Market Outlook for Friday, April 28, 2017

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News - "Leveraged ETFs In Trump's First 100 Days"

Saturday marks President Donald Trump's 100th day in office. And while the country remains divided over his actions, it cannot be refuted that U.S. equities have performed well since Trump was sworn in on January 20th. Since Trump took the oath of office two of the most popular large-cap indexes, the S&P 500 and NASDAQ 100, are up about 5.7 percent and 10 percent respectively.

Predictably, some leveraged exchange-traded funds are enjoying their seats on the “Trump train.” The Direxion Daily S&P 500 Bull 3X Shares (NYSE: SPXL) has returned about 15 percent since Inauguration Day. As its name implies, SPXL is designed to deliver triple the daily returns of the S&P 500 Index. SPXL has a bearish counterpart, the Direxion Daily S&P 500 Bear 3X Shares (NYSE: SPXS),which which is down about the same amount over Trump's first 100 days in office.

While SPXL's recent performance is undoubtedly compelling, traders should remember that holding leveraged ETFs for weeks or months on end is a dangerous bet because ETFs such as SPXL and SPXS are designed to be intraday instruments, not long-term investments. 

While large-cap US. stocks and their related exchange traded funds have been solid performers this year, things aren't quite the same for the small-caps.

Small-Cap Performance

Small-caps stocks and ETFs recently regained some lost momentum, ascending to record highs. That has been good news for the Direxion Daily Small-Cap 3X Bull Shares (NSYE: TNA). TNA, one of the most heavily traded leveraged small-cap ETFs, seeks to deliver triple the daily returns of the widely followed Russell 2000 Index.

However, TNA's bearish counterpart, the Direxion Daily 3X Bear Shares(NYSE: TZA), could soon get its turn in the spotlight as small-cap valuations climb to multi-year highs. TZA attempts to deliver triple the daily inverse returns of the Russell 2000.

“On forward P/E, small caps and mid-caps currently trade at the 98th percentile of their historical valuation range (since 1979) vs. the 87th percentile for large caps,” said Bank of America Merrill Lynch in a note out Friday. “Given that small caps now trade at Tech Bubble-like valuations in our view it does not bode well for future long-term returns.”

Since January 20 TNA is up 10 percent, while TZA is down 14 percent. 

Mid-Cap Performance

Mid-caps have been decent performers over Trump's first 100 days in office. For example, the Direxion Daily Mid Cap Bull 3X Shares (NYSE: MIDU) is up about 11 percent. MIDU seeks to deliver triple the daily returns of the widely followed S&P MidCap 400 Index (which has had a relatively strong 2017 in line with the rest of the market).

Its bearish counterpart on the other hand, the Direxion Daily Mid Cap Bear 3X Shares (NYSE: MIDZ) is down about 13 percent. 

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Image Credit: By U.S. Department of the Interior - 2063, Public Domain, via Wikimedia Commons

