Good Friday evening to all of you here on r/stocks! I hope everyone on this sub made out pretty nicely in the market this week, and are ready for the new trading week ahead. :)

Here is everything you need to know to get you ready for the trading week beginning April 24th, 2023.

Stocks end Friday’s session little changed, Dow snaps 4-week win streak: Live updates - (Source)

The Dow Jones Industrial Average ended little changed Friday and finished lower for the week as investors evaluated the latest earnings results and concerns of disappointing profits.

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The 30-stock index added 22.34 points, or 0.07%, to end at 33,808.96, while the S&P 500 eked out a 0.09% gain to settle at 4,133.52. The Nasdaq Composite rose 0.11% to close at 12,072.46.

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All major indices finished the week in the red, with the Dow falling 0.23% to snap a four-week win streak. The tech-heavy Nasdaq saw the biggest decline, falling 0.42%, while the S&P slipped 0.1%.

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“There’s the continued push-pull of the fact that the economy has been a lot more resilient than many people expected and corporate earnings have held up pretty well, all things considered,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.

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Even so, he noted that the Federal Reserve has raised rates substantially over the last year. Zaccarelli said that even if the central bank hikes as anticipated in May, it will likely hold rates at a higher level than the market expects.

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“You can kind of see the the bull and bear case really right there in a nutshell as far as resilient economy with stronger-than-expected corporate earnings versus a very hot, very restrictive monetary policy coming from the Fed,” he said.

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Earnings season continued Friday, with results from Procter & Gamble. The consumer products company gained 3.5% after beating expectations and lifting it sales forecast. As of Friday morning, 76% of S&P 500 companies reporting earnings so far have beaten analyst EPS estimates, according to FactSet.

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Elsewhere, materials stocks were the worst performers, with Freeport-McMoRan falling 4.1%. Albemarle tumbled 10% as Chile said it would nationalize its lithium industry.

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While companies broadly beat expectations this week, overall profit reports failed to boost stocks, with some investors fearing an earnings drop looms with a likely recession ahead.

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“So far, earnings season is off to an uneventful start, with many companies meeting already reduced earnings expectations and that helps to explain the lack of movement in the major stock indices over the past few days,” said Carol Schleif, chief investment officer at BMO Family Office, adding that she expects stocks to trade in a tight range for some time.

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Earnings continue next week with results on deck from Big Tech companies Amazon, Alphabet, Meta Platforms and Microsoft.

This past week saw the following moves in the S&P:

(CLICK HERE FOR THE FULL S&P TREE MAP FOR THE PAST WEEK!)

S&P Sectors for this past week:

(CLICK HERE FOR THE S&P SECTORS FOR THE PAST WEEK!)

Major Indices for this past week:

(CLICK HERE FOR THE MAJOR INDICES FOR THE PAST WEEK!)

Major Futures Markets as of Friday's close:

(CLICK HERE FOR THE MAJOR FUTURES INDICES AS OF FRIDAY!)

Economic Calendar for the Week Ahead:

(CLICK HERE FOR THE FULL ECONOMIC CALENDAR FOR THE WEEK AHEAD!)

Percentage Changes for the Major Indices, WTD, MTD, QTD, YTD as of Friday's close:

(CLICK HERE FOR THE CHART!)

S&P Sectors for the Past Week:

(CLICK HERE FOR THE CHART!)

Major Indices Pullback/Correction Levels as of Friday's close:

(CLICK HERE FOR THE CHART!)

Major Indices Rally Levels as of Friday's close:

(CLICK HERE FOR THE CHART!)

Most Anticipated Earnings Releases for this week:

(CLICK HERE FOR THE CHART!)

Here are the upcoming IPO's for this week:

(CLICK HERE FOR THE CHART!)

Friday's Stock Analyst Upgrades & Downgrades:

(CLICK HERE FOR THE CHART LINK #1!)

(CLICK HERE FOR THE CHART LINK #2!)

(CLICK HERE FOR THE CHART LINK #3!)

(CLICK HERE FOR THE CHART LINK #4!)

Lithium: The Cycle Continues

If you haven't checked the price of lithium lately, you might be in for a surprise. Spot prices for lithium carbonate in China have collapsed by two-thirds since hitting record highs in November of last year. Prices have gone from $84k per ton to $25k per ton. That unwinds the vast majority of a spectacular surge that played out from 2020 to 2022. Lithium initially surged 1,279% from July 2020 to March 2022 as part of the broader explosion of commodity prices and booming demand for electric vehicles, eventually peaking up 1,387% from the post-COVID lows. It's easy to forget that this critical battery input had already gone through one such cycle. A 224% rally in 6 months during late 2015 and early 2016 before a long, slow bear market that saw prices down 78% over several years.

(CLICK HERE FOR THE CHART!)

