Wednesday
Apr232014

Weak Lunch Hour, Strong Late

Below is a look at how the S&P 500 has traded on an intraday basis so far this year.  In the chart, we show the index's average intraday pattern in the first quarter compared to its average pattern so far in April.  Trading in the first quarter was marked by strong opens followed by very weak afternoons, with stocks usually rolling over between 1 PM and 2 PM and closing near their lows on the day.  On average, highs for the day came around 10:15 in the first quarter.  

So far in April, on average we have seen bigger pops following the open and highs for the day at almost the exact same time during the morning.  Interestingly, though, while the first quarter saw significant weakness in afternoon trading, we have seen buying in the afternoon this month.  As shown below, in April, the S&P has drifted lower from its highs around 10 AM until around 1:30 PM, and then it has seen a nice pop in the final hour of trading.  This indicates more of a willingness to hold stocks overnight, which is a good sign.  There's an old Wall Street adage that "the dumb money trades at the open, while the smart money trades at the close."  Bulls are hoping there's some truth to that.

Daily market briefings, commentary and tips in your inbox.  Sign up for a 5-day free trial to Bespoke Premium today!

Wednesday
Apr232014

Housing and Economic Growth

Bespoke Premium and Institutional clients received a 10 page report today on Bespoke's outlook for the housing sector over the long term.  The report delves into our outlook for housing as an asset class, its potential impact on economic growth, and outlines key themes as well as stocks that are well positioned to take advantage of developments in the housing market over the long term.  To gain access to the report, please sign up for a 5 day free trial.  Below is a sample from today's B.I.G. Tip on housing.

Housing has an outsized impact on GDP, and the correlation between private residential activity and GDP growth runs both ways; housing can stoke GDP gains and also responds positively to increases in activity elsewhere in the economy.  The below chart graphs private residential investment's share of GDP versus year-over-year GDP growth dating back to 1947.  As goes housing, so goes the economy.

To get access to our thoughts on where housing is headed and the rest of our reports - including actionable trade ideas - subscribe to Bespoke Premium today!

Tuesday
Apr222014

S&P 500 Six Day Winning Streaks

After a brutal stretch of trading two weeks ago, the S&P 500 has now reversed course and traded higher in each of the last six trading days.  Since the bull market began in March 2009, the S&P 500 has now had 15 streaks where the index closed up on the day for six or more days in a row.  In the table below, we have listed each of those streaks along with the index's performance over the following day and week.

For much of the bull market, the S&P 500 tended to hit a wall following six-day winning streaks.  In each of the first ten streaks, the S&P 500 traded down on the seventh day.  Beginning in 2013, though, every streak of six or more trading days went on to a seventh or even eighth trading day.  Over the entire period, the S&P 500 has averaged a decline of 0.24% with positive returns 28.6% of the time.  Over the next week, however, the average return of the S&P 500 has been a gain of 0.70% with positive returns in all but two periods.  

At the bottom of the table, we have listed the average daily and 5-day return of the S&P 500 for the entire bull market.  Looking at these results, the average return on the day after six straight up days is considerably worse than average (-0.24% vs. 0.09%), while the one-week return is considerably better than average (0.70% vs. 0.40%).

Daily market briefings, commentary and tips in your inbox.  Sign up for a 5-day free trial to Bespoke Premium today!

Tuesday
Apr222014

Early Read on Earnings Season

Earnings season is just a couple of weeks old, and things really didn't kick into gear until this week.  That being said, more than 200 companies have already reported, which gives us enough data to get an early read on how the season is shaping up.  The chart below shows the percentage of companies that have beaten consensus earnings estimates for each earnings season going back to 2001.  So far this season, 62% of companies have beaten earnings estimates.  This is right inline with the reading from last earnings season, and it's right inline with the average beat rate that we have seen since the bull market began in March 2009.

While the bottom line beat rate has come in okay so far, top line revenue estimates have been a bit weak.  So far this season, 50% of companies have beaten revenue estimates.  Last earnings season, the revenue beat rate was very strong at 63.8%, so a beat rate in the 50s would represent a pretty big quarter-over-quarter decline.  Since the bull market began, the revenue beat rate has been 59%, so we're about 9 percentage points weaker than average right now.

