Friday
Oct242014

S&P 500 Higher or Lower from Here?

The market bounced this week and bounced hard, with stocks soaring off of last week's lows.  Does the bounce continue or are we headed lower next week?  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!

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

Friday
Oct242014

Nasdaq Back Above Its 50-Day Moving Average

The Nasdaq Composite regained a major technical level today as the index closed at 4483.715, almost 4 points above its 50-day moving average, which currently sits at 4479.89.  In the space of about a week, we've seen the Nazz move from well below its 200-DMA to above its 50-DMA, a move that has been incredibly violent, even relative to previous v-shaped bounces shown in the chart below.

Sign up for a Bespoke Premium subscription today to check out our just published Bespoke Report newsletter, which contains our thoughts on last week's sell-off and this week's bounce back.  It's can't miss weekend reading!

Friday
Oct242014

Key Earnings Reports Next Week

Below is a table of major earnings reports next week.  During earnings season, each edition of The Bespoke Report includes analysis of how earnings are progressing and what to look forward to in the coming week.  Sign up for a five-day free trial now to get this week's Bespoke Report in your inbox tonight!

Next week we see big reports in Health Care (MRK, PFE, HCA, ABBV, GILD, AGN), Tech (TWTR, FB), Energy (APC, MCK, PSX, COP, XOM, CVX, FCX), and Financials (V, MA, MET).  Earnings season is currently coming in fairly strong for EPS but revenues have lagged estimates thus far, despite growing over 5% year-over-year.  We've seen relatively few Energy names report so far, so next week will be interesting given the chaos in the sector since oil began to sell off in earnest at the end of the summer.

Have a great weekend!

Friday
Oct242014

Biotech Laps the Internet

The Nasdaq Biotech and Internet groups were the two market leaders in 2013, and they both experienced massive corrections from February through April of this year.  Below is a check-up on the performance of the two groups.  As shown, both groups bottomed around the same time earlier this year, but Biotech has run circles around the Internet group over the last couple of months.  Today's sharp breakout higher for Biotech is in stark contrast to the weakness seen in the Internet group lately. 

Since the start of 2013, Biotech is up 110.4%, while the Internet group is up 59.5%.  Biotech has essentially lapped the Internet group at this point.  Let's see where these two groups head over the final two months of the year.

Friday
Oct242014

Jobless Claims Adjusted For Population

In yesterday's post on Initial Jobless Claims, we noted that claims are currently at levels not seen in 14 years.  This was even more impressive given the fact that the US population has grown by 12% since then.  That got us thinking.  Adjusted for the size of the US population, where do claims currently stand?  With that in mind, the chart below shows the level of initial jobless claims as a percent of the total US population.  

As you can see in the chart, claims are right near record lows based on this measure.  As of the latest week (10/18), 0.0887% of the total US population filed for first time jobless claims.  Going all the way back to 1968 (2,494 weeks), there have only been 8 other weeks where a smaller percentage of the US population filed for initial jobless benefits.  One of those weeks was last week (10/11), where the percentage of first time claims was 0.834%.  This was the second lowest percentage of claims on record (since 1968), behind only 11/30/1968 when the percentage of first time claims dropped to 0.0804%.  In order to break below that level any time in the near future, we would need to see weekly claims fall down to 256K, which is 27K below current levels.  Not out of the question by any stretch.

Thursday
Oct232014

Bulls Running

With the S&P 500 on pace for its best week since the beginning of 2013, individual investors continue to get more bullish.  According to the weekly sentiment survey from the American Association of Individual Investors (AAII), bullish sentiment increased by seven percentage points, rising from 42.7% up to 49.7%.  Although it is still slightly below 50%, this week's level is the highest in eight weeks.  Perhaps the most notable aspect during this entire period of heightened volatility is the fact that there was only one week during the sell-off where bullish sentiment fell below its bull market average of 38.4%.