In the equity market, the price cycle hasn't been as dramatic in percentage terms, but there has still nonetheless been a double cycle of surging stock prices in 2016 followed by a grinding bear market, and then an even more dramatic surge through late 2022 that is now sliding into reverse. On Thursday, Chile's government announced reforms to its lithium extraction policy. While existing contracts with firms that operate in the rich lithium brine deposits of the Chilean Atacama desert will be honored, the market is looking at weaker lithium prices and the fact that existing contracts will be replaced by less favorable ones 10+ years down the line and hitting lithium players. SQM is off 21% today while ALB is 10% lower.

(CLICK HERE FOR THE CHART!)

April 2nd Half Strength After Tax Deadline

(CLICK HERE FOR THE CHART!)

1st half of April used to outperform the second half, but since 1994 that has not been the case. Traders are more focused on Q1 earnings and guidance during April than the Tax Deadline nowadays.

Expectations are low for earnings season and next week is a big week with 35% of S&P 500 stocks reporting next week including AMZN, GOOGL, META & MSFT, compared to less than 12% this week and 2% last week (Hat tip @ScottSchnipper @CNBC @CNBCPro). Better than expected results and upbeat guidance could rally stocks into month-end.

These 2 charts show how April is tracking usual performance over the last 21 years as well as during pre-election years. April is clearly weaker than normal, yet the market is still tracking the directional trends.

(CLICK HERE FOR THE CHART!)

Jobless Claims Nearing New Highs

Jobless claims have continued to weaken with this week's release, rising by 5K to 245K versus expectations of no change from last week's upwardly revised 240K print. At current levels, claims sit at the high end of the range since the start of 2022 and only a couple thousand below last month's high.

(CLICK HERE FOR THE CHART!)

Prior to seasonal adjustment, claims have essentially come in right inline with the reading for the same week last year and the few years prior to the pandemic. As shown in the second chart below, claims tend to experience a little bit of a bounce around this point of the year before resuming a move lower through the late spring.

(CLICK HERE FOR THE CHART!)

Continuing claims were equally disappointing this week rising to 1.865 million, 40K above expectations. Although the increase to initial claims has not resulted in a new high, the 61K increase for continuing claims leaves the indicator at the highest level since late November 2021.

(CLICK HERE FOR THE CHART!)

Homebuilders Breaking Out Like It's...

It's hard to get over how well the homebuilder stocks have been performing lately. As shown in the charts below of stocks in the S&P 1500 Homebuilder group, these names are nearly universally in steep six-month uptrends and breaking out as we type.

(CLICK HERE FOR THE CHART!)

(CLICK HERE FOR THE CHART!)

Below is another way to see just how crazy the run has been for the S&P 1500 Homebuilder stocks lately. Most names are now up 30-40% year-to-date after rallying 5-10% over the last week. This has pushed them ~10% above their 50-DMAs, and many are trading more than two (or even three for some) standard deviations above their 50-DMAs in extreme overbought territory.

"Mr. Market" has either lost its mind or it's predicting that all the current worries about housing in the months and quarters ahead are misguided.

(CLICK HERE FOR THE CHART!)

Sell in May and go away – Maybe, it depends

(CLICK HERE FOR THE CHART!)

In the above table the “Worst Months” performance of DJIA, S&P 500, and NASDAQ have been separated by year of the four-year-presidential-election cycle going back to 1951 for DJIA and S&P 500 and 1971 for NASDAQ. NASDAQ’s “Worst Months” are July through October compared to May to October for DJIA and S&P 500. Even though pre-election years have historically been the best performing year of the four-year cycle, performance during the “Worst Months” has not been the least bit impressive. In 18 pre-election year “Worst Months” periods, DJIA has averaged a meager 1.14%. S&P 500 is only slightly better +1.81% while NASDAQ’s average is under 1%. Frequency of gains or percentage of time higher in pre-election years “Worst Months” is only slightly better than 50-50.

Because of the elevated level of risk that has been historically observed during the “Worst Six Months” of the year and its historically tepid returns, reducing long exposure and developing a defensive strategy is the approach taken in the Almanac Investor Stock and ETF Portfolios. We do not merely “sell in May and go away.” Instead, we take some profits, trim or outright sell underperforming stock and ETF positions, tighten stop losses and limit adding new long exposure to positions from sectors that have a demonstrated a record of outperforming during the “Worst Months” period.

For those with a lower risk tolerance or a desire to take a break from trading, the “Worst Months” are a great opportunity to unwind some longs and move into the relative safety of cash, Treasury bonds, gold and/or some combination of traditional defensive assets. For the first time in over a decade, cash can currently earn something other than zero. Preservation of capital may be more important than growth and with historical averages and frequency of gains reduced; the “Worst Six Months” are a good time to simply step aside if you prefer. August, September and/or October have provided some excellent buying opportunities over the years and could do the same again this year.

