Friday
Dec262014

Utilities -- The High-Fliers of 2014

The S&P 500 Utilities sector is closing out 2014 with a bang.  As shown below, the sector is currently in the midst of another big momentum move higher into extreme overbought territory -- currently trading more than two standard deviations above its 50-day moving average.  The sector is up a whopping 28% year-to-date -- easily the top performing sector of 2014.  No wonder so many portfolio managers are underperforming this year.  Utilities -- the most defensive, low-growth sector of the market -- has been leading the way.  It's tough to sell investors on a big overweight position in Utilities, especially in a rising rate (at least those are the expectations) environment.  But if you haven't owned Utilities, chances are you've lost ground to the S&P this year.

After this recent move into the stratosphere, the P/E ratio for the Utilities sector has jumped up to 18.77.  That's high, especially in relation to the P/E ratio of the S&P 500 as a whole.  At 18.77, the P/E for Utilities is actually 0.27 points higher than the P/E for the S&P 500 (18.50).   

Friday
Dec262014

Russell 2,000 (Smallcaps) Finally Breaks Out

After an amazing run throughout all of 2013, the Russell 2,000 (smallcaps) has been in a sideways consolidation phase over the last 12 months.  Even as largecaps have rallied 10%+ in 2014, the Russell 2,000 has been going back and forth around the flat-line all year.  Well, the rally over the last few weeks has culminated with a breakout to new highs today, pushing the Russell 2,000 ETF (IWM) above its double-top highs seen earlier this year.  Shorts have been beating on smallcaps all year, but it looks like the bulls might win out in the end.  This is definitely a very positive formation if the breakout can hold over the next few trading days.

Friday
Dec262014

The Bespoke 50 -- Bespoke's 50 Favorite Growth Stocks -- Up 104% Since Inception

One of our most popular products over at Bespoke Premium is our "Bespoke 50" list of our 50 favorite growth stocks.  To make the list of 50, a stock must have strong earnings growth prospects along with an attractive price chart based on Bespoke's proprietary fundamental and technical analysis.  

The Bespoke 50 is now up 104%% since inception in 2012 versus a gain of 52% for the S&P 500.

So which stocks currently make up the Bespoke 50?  To find out, simply sign up for a 5-day free trial to our Bespoke Premium service.  The Bespoke 50 is updated on a weekly basis every Thursday, and this week's list of 50 stocks was just published this morning due to the Christmas holiday yesterday.  Click here to start your free trial today!  Use "holiday" in the coupon code section of our Subscribe page to receive a 10% discount on the price of your new membership.

Wednesday
Dec242014

Happy Holidays from Bespoke!

2014 is winding down, with just four trading days left after tomorrow's Christmas holiday.  So what are investors to expect heading into 2015?  

Over at Bespoke Premium, we're currently putting the finishing touches on our annual Bespoke Report outlook piece.  There's certainly plenty to cover in this year's report, and we do indeed cover it all!  The big topics of conversation heading into 2015 concern the Fed and the price of oil.  Along with in-depth sections on these two topics, we also go into detail on economic cycles, housing, market sentiment, valuations, technicals, the Presidential election cycle, international markets, commodities, fixed income, the Dollar, and much, much more.  If there's an indicator or asset class you track more closely than others, rest assured that it's covered in the Bespoke Report.

To receive our 2015 Bespoke Report, simply sign up for any of our subscription services at Bespoke Premium.  At the Bespoke Premium website, you can learn about the numerous market research products that are included with the different levels of service that we offer.  Our entry-level service is the Bespoke Newsletter package, which gives you access to our weekly newsletter, Trade of the Day, and Bespoke model portfolios.  The Bespoke Newsletter package is available for just $1 per day, and it's a great deal for investors that want to stay on top of things without having to follow the market on a daily basis.

Our most popular level of service -- Bespoke Premium -- gives you access to our full suite of products, which includes daily market analysis and individual stock ideas.  For the active investor, there's not a service out there that matches up at the $80/month price point. 

Finally, our Bespoke Institutional offering includes access to our full product suite as well as our Interactive Databases.  Institutional clients also gain access to our team here at Bespoke, where they can make research requests on demand and talk markets at any time.

Sign up for any of our subscription services today to receive our 2015 Bespoke Report in your inbox next Tuesday!  We're happy to offer all new subscribers a 10% discount on membership costs for the holiday season.  Simply enter "holiday" in the coupon code section of our Subscribe page on checkout to receive the discount.  As always, the first five days of the service are free.

Happy Holidays from Bespoke!  We thank you for your continued support.

Below -- presented without comment -- are long-term charts of both the S&P 500 and China's Shanghai Composite.  Which will they go in 2015?  

Wednesday
Dec242014

Jobless Claims Better Than Expected

With the release coming one day earlier than normal due to the Christmas Holiday, jobless claims provided some holiday cheer with a better than expected print.  While economists were expecting claims to come in at a level of 290K, the actual level came in 10K better than expected at 280K.

With this week's decline in claims, the four-week moving average dropped by 8.5K down to 290.25K.  This is the lowest level since 11/14, but still a little more than 11K above the expansion low of 279K that we saw on 10/31/14.  It is also the 15th straight week where the 4-week moving average was below 300K.