Thursday
Oct232014

Jobless Claims Rise From 14 Year Low

Jobless claims rose by 17K in the latest week, but given we were coming off a print last week that was the lowest in more than 14 years, it's hard to get much better.  For the latest week, the level of claims came in at 283K, which was slightly higher than the consensus expectation of 281K.

In spite of this week's increase, the four-week moving average declined by 3K down to 281K.  This is also the lowest level for this indicator in more than 14 years (June 2000).  Given the fact that the size of the US population has increased by over 10% since then makes this number even more impressive.

On a non-seasonally adjusted basis (NSA), jobless claims fell by 18K down to 255.5K.  For the current week of the year, this is the lowest level since at least 2000, and 85K below the historical average of 339.9K for the current week of the year dating back to 2000.

Wednesday
Oct222014

EPS Strong; Revenues Weak

Just over 300 companies (around 15% of all companies) have reported earnings so far this season, giving us enough data to go ahead and take a look at the earnings and revenue beat rates for the quarter.  So far this season, 64.9% of companies have beaten bottom-line consensus analyst earnings estimates, while just 49.3% of companies have beaten top-line revenue estimates.  As shown in the charts below, the earnings beat rate looks strong compared to past quarters during this bull market, while the revenue beat rate looks very weak.

Investors would rather see top-line revenue numbers come in stronger than bottom-line earnings numbers, because revenue numbers are more difficult for companies to work around.  So far this earnings season, the opposite has occurred.

Below is a list of the companies that have seen the biggest price jumps on their earnings report days so far this season.  (For companies that report before the open, we look at that day's change.  For companies that report after the close, we look at the next day's change.)

As shown, Unisys (UIS) currently ranks first with a one-day gain of 22.03% in reaction to its report.  Healthstream (HSTM) ranks second with a gain of 21.75%, followed by Ruby Tuesday (RT) at 15.2%, iRobot (IRBT) at 13.38%, and Six Flags (SIX) at 12.78%.

E2open (EOPN) has been the worst performing stock on earnings this season with a one-day drop of 33.08%.  ARC Group (ARCW) ranks second worst with a decline of 24.35%, and then Netflix (NFLX) ranks third worst at -19.37%.  Netflix has been by far the worst performing S&P 500 stock this earnings season.  As a heavily owned stock, Netflix (NFLX) put a hurting on plenty of investors when it reported on the 15th.  IBM is another notable on the list with its one-day decline of 7.11% on Monday.  Chipotle (CMG) and Biogen (BIIB) are two other notables on the list of earnings losers.

Looking for more in-depth earnings season analysis?  Bespoke Premium has you covered with daily and weekly updates.  Sign up for a 5-day free trial today and use "earnings" in the coupon code section of our Subscribe page to receive a 10% discount.

Tuesday
Oct212014

Asset Class Performance Since the October 15th Short-Term Low

Below is a look at how various asset classes (using tradeable ETFs) have performed since stocks put in a short-term bottom on October 15th.  For each ETF, we also include its performance so far this month and year.

As shown, US equities have surged off the 10/15 lows, while international markets have seen a more subdued gain.  The Nasdaq 100 (QQQ) and midcaps (IJH) have bounced the most, while sectors like Energy (XLE), Materials (XLB) and Health Care (XLV) have outperformed.  Most sectors are still down for the month, while four of ten are down on the year (Cons. Discret., Energy, Industrials, Telecom).  

The rally in stocks has coincided with a drop in Treasuries, but for the month, fixed income ETFs are still up big.  And year-to-date, the 20+ Year Treasury ETF (TLT) is up the second most of any asset class on the list behind just India (INP).  Russia (RSX) is down the most year-to-date with a decline of 27.31%. 

Tuesday
Oct212014

Losers Bounce Back in a Big Way

The average stock in the Russell 1,000 fell 8.64% from September 18th through October 15th.  Since the close on the 15th, the average stock in the index has rallied back 4.95%.  

