The Bear Den by Shortside Jonny
Tuesday, June 2, 2021 – DIA 345.87 +.07%, QQQ 332.82 -.33%, SPY 419.67 -.37%
ISM Manufacturing PMI came in at a strong 61.2 v. 60.7 expected. ISM Manufacturing Prices Paid also came in strong at 88 v. 86.8 expected. ISM Manufacturing New Orders came in higher as well at 67 v. 66.3 expected. The one number that came in well below expectations, ISM Manufacturing Employment, came at 50.9 v. 61.5 expected (Many analysts believe that the additional unemployment payments created by Covid Legislation, are the reason for slow employment growth). The OPEC meeting ended with news of increased production quotas totaling 450,000 per day (smaller than expected) and on that news oil ripped higher to prices not seen in 2 years. Energy (XLE) 54.22 +3.85% reacted quickly to the OPEC news and subsequent industry upgrades on oil and energy names. Devon Energy (DVN) 30.20 +13.70% Marathon (MRO) 13.76 +13.63%, APA Corporation (APA) 23.06 +10.87% all surged. Cloud software company Cloudera (CLDR) 15.93 +23.87% agreed to be acquired by KKR in a private transaction for $5.3 billion. On the earnings front, biopharmaceutical firm Immunovant (IMVT) 9.40 -37.99% came with a narrower loss than expected & announced that their key drug in development for Autoimmune Hemolytic Anemia IMVT-1401 would resume clinical development, but the stock took a drubbing nonetheless and has now gone from 40 to 10 since January.
Wednesday, June 3, 2021 – DIA 346.46 +.14%, QQQ 333.47 +.20%, SPY 420.33 +.16%
No high-impact data. The release of the Fed Beige book survey was termed as lackluster. The market spent the day in consolidation with a slight upward bias. But importantly the Fed announced it would start selling its $9 billion corporate bond and ETF portfolio. What makes this news something to take note of, is not the size of this sale but the posture of fed policy going forward. The 10-year note index (TNX) 15.91 -.24 stabilized and moved lower from the sensitive 16.50-17.00 area that has coincided with recent weakness in technology shares. Energy (XLE) 55.23 +1.86% led the S&P sectors for the second day in a row with TechnipFMC (FTI) 9.89 +10.26% approaching its 2021 high, and Schlumberger (SLB) 35.46 +7.68% breaking out after giving upbeat forecasts. Basic Materials (XLB) 87.74 -.84% came under profit-taking, with specialty steel producer Nucor (NUE) 105.03 -5.16% pulling back from a 52 week high. Reddit/Wallstreetbets meme stock AMC Entertainment (AMC) 62.55 +95.22% bolted higher upon massive volume with a continued short squeeze. (and short gamma squeeze!) The company was recently able to bolster its balance sheet with a fresh equity capital raise of $230 million. Defying market logic, the dilution appeared to only embolden the trader’s appetite for the shares. Another meme stock, PetMed Express (PETS) 44.80 +58.4% surged on a perceived short squeeze as 29% of available shares have been sold short upon last reading. In Bed, Bath & Beyond (BBBY) 44.19 +62.11% short sellers were also hunted for the same reason as 31% of the available float had been sold short as of the last report.
Thursday, June 4, 2021 – DIA 346.02 -.10%, QQQ 330.00 -1.04%, SPY 418.83 -.36%
ADP Employment was reported at 978K v. the 650K a strong showing. Initial Jobless Claims reported a new pandemic low of 385K v. 395K expected Unit Labor Costs reported a positive 1.7% which was much stronger than the negative -.4 expected. ISM Services New Orders were way above expectations 63.9 v. 57.9. ISM Services Employment Index came in weaker than expected 55.3 v. 58 as employers continue to struggle to hire willing workers. ISM Services Prices Paid index came in far ahead of expectations 80.6 v. 75.9. The 10-year interest rate index (TNX) 16.25 +.34 was higher which resulted in Consumer Discretionary (XLY) 169.67 -1.19% and Technology (XLK) 137.38 -.93% underperforming. The internal rotation within the S&P500 (SPY) favored the low volatility defensive names; Staples (XLP) 71.27 +.62% and Utilities (XLU) 65.49 +.60% which led the market. Meme short squeeze focused stocks gave back some of the considerable gains from the prior session. Buzzfeed/Wallstreetbets favorite AMC Entertainment (AMC) 51.34 -17.92% fell as the company warned that investors could lose all of their money investing at these current price levels. PetMed (PETS) 33.01 -28.33% and Bed Bath & Beyond (BBBY) 31.90 -27.81% also gave up a significant portion of Wednesday’s frenetic gains. Software security firm FireEye (FEYE) 18.56 -17.62% announced a major restructuring including changing its name to Mandiant. FireEye said that Private Equity firm Symphony Technology group will buy its products business and its corporate name for $1.2 billion in cash. The newly named Mandiant also announced plans to buy back $500 million of its shares upon closing the transaction.
Friday, June 4, 2021 – DIA 347.90 +.54%, QQQ 335.60 +1.70%, SPY 422.44 +.88%
Non-Farm Payrolls came in much weaker than anticipated 559K v. 650K which sparked a rally in the markets across the board. The unemployment rate came in at 5.8% v. 5.9% anticipated while the Labor Force Participation Rate came in at a disappointing 61.6% down from 61.7% in the last reading. The Technology Sector ETF (XLK) 140.02+1.92% led the S&P500 to break to a 1 month new high and up and out of a bullish cup with handle pattern. Salesforce.com (CRM) 237.48 +2.88% led the DJIA. DocuSign (DOCU) 233.24 +19.76% surged on big volume after they beat on revenue and earnings, shrugging off worries that the pandemic favorite would experience slower growth as the economy reopened. AMC Networks (AMCX) 66.80 +17.67% bolted to a fresh 2 month high. On the downside, electric delivery truck provider Workhorse Group (WKHS) 13.05 -11.65% pulled back and cooled off from a recent outperformance streak, as the stock was downgraded by Cowen from "Outperform" to “Market Perform." Cloud computing infrastructure company PagerDuty, Inc (PD) 35.36 -12.97% disappointed in its earnings.
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