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Morning Note

"CAPIS Morning Note – The Week Ahead"

posted by CAPIS on 06/03/2019 at 7:47 am

by CAPIS

06/03/2019 at 7:47 am

Due to some early morning travel we are doing something different for today. We are producing The Week Ahead which we write for Phil Erlanger Research, Inc. each week. Our normal format returns tomorrow.

Summary of Last Week

The NASDAQ 100 was lower as were the Dow Jones Industrial Average, S&P 100 and Russell 2000 last week. The Big Picture [monthly bias] for the S&P 100, Dow Jones Industrial Average and NASDAQ 100 moved from positive to neutral on the monthly DMA Channel at the end of May. The Russell 2000 is still negative on the monthly; it has yet to turn positive. For the Russell 2000 to move out of negative bias situation it must close a month above the monthly DMA Channel. Despite the move to neutral on the other indexes, we would stay with their long bias.

The 14-day choppiness index for the NASDAQ 100 moved to 47 from 50, and the S&P 100 moved to 47 from 56. The Dow Jones Industrial Average 14-day choppiness index moved to 52 from 58. The Russell 2000 moved to 41 from 49.  The Choppiness index ranges from 0 to 100, and the lower it goes the more a trend is evolving. The higher the choppiness index moves, the more a new trend may be starting. Usually, above 65 is where new trends begin and below 40 is where trends typically end.

The NASDAQ 100 and the S&P 100 remain below their daily Displaced Moving Average (DMA) Channels. The Dow Jones Industrial Average moves below its daily DMA Channel. The Russell 2000 remains below its daily DMA Channel. The NASDAQ 100, S&P 100, the Russell 2000 and the Dow Jones Industrial Average remain below their weekly DMA Channels. The NASDAQ 100 and S&P 100 remain in their monthly DMA Channels. The Russell 2000 moves below its monthly DMA Channel, and the Dow Jones Industrial Average remains in its monthly DMA Channel.

The Displaced Moving Average is a six period moving average that is displaced into the future by four periods and then a moving average from the high and the low are created.

We note our Erlanger Big Barf Indicator (EBB) on a daily basis moved to -7.83 from -4.83 over the last week. The weekly EBB moved to -6.01 from 1.74. The Erlanger Big Barf Indicator looks at the S&P 100 action against the CBOE Volatility Index (VIX). The idea is that as the VIX drops and the S&P 100 rise the EBB will also rise. When the VIX rises and the S&P 100 falls then it turns negative.

  1. Geopolitical and Fiscal Events. Tuesday sees Federal Reserve Chairman Powell and Federal Reserve New York President speak at the Federal Reserve Inflation Conference. On Wednesday the latest Beige Book is released.
  2. Economic Releases. Releases of note this week and next include the weekly chain store sales, oil/gas numbers, mortgage applications and jobless claims as well as ISM Manufacturing Index, Construction Spending, Factory Orders, ISM Non-Manufacturing Index, Nonfarm Payrolls and the Unemployment Rate.

Earnings Releases.  Notable releases this upcoming week include BOX COUP TIF CRM CPB BFB CIEN MTN.

Monday, June 3

  • May ISM Manufacturing is due out at 10:00 a.m. and came in last month at 52.8 and is expected to fall to 52.6.
  • April Construction Spending is also due out at 10:00 a.m. EDT and is expected to rise 0.4% from -0.9%.
  • Joint (JYNT) holds its investor day and is a Type 1 Short Squeeze. The stock has just moved to moderate short interest as of May 9th’s data. Current short intensity is 74%, and the average short squeeze when moderate is 64.78%. Shorts are squeezed 42.86% of the time (7 occasions). When shorts make money, they make 29.93% on average. The average return is 14.93% over 82 days. Moderate short selling is just getting started at 15 days. There is both great risk and great reward another one not for the faint of heart.

 

Tuesday, June 4

  • April Factory Orders are due out at 10:00 a.m. EDT and are expected to fall to -0.9% from 1.9%.
  • Federal Reserve Chairman Jerome Powell and Federal Reserve New York President John Williams speak at the Federal Reserve Inflation Conference.
  • CVS Corp (CVS) holds its investor conference and is a Type 4 Long Squeeze.

 

Wednesday, June 5

  • May ADP Employment Index is due out at 8:15 a.m. EDT and is expected to come in at 170,000 from 275, 000.
  • May ISM Non-Manufacturing is expected to fall to 55.4 from 55.5.
  • June Federal Reserve Beige Book is due out at 2:00 p.m. EDT.

                                                                                                                

Thursday, June 6

  • None of note.

 

Friday, June 7

  • May Nonfarm Payrolls are due out at 8:30 a.m. EDT and are expected to fall to 175,000 from 236,000. The Unemployment Rate is expected to tick up to 3.7% 3.6%.
  • Cigna (CI) holds their analyst meeting and is a Type 4 Long Squeeze.

 

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