Today's Earnings
TickerCompany NameTime
AANAaron's8:00 AM
ACBIAtlantic Capital Bancshares, Inc. - Common Stock8:00 AM
AIMCAltra Industrial Motion8:00 AM
ALVAutoliv6:00 AM
APOApollo Global Management8:00 AM
ASXAdvanced Semiconductor6:00 AM
BBarnes Group8:00 AM
BCHBanco De Chile Banco De Chile ADS8:00 AM
BCSBarclays PLC Common Stock6:00 AM
BENFranklin Resources8:00 AM
BSMXGrupo Financiero8:00 AM
BVXVBiondVax Pharmaceuticals Ltd. - American Depositary Shares12:00 AM
CCJCameco Corporation Common Stock8:00 AM
CEMPCempra8:00 AM
CFCOUCF Corporation8:00 AM
CFNBCalifornia First National Bancorp9:00 AM
CIRCircor International8:00 AM
CIVBCivista Bancshares8:00 AM
CLColgate-Palmolive8:00 AM
COGCabot Oil & Gas8:00 AM
CPLPCapital Product Partners8:00 AM
CPNCalpine6:00 AM
CVXChevron8:00 AM
DRADDigirad8:00 AM
FMXFomento Economico8:00 AM
FNBCFirst NBC Bank Holding Company - Common Stock5:00 PM
GMGeneral Motors7:00 AM
GPIGroup 1 Automotive8:00 AM
GTGoodyear Tire & Rubber8:00 AM
HMCHonda Motor8:00 AM
HRCHill-Rom Holdings7:00 AM
HSTHost Hotels & Resorts8:00 AM
IDXXIDEXX Laboratories7:00 AM
IRMDiRadimed8:00 AM
LPNTLifePoint Hospitals8:00 AM
LUXLuxottica Group8:00 AM
LYBLyondellBasell Industries8:00 AM
MDXGMiMedx Group8:00 AM
MOFGMidWestOne Financial Gr8:00 AM
MOG-AMoog8:00 AM
MTRNMaterion8:00 AM
OCXOncoCyte Corporation Common Stock8:00 AM
OPYOppenheimer Holdings8:00 AM
PEGPublic Service Enterprise8:00 AM
PFSProvident Financial8:00 AM
PNMPNM Resources8:00 AM
POLAPolar Power7:00 AM
PORPortland General Electric8:00 AM
PSXPhillips 668:00 AM
PSXPPhillips 66 Partners8:00 AM
RCLRoyal Caribbean Cruises8:00 AM
ROPRoper Industries8:00 AM
SAIASaia8:00 AM
SAVESpirit Airlines8:00 AM
SBPHSpring Bank Pharmaceuticals Inc8:00 AM
SBSISouthside Bancshares, Inc. - Common Stock8:00 AM
SGBKStonegate Bank - Common Stock4:00 PM
SNESony6:00 AM
SNYSanofi8:00 AM
SYFSynchrony Financial8:00 AM
TMPTompkins Financial8:00 AM
TRIThomson Reuters8:00 AM
TYPEMonotype Imaging Holdings8:00 AM
UBSUBS Group AG Registered Ordinary Shares8:00 AM
VETVermilion Energy Inc. Common (Canada)8:00 AM
VLPValero Energy Partners8:00 AM
VNCEVince Holding8:00 AM
VRTSVirtus Investment8:00 AM
VTRVentas8:00 AM
WETFWisdomTree Investments7:00 AM
WFTWeatherford International8:00 AM
WYWeyerhaeuser8:00 AM
XOMExxon Mobil9:00 AM
ZEUSOlympic Steel8:00 AM
Today's Economic Events
Event NamePeriodYearTime
Employment Cost Index (QoQ)Q120178:30 AM
GDP Price Index (QoQ)Prelim. Q120178:30 AM
Employment Benefits (QoQ)Q120178:30 AM
Employment Wages (QoQ)Q120178:30 AM
GDP (QoQ)Q120178:30 AM
Real Consumer Spending (QoQ)Q120178:30 AM
Core PCE Price Index (QoQ)Q120178:30 AM
PCE Price Index (QoQ)Q120178:30 AM
Chicago PMIApr20179:45 AM
University of Michigan Consumer SentimentMar201710:00 AM
University of Michigan Inflation Expectations - 5 Yr.Apr201710:00 AM
University of Michigan Consumer ExpectationsApr201710:00 AM
University of Michigan Current ConditionsApr201710:00 AM
University of Michigan Inflation Expectations - 1 Yr.Apr201710:00 AM
ECRI Weekly Annualized (WoW) 201710:30 AM
ECRI Weekly Index 201710:30 AM
U.S. Baker Hughes Oil Rig Count 20171:00 PM
FOMC Member Brainard Speaks  1:15 PM
FOMC Member Harker Speaks  2:30 PM
Movers & Shakers - "20 Biggest Mid-Day Losers For Friday"
    Transenterix Inc (NYSE: TRXC) shares dipped 37.7 percent to $0.679. TransEnterix reported the pricing of $24.9 million public offering of common stock and warrant. CorMedix Inc. (NYSE: CRMD) shares declined 35.1 percent to $0.675. CorMedix raised its earlier announced public offering to $12.1 million. FuelCell Energy Inc (NASDAQ: FCEL) shares tumbled 32.8 percent to $1.08. FuelCell Energy priced its $15.4 million underwritten public offering of common stock and warrants. Vince Holding Corp (NYSE: VNCE) dropped 23.1 percent to $1.00. Vince Holding reported a Q4 loss of $162.1 million on revenue of $63.9 million. Matrix Service Co (NASDAQ: MTRX) shares fell 21.8 percent to $13.20 as the company issued a weak sales forecast for the third quarter. athenahealth, Inc (NASDAQ: ATHN) shares declined 19.4 percent to $97.94 after the company reported weaker-than-expected quarterly results. PDF Solutions, Inc. (NASDAQ: PDFS) fell 18.5 percent to $18.86 as the company posted downbeat Q1 results. Time Inc (NYSE: TIME) shares dropped 18.2 percent to $14.98. Time’s board determined to pursue the company’s own strategic plan. Wells Fargo downgraded Time from Outperform to Market Perform. PCM Inc (NASDAQ: PCMI) shares dipped 17.6 percent to $24.85. PCM posted Q1 earnings of $0.26 per share on revenue of $524.4 million. The company projects Q2 earnings of $0.44 to $0.49 per share, and revenue of $580 million to $600 million. A10 Networks Inc (NYSE: ATEN) dropped 16.7 percent to $7.96. A10 Networks posted Q1 earnings of $0.01 per share on revenue of $60.3 million. Gigamon Inc (NASDAQ: GIMO) shares fell 15.7 percent to $30.35. Gigamon reported Q1 adjusted earnings of $0.12 per share on revenue of $69.6 million. Credit Suisse downgraded Gigamon from Outperform to Neutral Lantronix Inc (NASDAQ: LTRX) dropped 14.5 percent to $2.84. Lantronix reported Q3 GAAP loss of $0.01 per share on sales of $11.5 million. Orchid Island Capital Inc (NYSE: ORC) shares slipped 9.2 percent to $9.92. Orchid Island reported Q1 earnings of $0.07 per share. The Ensign Group, Inc. (NASDAQ: ENSG) declined 7.7 percent to $17.64. Wells Fargo downgraded Ensign Group from Market Perform to Underperform. Accuray Incorporated (NASDAQ: ARAY) dropped 7.6 percent to $4.25. Accuray posted a wider-than-expected Q3 loss and lowered its FY 2017 sales guidance. Greenhill & Co., Inc. (NYSE: GHL) shares declined 7.1 percent to $26.20 after reporting weak quarterly results. Barclays PLC (ADR) (NYSE: BCS) dropped 4.8 percent to $10.96 after the company reported results for its first quarter. Intel Corporation (NASDAQ: INTC) declined 3.7 percent to $36.06. Intel reported upbeat earnings for its first quarter, but sales missed estimates. Starbucks Corporation (NASDAQ: SBUX) fell 3.4 percent to $59.24. Starbucks posted in-line earnings for its first quarter, but sales missed expectations. The company also lowered its FY17 earnings outlook. QUALCOMM, Inc. (NASDAQ: QCOM) fell 3.1 percent to $51.59 after the company lowered its Q3 forecast.