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09Oct2015 Market Close: Markets End Session With Best Week Of The Year

Written by Gary

Markets closed mostly in the green and ends best week of year with slight gain on a quiet note as investors waited for U.S. companies to report third-quarter earnings. In today's session traders flip-flopped between the negative fundamentals of persistent oversupply and support cushions from a sixth weekly decline in U.S. oil rig counts.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

UAW leaders send Fiat Chrysler pact to workers for vote

DETROIT (Reuters) - U.S. union United Auto Workers' leaders on Friday approved a tentative four-year contract with Fiat Chrysler Automobiles NV , sending the proposed pact to 40,000 workers for a ratification vote. The move follows Fiat Chrysler workers' rejection last week of a previous tentative contract. A new tentative agreement was reached on Wednesday night, averting a call by the UAW to have its members strike Fiat Chrysler’s U.S. operations.

Banks take spotlight as earnings season heats up

NEW YORK (Reuters) - The financial sector, recently a weak performer in the stock market, will garner the majority of investor attention next week as a number of big banks post their quarterly results.

Oil little changed after choppy trade, WTI ends at 11-week high

NEW YORK (Reuters) - Oil prices remained little changed in choppy trade on Friday as traders flip-flopped between the negative fundamentals of persistent oversupply and support cushions from a sixth weekly decline in U.S. oil rig counts.

Dow Jones discloses data breach

(Reuters) - Dow Jones & Co disclosed on Friday a breach of its systems that put payment card and contact information of about 3,500 individuals at risk.

SABMiller declares new savings goal in defense against AB InBev

LONDON (Reuters) - Brewer SABMiller Plc announced an expanded cost-cutting plan on Friday, stepping up its defense against an unsolicited $100 billion takeover offer from bigger rival Anheuser-Busch InBev .

United ready for rival's overseas flights from Houston: executive

(Reuters) - United Airlines will be competitive in Houston even as budget rival Southwest Airlines launches its first international flights from the Texas city next week, the company's chief revenue officer said Friday in an interview.

Wal-Mart changes CFO, gets new chief merchant in latest shuffle

(Reuters) - Wal-Mart Stores Inc on Friday named a new chief financial officer and installed a chief merchant, marking the latest shuffling of its management ranks as the retailer grapples with sluggish earnings.

Stocks Soar To Best Week In A Year On "Mother Of All Short Squeezes"

The week summarised... as BofA put it -"It's Not A Risk-On Rally, This Is The Biggest Short Squeeze In Years"

With China shut and The Fed going full dovish panic-mode over growth fears, world markets went crazy...


S&P up 7 of last 8 days +3.2% - best week since Oct 2014

Russell 2000 +4.5% - best week since Oct 2014

Nasdaq up 7 of last 8 (since Death Cross) closed above 50DMA

Trannies up 8 of last 9 closed above 100DMA +4.9% - best week since Oct 2014

Dow up 8 of last 9 +3.5% - best week since Feb 2015

"Most Shorted" +4.7% - biggest squeeze in 8 months

Biotechs -2.3%

Financials +2.2% - best week in 3 months

Asian Dollar Index +1.4% (worst week for USD vs Asian FX since Oct 2011)

Dollar Index -1.2% (worst week for USD vs Majors in 2 months)

AUD +4% - best week sicen Dec 2011


2Y TSY Yields +6.5bps - biggest rise in 7 weeks

5Y TSY Yields +11bps - biggest rise in 4 months

WTI Crude +8.9% - 2nd best week sicne Feb 2011

OJ +4.8% - best day since March

Silver +3.8% - best week since May

LOLume!!

The last 8 days have seen a massive short-squeeze... 2nd biggest in history

The "Secret" Of Successful Biotech Investing Revealed: All You Need To Know In One Chart

Back in March, just before the last parabolic phase of the biotech bubble, we showed something which at the time we thought was quite amazing: of the 150 companies that made up the Nasdaq Biotech Index, only 41 had any earnings. Of these 41 companies, just five companies (Gilead, Amgen, Shire, Biogen and Celgene) had earnings of at least $1 billion each, and the five combined accounted for 83% of all earnings in the entire sector. The combined Net Income of the profitable companies was $21 billion; this compared to a market cap for the NBI of $1.1 trillion, a 50x P/E ratio.

109 companies, or 73% of biotechs, had never made a dime in profit.

We were content with our "amazing" findings... until we ran into a recent note by Convergex' Nick Colas also looking at the biotech sector, which in addition to profitability looked at a very key second dimension, one which we had ignored: 2015 profits.

His finding is nothing short of stunning, and "explains" the "secret" behind biotechs' success.

* * *

While we present the full note in its entirety below, here is the TL/DR version:

What Colas did was first to pull the entire list of companies in the index â€" currently 144 in total â€" and ranked them by weighting in the index. The 80/20 rule applies to this group of companies â€" roughly 20% of the names (18.8% to be exact) made up 80% of the index.

27 names made Colas' list, 15 are profitable in 2015 (and analysts expect 18 to produce profits in 2016). The balance are in the red through the next year at least.

Looking at this universe of names, this is what he found:


On valuation: for the companies with profits in 2015 and 2016, earnings multiples are 22.3x this year and 19.0x next year.

On growth expectations: analysts expect our sample to show an average of 21. ...

It A "Liquidity Mirage": New York Fed Finally Grasps How Broken The Market Is Due To HFTs

In the aftermath of the October 15th, 2014 Treasury flash crash that was much fake "confusion" among the punditry about what caused the dramatic 20-sigma move in the 10 Year treasury. For us, however, there was no confusion, it was all due to a vicious case of HFT algo quote stuffing - a key component of algos trying to establish whether there are credible size orders to be frontrun - gone horribly wrong.

Several months later, in July, the Joint-Staff Report released by the Treasury, Fed, SEC and CFTC confirmed as much, and even if they didn't explicitly single out HFTs as the culprit for the flash crash (that would mean having to redo the topography of the market, in the process gutting and redoing the entire market structure after tacitly admitting the market is broken), they did very clearly note that it was "self-trading", or quote stuffing, that was responsible for the unprecedented move.

Here are the only two charts that mattered from that report:

As we thoroughly documented back in July, this is what the staff report said: "Given the finite c ...

H-P Ruling Strikes Blow Against Merger Litigation

A Delaware judge refused to approve a settlement of shareholder lawsuit stemming from Hewlett-Packard’s $2.7 billion purchase of Aruba Networks, a signal that the country’s most influential corporate court is taking a tougher stance against merger litigation.

Bond Report: Treasury yields post largest weekly gain in over a month

Treasury yields finish the week higher, posting their largest weekly increase since late August, as investors sold U.S. government debt, which is considered a safe investment, in favor of riskier assets amid a global stock market rally.

Behind the Storefront: Gap downgraded as Banana Republic sales extend their decline

Gap Inc.was downgraded at MKM Partners after September results showed continued declines and raised margin concerns.

Summary of Economic Releases this Week

Real Time Economic Calendar provided by Investing.com.

Earnings Summary for Today

Earnings Calendar provided by Investing.com.

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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