The Bear Den by Shortside Jonny
Monday, February 1, 2021– DIA 302.60 +.73%, 322.42 +2.50%, SPY 376.02 +1.61%
Markit manufacturing PMI posted 59.2 v. 59.1 expected. Markit Manufacturing Employment 52.6 v. prior number 51.7 (showing growth). Markit Prices Paid printed 82.1 v. 77.7 expected (inflationary). Markit New Orders dropped from the previous number 61.1 from 67.5 (contraction). The strongest sectors on the day were Consumer Discretionary (XLY) 166.11 +2.53% (AMZN is 21% of the index), and Technology (XLK) 132.16 +2.51%. International Fragrances and Flavors (IFF) 130.15 +15.81% announced the deal was finalized with DuPont’s (DD) Nutrition & Biosciences unit. ViacomCBS (VIAC) 52.33 +7.9% moved sharply higher. Xerox (XRX) 22.59 +7.4% announced an organizational restructuring. On the downside, DXC Technology (DXC) 25.50 -9.57% ended talks to be acquired by Atos SE.
Tuesday, February 2, 2021 – DIA 306.82 +1.59%, QQQ 327.68 +1.63%, SPY 381.55 +1.41%
No high impact data released. Good earnings continued to be released and the market rallied with Financials (XLF) 30.04 +2.42% and Industrials (XLI) 87.47 leading the way. The market continued to be transfixed by GameStop (GME) 90.00 -60%! The Reddit-fueled stocks all sold off, but the general market improved on traders’ assumption that the hedge fund deleveraging was abating. Goldman Sachs (GS) 286.97 +4.46% (pivoting up and out from a pullback on a long bar), and Caterpillar (CAT) 192.50 +4.21% (recently beat earnings estimates handily) continue to lift the DJIA. The day’s moon shot was Cassava Sciences (SAVA) 55.44 +141% which released primary data on an investigational drug, Sumifilam, for Alzheimer’s disease. Biotech names have seen increased interest in chatrooms of late.
Wednesday, February 3, 2021 – DIA 307.26 +.14%, QQQ 326.38 -.40%, SPY 381.85 +.08%
ADP Employment Change showed better than expected growth +174K vs. +49K estimate. ISM Services PMI came in better at 58.7 vs. 56.8 up from the prior reading of 57.7. ISM Services New Orders showed good growth 61.8 vs. 55.2 expected and up from prior 58.6. ISM Services Employment came in 55.2 vs. an expected 49.7 (below 50 is contraction). Prices paid were still elevated but lower than expected 64.2 vs. 65.6. The strongest sector on the day was energy (XLE) 41.74 +4.27% in response to the talk of OPEC confirming planned output cuts. Also, strong was the Communications Sector (XLC) 70.10 +1.34%. Individual standouts included EOG Resources (EOG) 55.88 +9.01% and Diamondback (FANG) 63.58% +8.84% which outperformed. In a case of "Sell the Good News", Perkin Elmer (PKI) 139.72 -7.55% reported & beat earnings and revenue estimates but with a good deal of their growth related to increased demand for COVID-19 testing, investors had doubts if the future sales growth is sustainable. Also, lower was Israeli-based Checkpoint Systems (CHKP) 120.03 -10.49% which beat analyst estimates but guided lower on future growth. Cassava Sciences (SAVA) 87.95 +58.64% continued higher from Tuesday’s move.
Thursday, February 4, 2021 – DIA 310.67 +1.11%, QQQ 330.24 +1.18%, SPY 386.19 +1.14%
Jobless Claims came in elevated but less than expected 779K vs. 830K. Continuing Claims still elevated came in better as well 4.592M vs. 4.7M down from the previous 4.785M. Unit labor Costs (a measure of inflationary pressures) came in at a much stronger +6.8% vs. the +3.9 expected. Factory orders were +1.1% vs. +.7% expected. Equity markets responded positively to the stimulus bill moving through Congress. Janet Yellen appeared to support a $1.9 Trillion price tag for the USA bailout package and economic stimulus. Financials were the best sector on the day (XLF) 30.88 +2.22% followed by Technology (XLK) 135.62 +1.60%. Visa (V) 209.25 +3.92% and Travelers (TRV) 143.93 +3.80% led the DJIA (DIA). United Healthcare (UNH) 329.32 -2.54% continued its downtrend and sell-off which started January 11. CDW Corp (CDW) 149.98 +6.38% was upgraded by Morgan Stanley to Overweight. eBay (EBAY) 61.12 +5.31% released better than expected earnings and revenue on Wednesday night. On the downside Qualcomm (QCOM) 147.97 -8.83% beat on earnings but chip supply constraints held back performance. Anavex Life Sciences (AVXL) 14.91 +43.64% bolted higher on favorable data. In the last report on AVXL, there were 9 days average daily volume to cover on short interest.
Friday, February 5, 2021 – DIA 311.54 +.28%, QQQ 332.36 +.34%, SPY 387.71 +.39%
Non-Farm Payrolls came in a tame +49K in line with expectations. The unemployment rate dropped to 6.3% (in line with expectations) from last month's reading of 6.7%. Underemployment dropped to 11.1% from 11.7% as part-time workers seeking full-time work either left the workforce or found full-time employment. The Materials sector (XLB) 73.53 +1.72% and Communications Sector (XLC) 71.41 +1.26% performed best on the day. The technology sector was the laggard (XLK) 135.32 -.22%. In the DJIA, Nike (NKE) 145.11 +3.19 spiked as the footwear powerhouse saw super bowl publicity and hype for its upcoming TV ads which always come under the spotlight. United Healthcare (UNH) 324.51 -1.46% continued its recent weakness. SeaGen (SGEN) 190.61 +15.23% bolted on reported speculation of inclusion in the S&P500 index. In the last report, there were 5 days average daily volume to cover in short interest in the stock. Activision Blizzard (ATVI) 101.61 +9.64% missed on earnings and revenues but bolted higher on an upbeat outlook for video game sales going forward. On the downside Cassava Sciences (SAVA) 44.80 -29.37% came under profit-taking from the week's huge run up on the data released earlier in the week.
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