Monday
Sep152014

Nasdaq Trades Down to a Three Week Low

As it turned in a decline of 1.07% on Monday, the Nasdaq composite had its worst day since 7/31.  In the process, the index traded down to its lowest level since it broke out on 8/18.

With today's sell-off in the Nasdaq, a lot of US stocks (primarily in the small cap universe) were down sharply.  Looking at the individual performance of Russell 3000 companies, there were 32 stocks in the index that fell more than 7.5% today alone.  As shown in the table, a lot of those names were stocks that had been leading the market higher since the Nasdaq broke out on 8/18.  For example, the average return of these 32 stocks since 8/18 through Friday (9/12) was a gain of 7.9%.  

One of the highest profile names on this list is Tesla (TSLA), which dropped 9.1% for its worst day since May 8th.  Interestingly, while TSLA was the 11th worst performing stock in the Russell 3000 today, Elon Musk's other company, SolarCity (SCTY), was right behind TSLA at number 12 with a decline of 9%.  Is it us, or does it seem like even though the two companies are in completely different businesses, that whenever TSLA has a big up or down day that SCTY sees a similar move in the same direction?

Another way to illustrate how the market's leaders of the last few weeks dragged equities lower today is by grouping stocks in the index into deciles based on their performance from 8/18 through 9/12.  In the chart below, we took each decile of stocks and then calculated the average return of the stocks in them.  The biggest standout to the downside among the ten deciles is the group of stocks that performed best leading up to today, as they declined an average of 1.83%.  

While investors were selling their biggest winners, they must have been offsetting the gains they took with losses from the biggest losers from 8/18 through 9/12.  This group of stocks was down an average of 1.37% today, making it the second worst performing decile of the ten.  Outside of those two deciles, returns were pretty similar today as seven of the remaining eight deciles had average returns that were within a range of 30 bps.

Monday
Sep152014

Tesla's (TSLA) September 15th Bloodbath

After gaining more than $100 since its lows in early May, Tesla (TSLA) is getting slaughtered today on the back of a bearish analyst call from Morgan Stanley.  While the bearish call from Morgan Stanley helped trigger the sell-off, it can't be the only reason the stock is off more than 10% with a couple hours of trading left in the day.  The entire "growth" trade is getting crushed today, and it looks like short-term owners of TSLA are just running for the exits.  Note that nothing changed in regards to TSLA's earnings or revenues since the close last Friday, so we're simply seeing a re-pricing of risk.

For those interested, below is a look at the near-term performance of Tesla (TSLA) when it has fallen more than 8% on any day since it went public back in mid-2010.  As shown, the stock has averaged a gain of 75 bps on the day after these big sell-offs.  Over the next week, the stock has averaged a bounce back of 3.11%, and over the next month, the stock has gained more than 11%.  The one-day and one-week performance numbers would be even better if you took out the 10% drops the stock saw in its first week of trading.

We'll see how Tesla trades from here, but if this is a stock you've been waiting to buy on any pullbacks, you're certainly getting a big one today on no company specific news.

Monday
Sep152014

Empire Manufacturing Beats Expectations

This week's schedule of economic data started off on a positive note as the Empire Manufacturing report for the month of September showed a big uptick from August and exceeded expectations by a wide margin.  While economists were forecasting a level of 16.0 in the headline index, the actual reading came in at 27.5 which was up from last month's reading of 16.69.  It was also the highest monthly reading since October 2009.  While the current conditions index of this month's report showed a solid increase, the expectations component for September (46.8) was practically unchanged from August's reading of (46.8).

The table below breaks out this month's report by each category and shows both current conditions and expectations for six months from now.  In addition to the headline index, five of the nine subcomponents saw an increase in their level for current conditions.  While the Shipments component rose to its highest level since October 2009, the biggest increases for the month were in Prices Received and Inventories.  On the downside, this month's report didn't have anything positive related to the jobs picture.  As shown in the table, the biggest declines in current conditions this month were in Number of Employees and Average Workweek.

Monday
Sep152014

Sentiment Levels Unchanged

Bull/bear sentiment in our weekend Bespoke Market Poll was unchanged week-over-week, with bullish sentiment coming in at 49% and bearish sentiment coming in at 51%.  Last week's negative action for the market doesn't look to have impacted investor views too much.

Friday
Sep122014

S&P 500 Higher or Lower from Here?