The ultimate gauge of the strength or weakness of a company's earnings report is how its stock price reacts, and so far this season, stocks have been trading higher on their report days.  The average one-day change in reaction to earnings of the 226 stocks that have reported stands at +0.30%.  (For companies that report in the morning, we use that day's change.  For companies that report after the close, we use the next day's change.)  As shown below, the +0.30% average one-day change so far this season pales in comparison to the huge gain of +0.80% that stocks saw last earnings season, but it's still positive, and it has really helped settle down a stock market that was really struggling heading into mid-April.

Tuesday
Apr222014

Bespoke CNBC Appearance (4/22)

Bespoke's Paul Hickey appeared on CNBC's Street Signs with Brian Sullivan and Melissa Lee yesterday (4/21) to discuss the recent sell-off in biotech stocks and its potential impact (or lack thereof) on the broader market.  To view the segment, please click on the image below.

Monday
Apr212014

S&P 500 Daily Change By Day

After Monday's gains, the S&P 500 and Nasdaq are both riding 5-day winning streaks for the first time this year.  The table below shows the daily percentage change of the S&P 500 so far this year based on the day of the week.  As shown at the bottom and as we have noted in prior posts, Tuesday is the only day of the week where the S&P 500 has seen consistently positive returns.  In fact, of the 15 Tuesdays so far this year, the S&P 500 has only been down twice.  If you had invested in the S&P 500 only on Tuesdays so far this year, you would be up 8.7%.  For all other four weekdays, you would have less money now than at the start of the year if you had employed a similar strategy.  With such consistent gains on Tuesdays, can the S&P 500 make it six in a row?

Time is running out on our 10% discount on new subscriptions to the Bespoke Premium service.  In addition to the Model ETF PortfolioModel Stock PortfolioTrade of the Day and The Bespoke Report Newsletter that our entry-level clients receive, Bespoke Premium subscribers receive a huge array of daily commentary, unique analysis, and actionable advice via our numerous products.

Sign up today for 10% off in addition to our five-day free trial.  If you don't like what you see, you can cancel free of charge.  When checking out, be sure to use the code 'easteregg' to receive your 10% discount.  

Monday
Apr212014

Prices at the Pump March Upward

If you drive a lot, the last few months have seen you devoting a larger and larger share of your wallet into filling up the tank.  From their recent lows in early November, prices at the pump have risen by over 15% to $3.67 per gallon according to AAA.  Following that increase, gasoline prices are now at their highest level since late July.

While the recent increase in gas prices looks pretty painful, it is important to remember the seasonal patterns.  Since 2004 for example, gasoline prices have been up on a year to date basis through 4/20 every year with an average increase of 19.5%.  Viewed in that light, the 10.4% increase so far this year has been pretty tame.  Looking ahead, the seasonal strength that we have seen so far in gas prices typically continues right up until Memorial Day, when the price levels out and begins to decline right after Labor Day.

Time is running out on our 10% discount on new subscriptions to the Bespoke Premium service.  In addition to the Model ETF PortfolioModel Stock PortfolioTrade of the Day and The Bespoke Report Newsletter that our entry-level clients receive, Bespoke Premium subscribers receive a huge array of daily commentary, unique analysis, and actionable advice via our numerous products.

Sign up today for 10% off in addition to our five-day free trial.  If you don't like what you see, you can cancel free of charge.  When checking out, be sure to use the code 'easteregg' to receive your 10% discount.  

Monday
Apr212014

Post Easter Week Returns

Last week's gain of 2.7% in the S&P 500 was the best pre-Easter week returns for the S&P 500 in six years.  With those gains, the S&P 500 has now averaged a gain of over 1% in the week before Easter over the last 25 years.  Of those 25 years, the index has also seen positive returns over two-thirds of the time (17 times).  So what is in store for equities in the week after Easter?

The table below lists the S&P 500's weekly return in the week after Easter over each of the last 25 years.  While the index has averaged a positive return for the week (+0.29%), the magnitude of the move has been considerably less and less consistent (60%).  More recently, the S&P 500 has been down over 1% in the week after Easter over each of the last two years.

While last week's strong performance for equities was encouraging, before reading too much into it remember that the week before Easter is often positive.  Additionally, this year's pre-Easter returns for the S&P 500 were the best since 2008.  We don't have to remind you how the rest of that year turned out.

