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Weekly Market Recap Feb 10, 2019

Courtesy of Blain.

A good week for the bulls once again as a very overbought market essentially went sideways to help work off some of those near term extreme conditions.  The S&P 500 stalled exactly at the 200 day moving average after a frantic rally the past month and a half.  It was generally a quiet week with lowered volatility as the word “patience” continues to have the investor class in a happy daze.

In economic news, ISM Services fell from 58.0 in December to 56.7 last month, below economists’ expectations of a 57.4 reading. A reading above 50 indicates an expansion in activity.

For the week the S&P 500 gained 0.1% and the NASDAQ 0.5%.  That is 7 up weeks in a row.

Here is the 5 day weekly “intraday” chart of the S&P 500 … via Jill Mislinski.

A couple of interesting infographics in regard to Facebook (FB) from Statista.  First the growth of employees – 2018 was pretty amazing growth for an already large company.

Second is how Facebook properties are dominating the newest area in social media: stories.

First introduced on Instagram in August 2016, the Stories format was heavily “inspired” by one of Snapchat’s most popular features and gradually found its way to all of Facebook’s social media and messaging apps.  All of Facebook’s stories features, i.e. Instagram Stories, WhatsApp Status (which might as well have been named Stories too) and Facebook Stories have surpassed Snapchat in terms of daily active users by now, regardless of whose idea it originally was. The ongoing shift towards stories at the expense of feeds in social media poses a new challenge for Facebook, because it’s unclear whether the new format can be monetized as effectively as the news feed.

The week ahead…

Earnings will begin to slow down, and move to the smaller type of companies.  The Fed remains on hold for half a year at minimum it seems.  News flow seems like it will be light with perhaps a nod to China-US trade talks.

Index charts:

Short term: the S&P 500 rallied exactly to the 200 day moving average.

Unlike 2018, the Russell 2000 seems to be patterning itself pretty closely to the S&P 500 and NASDAQ of late.

This is the 5th week in a row the NYSE McClellan Oscillator remains ABOVE the level it usually stalls out at: +55 to +65.

Long term: The S&P rallied exactly to our trend line which connects the major lows of 2017 and 2018, before stalling a tad.

Charts of interest / Big Movers:

Monday, Ultimate Software Group (ULTI) soared 20% after it agreed to be bought by an investor group led by Hellman & Friedman in an all-cash dealvalued at about $11 billion.

Tuesday, Estee Lauder (EL) rallied 12% after the cosmetics company posted fiscal second quarter earnings and sales beats and raised its full-year outlook.

Ralph Lauren (RL) jumped 8.4% Tuesday after the luxury lifestyle brand reported fiscal third quarter earnings and revenue that beat expectations.

Wednesday, Snap (SNAP) surged 22% after posting record quarterly revenue and narrowing its loss on the back of a boom in online advertising.  This one has been a massive disappointment since its IPO.

The power of Fortnite!  Electronic Arts (EA) sunk 13% Wednesday after the company missed holiday-season sales estimates and issued a downbeat outlook.  Apparently this was due to it’s major gaming release not having a “battle royale” component in initial release – i.e a copycat to Fortnite.  However Friday the company announced that battle royale game Apex Legends drew 10 million players in its first 72 hours.

Thursday, Chipotle (CMG) soared 11% after the restaurant chain reported adjusted quarterly earnings above expectations.

Twitter (TWTR) skidded 9.8% after the firm issued a downbeat outlook for the current quarter, while announcing it would stop reporting the monthly average user metric.

Mattel (MAT) shares were up 23% after beating Wall Street revenue and earnings forecasts.

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


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