The S&P 500 pulled back from all-time highs this week and failed to hold above the 2,000 level.  But which way will the market head from here?   Please take part in our Bespoke Market Poll below by letting us know whether you think the S&P 500 will be higher or lower one month from now.  We'll report back with the results on Monday before the open.  Thanks for participating and have a great weekend!

Our "end of summer" 10% off special comes to an end this weekend, so be sure to sign up for your 5-day free trial to Bespoke Premium before the offer expires!  We've just published our weekly Bespoke Report newsletter, so you'll have a fresh piece of market research to read with your new trial.  Simply enter "endofsummer" in the coupon code section of our Bespoke Premium subscribe page to receive the 10% discount for the life of your membership.

Will the S&P 500 be higher or lower than its current level one month from now?
Higher
Lower
  
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Friday
Sep122014

Most Heavily Shorted Stocks Getting Hit Hard

Short interest figures for the end of August were released after the close on Wednesday, and with that release we sent out our semi-monthly update of short interest trends for the S&P 1500 to clients yesterday.  One table in the report looked at stocks in the index that have more than 25% of their float sold short and how they have performed so far this month.  One useful aspect of this list is that the performance of these stocks usually provides a good barometer of investor sentiment.  When the most heavily shorted stocks rally, it is a sign that investors are more willing to hold riskier stocks which is good for the overall market.  Meanwhile, when these stocks are underperforming the overall market by a wide margin, it is a sign that investors are increasingly risk averse, which at the margin is negative for equities.

So far this month, the most heavily shorted stocks are doing poorly on both an absolute and relative basis.  While the S&P 1500 is down 0.98% the average return of these 29 stocks is nearly two and a half times worse at negative 2.41%.  Furthermore, while there are some big losers that have dragged the average return lower, the breadth of this list is extremely negative.  Of the 29 stocks listed, just ten are up so far in September.  The biggest loser on the list by far this month is GT Advanced Technologies (GTAT).  Following news that the new iPhone screens will not have the company's Sapphire glass, the stock has been in a free fall and is down 28% this month.  After GTAT, the two next worst performing stocks listed are AK Steel (AKS) and Penn Virginia (PVA), which are down 16% and 10%, respectively.

While this list has more than its fair share of losers, there have also been some big winners.  The biggest winner on the list is Conversant (CNVR), which is up big today on news that it will be bought by Alliance Data Systems (ADS) for $35 per share in cash and stock.  Regular readers may remember that we highlighted this stock in a recent CNBC Fast Money interview where we said it was an attractive takeover candidate.  So far in September shares of CNVR are up over 26%.  The next best performing stock on the list of most heavily shorted stocks is Albany Molecular Research (AMRI), which is up just under 10% in September (and coincidentally was positively mentioned in that same interview).  Outside of those two companies, only one other stock (Tuesday Morning: TUES) on the list is up more than 5% this month.

Friday
Sep122014

Prices at the Pump Drop to Lowest Level Since February

In today's retail sales report for the month of August, only two of the thirteen sectors tracked (Gas Stations and General Merchandise) saw month over month declines in sales.  The largest decline was in Gas Stations where sales fell by 0.8%.  When it comes to retail sales, if there is a category where sales declines are a good thing, it is at gas stations.  That is because any sales decline is typically the result of lower gas prices, which leaves more money in the pockets of consumers for other items.

As the chart below shows, the recent drop in retail sales is all due to lower gas prices.  Since its peak in April, the national average price of a gallon of gas (according to AAA) has fallen by nearly 8% from $3.70 down to $3.41.  This is the lowest price since February 22nd.  Additionally, the last time a gallon of gas was less than it is now on this day of the year was in 2010.

To illustrate just how low gas prices currently are for this time of a year.  The chart below compares the YTD percentage change in the national average price of a gallon of gas in 2014 (red line) to a composite of the average YTD change for all years since 2005 (blue line).  Following the recent declines we have seen, prices at the pump are up 2.7% so far in 2014 compared to an average of 25.33% at this point in the year for all years since 2005.  The only other year where the average price was up less at this point in the year was 2010.  As long as this trend continues, you can bet that consumers will be feeling a bit more flush heading into the fourth quarter.

Thursday
Sep112014

Jobless Claims Rise More Than Expected

Initial jobless claims rose more than expected this week, rising to 315K versus expectations of 300K, and up 11K from last week's revised reading of 304K.  Jobless claims have been an optimistic data series for the last several months, but after this week's increase they are suddenly up 36K from their July low of 279K.  This isn't necessarily a major move to the upside, but it is moving in the wrong direction.