Daily market briefings, commentary and tips in your inbox.  Sign up for a 5-day free trial to Bespoke Premium today!

Monday
Apr212014

Back to Bullish

After a nice gain for stocks last week, participants in our weekend Bespoke Market Poll turned more bullish.  As shown below, 53% expect the S&P 500 to be higher one month from now, while 47% expect the index to be lower.  The bullish sentiment reading of 53% is up from a reading of 47% last week and 44% two weeks ago.  Nothing extreme on the sentiment front, but nerves appear to be a little more settled here.

Sunday
Apr202014

Recent Asset Class Performance

As the 3-day Easter holiday weekend comes to an end, below is a look at the recent performance of various asset classes using our key ETF matrix.  For each ETF, we highlight its performance over the last week, since the end of February, and year to date.  The left side of the matrix contains mostly US equity related ETFs, while the right side contains international, commodity and fixed income ETFs.

US equity ETFs got a boost last week with four straight days of gains.  While smallcaps typically lead when the market is up, it's notable that they lagged during the rally last week.  The large cap S&P 500 (SPY) ETF actually gained the most of the big index ETFs with a move of +1.77%, leaving it up 5 basis points since the end of February.  Over the same time period, the Nasdaq 100 (QQQ) is down 4.58%, while the Russell 2,000 (IWM) is down 3.91%.  

Looking at sectors, Energy (XLE) was a big standout on the upside last week with a gain of 4.61%.  Most other sectors were up in the 1-2% range.  Year to date, Utilities (XLU) still leads the way by a wide margin with a gain of 11.40%, but Energy (XLE) is now second at +4.84%.

As equities rallied last week, the precious metals (GLD and SLV) along with fixed income saw slight pullbacks.  For the year, GLD is still up 7.43%, while the 20+ Year Treasury ETF (TLT) is still up 8.04%.

As we head into the last third of April, market bulls are hoping for a continuation of the trend we saw last week.  If you're looking for our thoughts on where we think things are headed, sign up for a 5-day free trial to any of our Bespoke subscription services today.

Daily market briefings, commentary and tips in your inbox.  Sign up for a 5-day free trial to Bespoke Premium today!

Friday
Apr182014

S&P 500 Higher or Lower from Here?

The S&P 500 staged a nice bounce back rally during this holiday-shortened work week, and it is now back above its 50-day moving average.  Has the all clear been sounded in the short term, or is there more pain to come?  Please take part in our weekly 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!  Be sure to check out our current 10% discount offer on Bespoke Premium memberships if you have yet to do so.  

Will the S&P 500 be higher or lower than its current level one month from now?
Higher
Lower
  
Free polls from Pollhost.com
Thursday
Apr172014

Bespoke Premium: Subscribe and Save!

In celebration of Easter Weekend, Bespoke is offering a 10% discount on new subscriptions to our Bespoke Premium service.  In addition to the Model ETF Portfolio, Model Stock Portfolio, Trade of the Day and The Bespoke Report Newsletter that our entry-level clients receive, Bespoke Premium subscribers receive a huge array of daily commentary, unique analysis, and actionable advice via our numerous products.

Each day starts with The Morning Lineup, a data-packed summary of overnight markets, sector trends, and recent trading across multiple asset classes.  We've recently added a more complete commentary to The Morning Lineup that includes views on the markets collected from Bespoke's trading and research team.  Intraday, Bespoke Premium subscribers receive our B.I.G. Tips reports: actionable analysis on the market's recent trends, seasonality, positioning and direction that will alert you to opportunities in a timely and easily digestible fashion.  We also provide a daily summary of trends in the ETF world, including Bespoke's proprietary Trend and Timing calls for each of over 200 ETFs across all types of markets.  ETF Trends is a must-have for the regular ETF investor, whether passive or active.

Bespoke also publishes a range of weekly reports.  Each Tuesday, we rate every stock in the S&P 1500 using a proprietary blend of fundamental, technical and sentiment scores to arrive at a bottom line outlook in our Bespoke Stock Scores database.  On Thursdays, investors around the world eagerly anticipate the arrial of The Bespoke 50, a portfolio of our 50 favorite growth stocks from the Russell 3000.  The Bespoke 50 is up over 89% since inception and is beating the S&P 500 by 52.7% in that time period.