Sector Breadth All Over the Place

In terms of price, the Industrials sector remains 5.75% below its high from January of last year and has yet to even take out the highs from earlier this year, but breadth has been more constructive recently. Just yesterday, the cumulative advance/decline line hit a new all time high.

(CLICK HERE FOR THE CHART!)

Although that measure of breadth is making promising moves, other breadth measures have not exactly echoed that strength. In spite of the record high in the cumulative A/D line Monday, only 37% of the sector's stocks finished above their 50-DMAs. As shown below, of all other instances of a record high in the cumulative AD line, there has never been such a low reading in the percentage of stocks above their 50-DMAs. In fact, no other readings have even crossed into the 30% range! For the vast majority of previous highs, the percentage of stocks above their 50-DMAs has sat at 70% or more.

(CLICK HERE FOR THE CHART!)

All that is to say that most Industrials sector stocks are moving higher, but have not yet moved above potential resistance at their 50-DMAs. And even though the reading on the percentage of stocks above their 50-DMAs is low at the moment, that is not to say it is not improving rapidly. As shown below, it has risen sharply from the low of 19.18% on April 6th. Furthermore, whereas Monday's close only saw 37% of the sector finish above their 50-DMAs, as of mid-morning Tuesday the reading is already up another 8.2 percentage points to 45.2% as the average stock in the sector trades just 7 bps below its 50-DMA.

(CLICK HERE FOR THE CHART!)

Volatility Is The Toll We Pay

“It’s a proprietary strategy. I can’t go into it in great detail.” – Bernie Madoff

Although Bernie Madoff was quite vague when asked how he had a strategy that printed money month after month when no one else could match it, as investors we know one thing and that is markets don’t always go straight up.

Burt White, our Managing Director and Chief Strategy Officer, likes to say that volatility is the toll we pay to invest. No one wants to pay a toll, but sometimes you just have to do it to get where you are going. When I lived in Charlotte and would drive back up to Ohio for holidays, I’d have to pay the great state of West Virginia $4.25 three different times on I-77. I didn’t like it, but Santa brought the kids presents up there and I had to do it.

Getting back to the stock market, volatility is that toll that we pay for enjoying longer-term returns. Below is a great chart that sums it up and thanks to our friends at Ned Davis Research for helping us with the data.

Here’s what you need to know regarding the S&P 500:

Each year sees more than seven different 3% percent dips. More than three times a year do stocks correct 5%. About once a year on average sees a 10% correction. A 15% major correction happens every year-and-a-half. A 20% bear markets happens about every three years.

(CLICK HERE FOR THE CHART!)

Another quote I like is from Regis Philbin when he said, “I’m involved in the stock market, which is fun, but sometimes very painful.” Well, this year has been fun for investors, but last year was quite painful.

After more than a 120% rally off the March 2020 lows, maybe the bear market we saw last year shouldn’t have caught as many investors off guard like it did? We didn’t quite see a 25% bear market happening last year, but we expected as much as a 15% correction at some point. With the historically aggressive Fed, inflation soaring, China lockdowns, the war, and supply chains in disarray, it was a perfect cocktail for a bear market.

The truth though is we get spoiled by the good times and when the rough times hit, we are almost surprised that bad times ever happen. Well, they do happen and it is all part of investing, or the toll we pay to invest. Just know this, volatility and bear markets have happened before and will happen again. The good new though is after this bad times, likely better times will be coming!

STOCK MARKET VIDEO: Stock Market Analysis Video for Week Ending April 21st, 2023

([CLICK HERE FOR THE YOUTUBE VIDEO!]())

(VIDEO NOT YET POSTED.)

STOCK MARKET VIDEO: ShadowTrader Video Weekly 4/23/23

([CLICK HERE FOR THE YOUTUBE VIDEO!]())

(VIDEO NOT YET POSTED.)

Here are the most notable companies (tickers) reporting earnings in this upcoming trading week ahead-

($AMZN $MSFT $META $FRC $KO $BA $VZ $GOOGL $UPS $ENPH $CLF $HAL $MCD $GM $GE $MMM $PEP $XOM $SPOT $INTC $AAL $V $ROKU $RTX $NEE $PHG $CAT $CVX $SNAP $LLY $VLO $LUV $BOH $MA $CROX $SIFY $JBLU $CMG $DOW $MO $ABBV $NOW $DHR $DX $NET $HUM $HLT $MRK $BMRC $PACW)

(CLICK HERE FOR NEXT WEEK'S MOST NOTABLE EARNINGS RELEASES!)

(CLICK HERE FOR NEXT WEEK'S HIGHEST VOLATILITY EARNINGS RELEASES!)

(CLICK HERE FOR MONDAY'S PRE-MARKET NOTABLE EARNINGS RELEASES!)

(T.B.A. T