Although this week's jobless claims reading was the highest weekly reading since June, the four-week moving average rose by less than one thousand, rising from 303.25K up to 304K.  For the next two weeks, we will be dropping sub 300K readings from the four-week moving average, so unless the weekly numbers improve the rate of increase in this indicator will pick up.

On a non-seasonally adjusted basis (NSA), initial jobless claims dropped by 15.4K to 234.4K.  While this was the lowest NSA weekly reading of the year, we typically see relatively low levels of claims at this time of year as schools are back in session.  For the current week of the year, however, NSA claims were actually lower last year (229.6K) than they were this year, so even on this front claims are showing some deterioration.  Relative to the longer term average since 2000 (305.9K), though, NSA claims are still well below average.

Thursday
Sep112014

Bullish Sentiment Retreats

After a few shaky days for equities, the sentiment of individual investors took a slight turn for the worse this week.  According to the weekly survey of sentiment from the American Association of Individual Investors (AAII), bullish sentiment dropped from 44.67% down to 40.38%, while bearish sentiment ticked just under three percentage points higher, rising from 23.96% up to 26.6%.  Perhaps the most notable aspect of this week's survey, though, was the fact that even after the decline in bullish sentiment, it still remains above its average of 38.3% for the current bull market.  This is the fifth straight week that bullish sentiment has been above average, which is the longest streak since the week ending March 13th.

Wednesday
Sep102014

GoPro (GPRO) Powers Bloomberg IPO Index to 2014 Highs

In case you haven't noticed, the high-def, indestructible camera maker GoPro (GPRO) has been on fire since it IPOd back on June 25th, and it has gone parabolic since late August.  The stock gained another $4.28 today to push it up to $68.47/share, which is up 185% from its IPO price of $24.

The move for GoPro (GPRO) has helped the Bloomberg IPO index (which is an index containing companies that have gone public over the last year) break out to 2014 highs after really struggling during the March to May pullback in momentum/growth names.  As shown below, the Bloomberg IPO index dipped a bit in the first month after GPRO's late June IPO, but it has surged since August and is now up just under 5% year-to-date.  It's still underperforming the S&P 500 this year, but if GPRO and other recent IPOs continue their runs, it won't be long before it surpasses the S&P.  That's a big if, though.  Runs like GPRO's don't last forever.  The stock will slow down this parabolic pace at some point in the near term.

For those interested, below is a look at the top performing stocks in the Bloomberg IPO index over the last month.  GoPro (GPRO) tops the list with a one-month gain of 81.86%, followed by ARGS, TRUE and AGRX.  You'll notice Twitter (TWTR) is also on the list of big winners over the last month with a gain of 22.63%.

Wednesday
Sep102014

Apple (AAPL) Back Above the $600 Billion Mark; Two Tech Stocks Creep Up on Exxon Mobil

Below is an updated look at the rankings for the largest public companies in the US.  After moving back above the $100/share level today, Apple (AAPL) is back over the $600 billion mark as well.  This puts it nearly $180 billion larger than Exxon Mobil (XOM), the next largest company in the US.  The difference in market cap between Apple and Exxon is equivalent to the size of AT&T, the 19th largest company in the country!  

Exxon is still valued at more than $400 billion, but it's getting close to losing its number 2 status to two Tech behemoths.  As shown below, Google (GOOGL) is now valued at $397 billion, just $15 billion less than XOM.  And don't sleep on Microsoft (MSFT) either.  MSFT has surged in 2014, adding $74 billion in market cap to put it at $386.4 billion.  

Berkshire Hathaway (BRK/B) rounds out the top five with a market cap of $339.5 billion.  No other companies are worth more than $300 billion, but Johnson & Johnson (JNJ) is close at $296 bln.  

Along with Microsoft (MSFT), other companies that have added significantly to their market caps this year include Facebook (FB) -- up $62 billion, Verizon (VZ) -- up $60 billion, Gilead Sciences (GILD) -- up $47.5 billion, and Intel (INTC) -- up $44 billion.  Some of the big losers along with XOM include General Electric (GE) -- down $22.7 billion, and Amazon.com (AMZN) -- down $29 billion.  Coming into the year, Amazon.com was the 16th largest company in the US, but declines in the stock have left it outside the top 25.