With earnings season in full swing, our full suite of earnings season reports will keep investors informed about the companies they own as volatility increases and surprises to the up and downside begin to roll in.  Make sure to take a look at our full list of earnings season products!

Finally, wrap up your trading day with The Closer, Bespoke's five page closing market summary packed with commentary, charts, analysis, and key information that moved markets over the prior 24 hours.  Everything you need is here, quickly summarized and easily readable but with enough content to keep you fully informed.

Sign up today for 10% off in addition to our five-day free trial.  If you don't like what you see, you can cancel free of charge.  When checking out, be sure to use the code 'easteregg' to receive your 10% discount.  Have a great long weekend!

Thursday
Apr172014

Key Earnings Reports Next Week

Next week will be extremely busy on the earnings front with no less than 550 companies set to report their first quarter numbers.  Below is a list of some of the largest and most widely followed companies set to report.

For each stock, we provide its report date and time along with some key statistics collected from our Interactive Earnings Report Database (available to Bespoke Institutional members).  

On Monday morning we'll hear from Halliburton (HAL), while Netflix (NFLX) is set to report Monday afternoon.  NFLX has gotten slammed over the last few weeks, and traders will be anxious to see if the sellers are proven right or wrong.  

Tuesday morning brings reports from United Tech (UTX) and McDonald's (MCD), while AT&T (T), Gilead (GILD), Amgen (AMGN) and Intuitive Surgical (ISRG) are set for Tuesday after the close.  Procter & Gamble (PG), Boeing (BA), Biogen (BIIB) and Delta (DAL) will report on Wednesday before the open, and then all eyes will be glued on Apple (AAPL) and Facebook (FB) on Wednesday after the close. 

Thursday will be the busiest day for earnings next week with an outrageously high 250+ companies set to report.  Some of the key names reporting on Thursday morning include Verizon (VZ), UPS, 3M (MMM), Caterpillar (CAT), General Motors (GM) and UnderArmour (UA).  Microsoft (MSFT), Amazon.com (AMZN), Visa (V), Las Vegas Sands (LVS), Baidu.com (BIDU), Starbucks (SBUX), Wynn Resorts (WYNN) and Broadcom (BRCM) will all report on Thursday evening.  Finally, Ford (F) and Colgate-Palmolive (CL) will finish off the week with reports on Friday.

Of the companies listed below, UTX, LMT, ISRG, UA and V have historically beaten earnings estimates at the highest rate (>90% of the time).  HAL, ISRG, AAPL, FB, QCOM, CELG, UA, AMZN, BIDU, V and WYNN have historically averaged the strongest gains on their report days.

Become a Bespoke Institutional member today to access our popular Interactive Earnings Report Database.

Thursday
Apr172014

Philly Fed Exceeds Forecasts

Despite the fact that manufacturing activity in the New York area was weaker than expected, manufacturing in the neighboring Philadelphia region came in better than expected this morning.  With economists forecasting a headline reading of 10.0, the actual level came in at 16.6.  This was the highest reading since September (20.0), and the ninth highest reading since the recession ended in 2009.

The table to the right summarizes the key components of the Philly Fed report and shows some pretty good strength in the internals.  Of the nine subcomponents, just three declined in April.  Meanwhile, we saw big increases in Shipments and New Orders.  The current level of the Shipments component is now at the highest level since March of 2011.  Just as the weather slowed down activity in the winter, better weather now is causing a snapback effect as conditions revert back to normal.

Thursday
Apr172014

Investor Sentiment Turns A Little Less Bullish

In spite of the equity market's rebound this week, individual investor sentiment took a slight turn for the worse this week.  According to this week's survey from the American Association of Individual Investors (AAII), bullish sentiment dropped from 28.48% down to 27.22%, while bearish sentiment increased from 34.11% to 34.25%.  These are small moves to be sure, but they come on the heels of big declines in bullishness and big increases in bearishness last week.  As has been the case throughout the entirety of this bull market, investors are quick to check out of the market, but slow to get back in.  Therefore, it will like take further improvement in equity prices before sentiment starts to rebound.

Daily market briefings, commentary and tips in your inbox.  Sign up for a 5-day free trial to Bespoke Premium today!