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Market Indexes: The market had its worst week since October, with volatility soaring above 30. This was a new wrinkle - retail traders ganging up on Wall St. short sellers, causing major short squeezes in heavily shorted stocks. GameStop short sellers were said to have lost some $19B this week. The DOW, S&P, and the NASDAQ all lost over -3%, and the market-leading small caps lost over -4% this week.
We covered a stock in an article last Friday, PetMed Express, (PETS), a pet-care pharma retailer, that has a 30%-plus short float.PETS got caught up in the social media/Reddit/RobinHood short squeeze play this week. A roller coaster ride that sent it into the $50's, and back to the high $30's.
PETS ended up ~26% for the week - a real tail-wagger for PETS longs!"Puttin' On The Dog: PetMed Express & 9 Other Pet Stocks"
"On Friday, the S&P 500 fell more than 1.9%, capping a stretch of volatile trading that left the index down more than 3% for the week — its worst week since late October. The selling came as Wall Street has been consumed by the antics of a group of day traders who have been bidding up a handful of stocks — notably the ailing video game retailer GameStop — and forcing losses on big hedge funds.The traders appear to be mostly small investors who are focused only on a handful of stocks.
But they have emerged as a new risk factor for large firms that had bet against those companies with what are known as short sales. Short sellers lose money when a company’s shares rise, and the losses are potentially limitless.To some investors, the week’s turmoil served only as a distraction from those positives.
Even as stocks fell this week, several large companies, including Microsoft, Apple and Facebook, reported profit and sales growth. The selling Friday came even after Johnson & Johnson said that its one-dose coronavirus vaccine provided strong protection against Covid-19." (NY Times)
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Volatility: The VIX rose 51% this week, ending at $33.09, its highest point since October.
High Dividend Stocks: These high dividend stocks go ex-dividend next week: CAPL, DKL, HEP, SHLX, SRLP, SPH, TGP, HESM, BKEP, CEQP, NBLX, AROC, CQP,
Market Breadth: 9 out of 30 DOW stocks rose this week, vs. 12 last week. 21% of the S&P 500 rose, vs. 44% last week.
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Economic Reports: "The Fed has cut its policy interest rate close to zero and is buying $120 billion per month of U.S. Treasurys and mortgage-backed securities to help the economy recover from the pandemic. During a news conference on Wed., Fed chief Powell said new strains of coronavirus "add to economic uncertainty." However, he emphasized that the U.S. economic recovery has been strong from its lows and said financial stability vulnerabilities are 'moderate' right now." (MarketWatch)
"New orders for key U.S.-made capital goods increased for an eighth straight month in December, pointing to solid growth in business spending on equipment in the fourth quarter and likely helping to underpin the economic recovery. Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 0.6% last month. These so-called core capital goods orders advanced 1.0% in November.
Last month’s increase was in line with economists’ expectations. Core capital goods orders surged 1.8% year-on-year in December. Demand has shifted away from services like travel and hospitality towards goods like motor vehicles, electronics and medical equipment during the COVID-19 pandemic. That has contributed to boosting production at factories, though output remains about 2.6% below its pre-pandemic level." (Reuters)
Q4 '20 earnings season rolls on, as 20% of the S&P 500 reports, and 2 DOW stocks report, including many big Healthcare names, including Bristol Myers, Merck, Amgen, and AbbVie, among others. Amazon will also report.
"The US Energy Information Administration that U.S. crude inventories fell by 9.9 million barrels for the week ended Jan. 22. The data compared with the average decline of 1.7 million barrels forecast by analysts polled by S&P Global Platts." (MarketWatch)