Wednesday
Sep102014

Average Stock Declines From 52-Week Highs

The S&P 500 may have closed at an all-time high just three days ago, but some may be surprised by the fact that the average stock in the S&P 500 is down 7.5% from its own 52-week high.  While that may sound startling at first, keep in mind that the index is made up of 500 stocks, and while most stocks typically move in the same direction, different areas of the market fall in and out of favor at different times, even as the overall trend is higher.

The table at right breaks down the average percentage that stocks are trading from their 52-week highs by size.  While large cap stocks in the S&P 500 are down 7.5%, mid and small cap stocks are having an even rougher go of things.  In the S&P 400 Mid Cap index, the average stock is down 11.1%, while the average small cap stock in the S&P 600 is down 17.3%.  For this area of the market, the average stock isn't far from bear market territory!  Overall, the average stock in the S&P 1500 is down 12.4%.

Looking at average declines by sector also shows a varied picture.  For the entire S&P 1500 (large, mid, and small cap), Utilities (-6.6%) and Financials (-8.6%) are the only sectors where the average stock is not down more than 10% from its 52-week high.  We mentioned that certain areas of the market tend to fall in and out of favor, and one sector that has definitely fallen out of favor is Energy.  Stocks in the Energy sector are currently down an average of 19.7% from their 52-week highs.  The only other sector that is even close is Telecom Services (-17.3%), but with only 15 stocks in the sector (compared to 96 in the Energy sector) it has little overall impact on the market.  With both small caps and Energy stocks trading the furthest below their 52-week highs, you can imagine that small cap stocks in the Energy sector would be underperforming, and that would be an understatement as stocks that fit this criteria are down just under 30% (29.4%) from their 52-week highs.  Bull market?  Not if you're overweight Energy.


Wednesday
Sep102014

Long Term Economic Growth

While it's not always the best indicator of what's going to happen in the future, it can be helpful to look at what long-term trends in growth tell us about how the global economy has developed over time.  Using a data set put together by the Maddison Project, we are able to see some interesting trends over the long arc of economic history and across countries.  The chart below shows the per capita GDP for a variety of countries over time, experessed in 1990 dollars.

Towards the end of the 19th century, the political power of the British empire started to decline, and with it the advantages for British subjects in the UK and Australia; these two started as the two most productive nations but had to play defense over the intervening period as other nations' growth rates caught up.  Central American countries have also had an interesting path.  While Venezuela started at a very low level of GDP, it was able to move up the ranks to number two in this sample by the late 1950s.  But since then, political decisions have hampered growth, and the nation now trails significantly.  Argentina was also a very productive society in the 1910s; unscathed by World War I, Argentines were the 4th most productive in the above sample by the time the Roaring Twenties kicked off.  But the Great Depression destroyed Argentina's open economy, and political issues in the 1970s again trashed growth.  Overall, the most glaring country on this chart is the United States, which has been able to grow from a relatively high base in 1870 to a drastically more productive economy than its peers.  Most of that outperformance accrued around World War II, but it's continued throughout the last 70 years.

Overall, prosperity today is relatively dependent on where prosperity sat in 1870.  The chart below compares 1870 and 2010 per capita GDP (again, constant 1990 dollars) for an even broader set of countries than the first chart.  While the US has grown faster than its initial starting point would suggest (as have Nordic countries and Canada), many of today's emerging markets have underperformed versus their starting base, as has New Zealand and to an extent the UK.

Interested in international markets or unique economic analysis like this? For actionable insights, try out Bespoke Premium today.  Every subscription includes a five day free trial.

 

Wednesday
Sep102014

25% of Bespoke Readers Plan to Buy the Apple Watch

Yesterday afternoon after the unveiling of the new Apple Watch, we asked readers whether they plan to purchase one or not within the next year.  As shown below, 25% of respondents answered "Yes", which seems like a pretty high number considering that the question was asked to all consumers, not just iPhone owners (the Apple Watch needs to be used alongside an iPhone).  It looks like Apple will have a pretty large baseline number of Watch buyers when the product is released early next year given that a quarter of our respondents plan to buy one.

Tuesday
Sep092014

Will You Buy the Apple Watch?

Apple unveiled its first new product since the iPad today with the Apple Watch.  Have a look at the product to get an idea of the various models and what it does.  (With text message pop-ups on the Watch, maybe parents will finally be able to get the phones off the table at dinner!)

The Apple Watch isn't set for release until early 2015, but we want to know if you plan to buy one or not.  Please let us know in our poll below.  We'll report back with the results shortly.  Thanks for participating!

Will you purchase the new Apple Watch within the next year?
Yes
No
Not Sure
  
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