So which stocks have led the way higher?  Below we have broken up the Russell 1,000 into deciles (10 groups of 100 stocks each) based on performance (%) during the market sell-off from 9/18 to 10/15.  The "Best" decile contains the 100 stocks in the Russell 1,000 that did the best during the sell-off, while the "Worst" decile contains the 100 stocks in the index that did the worst during the sell-off.  For each decile, we highlight the average performance of its stocks since the 10/15 low.

As shown, the stocks that held up best during the sell-off are up an average of just 2.42% since 10/15, while the stocks in the decile of worst performers during the pullback are up an average of 8.30%!  There's a clear pattern in the chart -- the worse the stock did during the sell-off, the better it has done during the bounce.

Below is a list of the 40 stocks in the Russell 1,000 that are up the most since the current rally began on the 15th.  For each stock, we also highlight how it performed during the 9/18 to 10/15 sell-off, as well as its current distance from its 50-day moving average.

Monday
Oct202014

Heavily Shorted Stocks Bounce But Still Underperforming

When trying to get a feel for the market's overall tone, one indicator we track is the performance of the most heavily shorted stocks.  When these stocks rally and/or outperform the market, it is usually a sign that investors are more open to risk.  As a group, throughout most of 2013 and part of this year, the best performing stocks in the market were also the ones with the highest short interest as a percentage of float.  More recently, though, these stocks have been under notable selling pressure, indicating that investors were no longer willing to stomach the risk associated with these names.  In our regular update (Bespoke Premium subscription required) of short interest back on 9/11/14, we noted the weakness in stocks with high levels of short interest: "Just as we have pointed out in the past that the overall equity market typically performs well when the most heavily shorted stocks outperform the market, in the past when we have seen the most heavily shorted stocks underperform the market, it is not a great sign for the overall market."

Ever since the early September update, the performance of the most heavily shorted stocks has only gotten worse and the rest of the market has followed suit.  The chart below compares the performance of the 150 most heavily shorted stocks in the S&P 1500 to the 150 least heavily shorted stocks in the S&P 1500 (as a percentage of float) so far in 2014.  Each basket of stocks is equally weighted and changes with each semi-monthly update on short interest. 

Starting the year off with both indices at 100, the basket of most heavily shorted stocks ("hi-short") is down just about 10% YTD to 90.06.  Meanwhile, the basket of least heavily shorted stocks ("low-short) is up just under 2.5% on the year.  Looking at the chart, it is interesting to see that both baskets saw nearly identical performances up until Spring, which was right around the time the Russell 2000 peaked.  From that point, though, they began to diverge with the hi-shorts underperforming.  The underperformance of the hi-shorts steadily increased throughout the summer, but beginning in late September, the bottom really fell out of the hi-shorts.  At their lows last week, the hi-short basket was down over 14.5% on the year, while the low-shorts were down less than 1.5%.

As the overall market has bounced since Wednesday, we have seen the hi-shorts make up some of their lost ground, which is supportive of the rally, but going forward it is important for investors and traders alike to track how stocks with high short interest perform.  If the hi-shorts continue to outperform, Wednesday's panic sell-off will likely prove to be the low.  However, if we see the market continue to rally and the hi-shorts do not participate, it may be a good idea to take profits on any stocks you picked up in the sell-off.

Start your day with our Morning Lineup, and end it with The Closer -- some of the most insightful and actionable market analysis on the Street.  Sign up for a 5-day free trial to Bespoke Premium today!

Monday
Oct202014

S&P 500 Sector Weightings; Wither Energy

Below is an updated look at sector weightings for the S&P 500.  As shown, Technology remains the largest sector of the market at 19.32% -- pretty much a fifth of the market.  The Financial sector is the second largest with a weighting of 16.41%, followed by Health Care at 13.89%.  Consumer Discretionary ranks fourth at 11.74%, Industrials is in fifth at 10.41%, and Consumer Staples is sixth at 9.80%.  The Energy sector currently has a weighting of 9.42%, which is down significantly this year.  The bottom three sectors make up just 9% of the index, so together they don't add up to Energy's weighting in seventh place.

