S&P New All-Time Highs, What Did You Expect?
MrTopStep | Jan 30, 2018 12:06AM ET
- In Asia 5 out of 11 markets closed lower: Shanghai Comp -0.97%, Hang Seng -0.56%, Nikkei -0.01%
- In Europe 5 out of 12 markets are trading higher: CAC +0.03%, DAX -0.19%, FTSE +0.20%
- Fair Value: S&P +0.50, NASDAQ +8.40, Dow -21.70
- Total Volume: 1.2mil ESH & 337 SPH traded in the pit
Chicago Fed National Activity Index, 8:30 a.m. Premarket earnings: Adient, Lockheed Martin (NYSE:LMT), Dominion Energy, Seagate Technology (NASDAQ:STX). Post-market earnings: Werner Enterprises, Graco, Principal Financial, Reinsurance Group of America, Houlihan Lokey, IDEX, Crane, Ashland Global Holdings.
h2 S&P 500 Futures: $ES_F Up 188 Handles Or + 7% in 18 Trading Days/h2Friday morning, Asian markets closed mixed, the Stoxx 600 was up +0.50%, and the dollar continued to slide. On Globex the S&P 500 futures traded up to 2852.25, up 11 handles. On the 8:30 CT futures open the ES traded 2850.00, pulled back down to 2846.50, did a little back and fill, and then traded up to 2850.50, two ticks above the opening print.
After a few small pullbacks, and a triple top at the 2850.50 level, it sold off a few ticks below the vwap, down to 2848.00, and then in came a big buy program that pushed the future up to a new all-time high at 2856.50. Again, there was some back and fill, and at 12:54 CT traded up to 2862.75.
At 2:00 the MiM went showing over $800 million, to sell to $500 million to sell, to -87 million to sell, and as it did the ES pulled back down to 2859.50. On the 2:45 cash close the MiM flipped to buy $800 million, and the ES went flying up to 2772.75, and went on to settled at 2874.00 on the 3:15 futures close, up 31.50 handles, or +1.12%.
In the end, a weak dollar, a batch of stronger than expected earnings, and fresh data showing continued economic growth around the globe helped push the ES to a new all-time high at 2876.00, up almost 8% in 2018. We have seen a lot of stock market moves, but none like this.
h2 Are The Big Bank Predictions For 2018 Off The Mark?/h2
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Big and small investors always want to know what the big banks think about where the S&P is going in the year ahead. They have not been very accurate over the last few year, and we do not think they will be this year either. Marko Kolanovic, who serves as JPMorgan’s global head of quantitative and derivatives strategy, said at the end of 2017 that, “The upcoming reduction of US corporate tax rates may be one of the biggest positive catalysts for US equities this cycle. We think that little is priced into the market and hence there is potential for market upside. Clients are not repositioning portfolios until they see the reform passed.”
Kolanovic set a price of 3,000 for his year end prediction. He thinks that the US stock market is ‘not even close to pricing in the full positive effect of a successful GOP tax bill’. His forecast is that volatility will rebound from near-record levels next year, and sees tail risks mounting in the second half of the year.
I believe that Marko Kolanovic is one of the best strategist we’ve seen on Wall Street in many years. I also believe that what he said about the benefits of the tax bill having not fully been priced into the markets is 100% correct. No one knows for sure how high the S&P can go, but what we do know is that the S&P can’t keep going up like it is forever.
Other predictions; Oppenheimer — John Stoltzfus — Target: 3,000. Bank of Montreal — Brian Belski — Target: 2,950. Jefferies — Sean Darby — Target: 2,855. Morgan Stanley (NYSE:MS) — Mike Wilson — Target: 2,750. Scotiabank — Vincent Delisle — Target, 2,750. Stifel Nicolaus — Barry Bannister — Target: 2,750. HSBC — Ben Laidler — Target: 2,650.
Whatever your prediction is, it would be hard to believe that anyone would have thought the S&P would go up so fast. That said, what is you 2018 prediction?
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