is what you need to know about bitcoin futures)

Back to your regularly scheduled program… the S&P 500 rested a bit while a small correction rolled through the massive winners of 2017 in mega cap tech land, but in the end all was well again by Friday.

“The Nasdaq Composite Index was getting a little frothy, so it’s not surprising to see that some details in the proposed tax bill that would impact tech companies turned out to be a catalyst for a selloff in these stocks over the past few sessions,” said Quincy Krosby, chief market strategist at Prudential Financial.

The retention of the corporate alternative minimum tax in the Senate version of the Republicans’ tax bill has been seen as a factor in tech-stock selling. The House’s bill repealed the corporate AMT, but in a last-minute switch before passing its bill early Saturday morning, the Senate decided to keep the provision.

Still good sailing otherwise… for the week the S&P 500 gained 0.35% while the NASDAQ fell 0.1%.

“Getting the tax plan done will still be a challenge, but it doesn’t seem as impossible as it once did, and now there’s optimism that it could happen before the end of the year, which means it could be made retroactive and change the liability for companies and individuals for this year as well as next, which would be a positive,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab.

In economic news, ISM Services fell to 57.4 in November from a 12 year high of 60.1 in October.  The U.S. created 228,000 jobs in November, surpassing the 200,000 that had been expected, according to the nonfarm payroll report. The unemployment rate held at 4.1% while wages rose 0.2%.

“The report all around is pretty hard to argue with,” said Dan North, chief economist at Euler Hermes North America. “But there is one important thing that’s missing: wage growth.”  Construction firms and manufacturers, for instance, both boosted hiring last month after home building and production recovered from storm-related disruptions. Builders added 23,000 new jobs and manufacturers created 31,000 new positions.  Professional-related work and health-care jobs also saw strong gains again. Most other industries saw little change.

“The jobs reports highlights the Goldilocks environment: continued growth but no profit pressure of rising labor costs,” said Tina Byles Williams, chief investment officer at FIS Group.

Note the move in the financial stocks (and volume) spike once it became clear the financial lobbyists had inserted all their goodies into the competing tax plans… err, I mean tax cuts for the middle class were assured.

Here is the 5 day weekly “intraday” chart of the S&P 500 … not via Jill Mislinski.

This is fascinating:

$10,000 invested in the S&P 500 at the start of 1996 would’ve grown to $43,930 by the end of 2016, assuming the investor took a buy-and-hold strategy. That’s an annualized return of about 8.19%.  Miss the five best days of that period, however, and the amount you’re left with shrinks by more than a third, to $29,145, which represents annualized gains of 5.99% from the initial $10,000. The more “best days” you’re not invested for, the worse off the end result looks. If you missed the top 30 sessions of that 20-year period, in fact, you would’ve lost money, with your initial $10,000 investment shrinking to a little over $9,000.   Of course the same holds for missing the worst days in the market.

The week ahead…

The Federal Reserve is widely expected to deliver its third and final rate increase of 2017 in the coming week:

The Fed’s two day policy meeting will end on Wednesday, with the announcement of its policy decision at 2 p.m. Eastern. The announcement will be followed by Yellen’s last news conference as Fed chief. at 2:30 p.m.

The only major economic report is retail sales on Wednesday.   Tax reform negotiations will continue to capture the markets attention — as will Bitcoin!

Index charts:

Short term: The S&P 500 continued onward as the NASDAQ is a bit weaker.

The Russell 2000 consolidated some big gains.

The NYSE McClellan Oscillator flipped to negative mid week – keep an eye on it.

Long term: Unicorns and rainbows continue.

Charts of interest / Big Movers:

Monday, Digital Power Corp (DPW) jumped 91% after the company said its Coolisys Technologies unit launched a line of power systems for cryptocurrency mining.  I am sure most of the “investors” in the stock that day had no idea what that meant, but what does it matter when we are in a mania?  We’re at the stage where any press release with text cryptocurrency is going to send algorithms and humanoids hitting BUY BUY BUY instantly.  Boo yah!

General Cable Corp (BGC) soared 35% Monday after Italy’s cable maker Prysmian said it would buy the cable manufacturer in a deal that values it at around $3 billion.

Thursday, Lending Club (LC) tumbled 15% after the company lowered its outlook for the fourth quarter and delivered a lower-than-expected forecast for next year.

Sage Therapeutics (SAGE) rallied a cool 73% Thursday.

Sage Therapeutics Inc. stock soared more than 73% Thursday to mark its biggest-ever one-day price and percentage gain, after the company reported positive results in a midstage trial of a treatment for severe depression that could offer doctors a new mechanism to treat the disease.

The company said the Phase 2 trial of its Sage-217 drug involving 89 adult patients with moderate to severe major depressive disorder (MDD) met its primary and secondary endpoints. Patients showed a statistically significant mean reduction in the Hamilton Rating Scale for Depression after just 14 days of treatment compared with the placebo. The drug was well-tolerated with no serious or adverse events, said Sage.

“With the caveat of cross-trial comparisons, this difference is both larger — and attained faster — than what’s observed for other antidepressants today,” Leerink analysts wrote in a note, as they raised their stock price target to $246 from $123, equal to 53% above its current trading level.

RBC analysts went a step further, raising their stock price target to $280 and forecasting further gains, “and good likelihood of takeout at premium to current levels.”

Friday, American Outdoor Brands (AOBC) tumbled 9.5% after the gun maker late Thursday reported a drop in profit and forecast continued struggles amid “challenging market conditions.”

Have a great week and we’ll see you back here Sunday!

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