Below is a look at how sector weightings have changed during the current bull market as well as so far in 2014.  Ironically, the two sectors that have seen their share of the market drop the most in 2014 are Consumer Discretionary and Energy -- two sectors that you wouldn't expect to move inline with each other.  Industrials has also seen its weighting drop this year, down 0.52 percentage points from 10.93% to 10.41%.

The three sectors that have seen their shares increase the most this year are the three largest sectors of the market -- Technology, Financials and Health Care.  So the "rich have gotten richer" in 2014.

During the current bull market, the Financial sector has seen the biggest increase in share gain at 7.83 percentage points.  It had dropped all the way down to 8.58% at the lows of the financial crisis after it was the largest sector of the market at the peak of the 2002-2007 bull cycle.  Consumer Staples and Energy have seen the biggest drop in share during the current bull, both giving up more than 4 percentage points of share.

Below are long-term charts of sector weightings for the S&P 500.  The red line represents the sector's average weighting going back to 1990.  This allows you to see which sectors are currently above or below their long-term averages.  

As shown, both Technology and Financials are back above their long-term averages, with Tech at nearly 4.5% above.  Health Care is also quite a bit above its average, while Consumer Staples and Industrials are well below.  Both Consumer Discretionary and Energy have now dropped below their average weightings after the rough patch they have experienced in 2014.

Monday
Oct202014

Looking for Action? S&P 1500 Most Volatile Stocks

For traders with a short-term time horizon who are looking for big moves over a short period, we have updated our list of the S&P 1500 stocks trading above $10 that have the largest intraday high-low ranges (based on the average percent spread between the intraday high and low over the last 50 days).  The stocks are grouped based on whether they have a rising or falling 50-day moving average (DMA).  Stocks highlighted in gray are new to the list this month.

In prior updates on the most volatile stocks, we discussed how the dearth of volatility in the market was really compressing the intraday ranges of the most volatile stocks.  For example, just last month there were only three stocks in the S&P 1500 that had an average intraday range of more than 5%.  In the last month, though, we have seen the number of stocks with average intraday ranges of more than 5% swell to 11, so we are definitely seeing a pickup.  Topping the list this month are shares of Synergy Resources (SYRG), which have an average daily range of 6.3%.  Along with SYRG there are 18 other Energy sector stocks listed below, and all of them have falling 50-day moving averages.  After Energy, the two sectors with the second most number of stocks represented are Health Care and Technology, which both have eight.

Start your day with our Morning Lineup, and end it with The Closer -- some of the most insightful and actionable market analysis on the Street.  Sign up for a 5-day free trial to Bespoke Premium today!

Monday
Oct202014

Investors Not Running Scared

Amid a big uptick in volatility and a sell-off of the likes not seen in a couple of years, you would have thought bullish sentiment would be heading south.  That's not the case, however.  Last Thursday's AAII (American Association of Individual Investors) number was the first sign that the sell-off wasn't impacting sentiment, and our weekend Bespoke Market Poll only confirmed it.  As shown below, bullish sentiment in our poll came in at 61% over the weekend, which was up 7 points week-over-week.  

Clearly investors are treating this sell-off as a buying opportunity.  Throughout this bull market going back to 2009, we have seen sentiment turn very negative on any signs of market weakness.  That's not happening so far this time around, which is worrisome if you're a contrarian. 

Friday
Oct172014

S&P 500 Higher or Lower from Here?

The S&P 500 had a wild week, but which way will it head from here?  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!

Interested in Bespoke's thoughts on the wild week and what's in store going forward?  Sign up for any of our subscription services and check out our just-published Bespoke Report newsletter.  It's packed with market stats and insights from our team of researchers here, and will help guide you through this crazy market.  Try out a 5-day free trial today, and get 10% off your membership cost by entering "bespokeinvest" in the coupon code section of our Subscribe page today.

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