On a non-seasonally adjusted (NSA) basis, claims rose by 12.3K to 340.1K.  For this time of year, though, that reading is extraordinarily low as it is the lowest for the current week of the year dating back to 2000, and more than 100K below the historical average of 463.8K.

Tuesday
Dec232014

Highest GDP Print In Over A Decade

We almost fell off our chairs when a five-handle figure came across the screens this morning at 8:30 AM, showing the US economy expanded at its fastest pace for a quarter since Q3 2003: 5.0% at a real, seasonally adjusted annual rate.  As we said last night in The Closer (available as part of our Premium package:

GDP revisions [tomorrow] will be important to review, as usual, but keep in mind any data is at this point between three and six months old and therefore only useful in terms of confirmation as opposed to inflection points in trend.

The third (and final) revision to Q3 GDP completes this revision cycle, and for 2 quarters in a row every revision was upwards.  This is an impressive run for growth, and as we indicate in the quote above, there's no foregone conclusion it can be sustained, especially with tempered readings for a variety of leading indicators relative to their pace in Q2 and Q3.  That said, momentum is clearly on the side of growth, and the consumer is leading as upward consumption revisions accounted for two-thirds of the total upward revision.

To close, we would note that two tailwinds for this report (health care services and federal spending) should recede somewhat.  We would not expect 5% growth to continue.  That said, consumers were out and spending long before the best of the tailwind from lower gas prices kicked in, and fixed investment is still a mixed picture.  While oil and gas-related industries should slash capex, we would expect some replacement as other industries see higher consumer demand.  Further, housing is making no contribution, and any acceleration in demand for housing investment would be a further positive.

For more economic analysis, outlooks, and summaries, make sure to subscribe to Bespoke Premium.  Every night in The Closer we break down the biggest economic releases, with daily insights into where the United States and the rest of the global economy are headed.  Our B.I.G. Tips, like the one we sent today covering this morning's GDP release, are also a helpful guide to the markets. 

Tuesday
Dec232014

Dogs of the Dow 2015 Firming Up

One popular investment strategy is to purchase stocks that have gotten "cheap" on a dividend basis: stocks that pay a higher dividend than their peers.  For the Dow Jones Industrial Average, this is known as buying the "Dogs of the Dow", or the ten stocks in the Dow that have the highest dividend yield as of year end, equally weighted.  The strategy is simple and easy to execute; it requires at most twenty trades per year, and operates on the theory that stocks that pay a high dividend will see higher total returns over the long run than stocks that don't. 

Below is a summary of the "Dogs of the Dow" strategy's total returns since 2001.  About half the time, the strategy outperforms both the Dow and the S&P 500, while it beat the Dow itself 12 of 14 times.  Average and median returns are higher for the "Dogs of the Dow" strategy than the Dow, and its average return beats the S&P 500 while trailing slightly on a median basis.

This year has been an interesting one for the strategy.  While total return has been about in-line with the Dow as a whole on average, the individual names within the list of Dogs have been all over the place.  Intel, Microsoft and Cisco have all exploded higher, with total returns of over 30%.  But GE and Chevron have both lagged the index badly, and McDonald's has also had a challenging year amidst a broader equity market rally.

Looking ahead to next year, three names will be removed from the current Dogs list; unsurprisingly, they're also the best performers.  Intel, Microsoft and Cisco will all step aside to make room for Exxon Mobil, Caterpillar and Coca-Cola should current prices hold roughly steady for the last few trading days of the year.  After seeing their dividend yields expand for years heading into 2014, strong stock performance for the three Tech dogs (INTC, MSFT, CSCO) has pushed their dividend yields lower this year.

Interested in index analysis, sector strategies or idea generation? Try out Bespoke Premium or Bespoke Newsletter today.  Both tiers receive our popular Annual Bespoke Report, fully recapping 2014 and giving an outlook for 2015 across asset classes, equity market sectors, and the global economy.  Subscriptions come with a five day free trial.

Tuesday
Dec232014

Most Countries Still Oversold; China and US Overbought

While the US is enjoying a stock market at new all-time highs, most countries around the world are still at oversold levels.  Below is a look at our trading range screen for the 30 largest country ETFs traded on US exchanges.  For each ETF, the dot represents where it is currently trading within its range, while the tail end represents where it was trading one week ago.  The black vertical "N" line represents its 50-day moving average, and moves into the red or green zones are considered overbought or oversold.  (Read more about the calculations for this screen at the bottom of this post.)

Of the 30 country ETFs in the screen below, 17 remain in oversold territory, while just 2 are overbought (China and the US).  Most countries have experienced big moves higher within their ranges over the last week, however.  Countries like Chile, India, Indonesia, Mexico, Russia and Thailand were trading more than three standard deviations below their 50-days last week at this time, but they have clawed their way back and are getting close to neutral territory.  

Here at Bespoke, we run these custom screens for many of our Institutional clients who like to track the trends of their portfolio holdings.  Give us a call at 914-315-1248 if you're interested in doing this for your portfolio.

Monday
Dec222014

Twitter vs. Instagram Search Trends; Amazon Hits a New High

There was quite a bit of chatter today about Dick Costolo's future as CEO of Twitter (TWTR).  The stock rallied today on the back of an analyst's call that "there's a good chance he's not there within a year".  Recently, one of Twitter's competitors -- Instagram (Facebook-owned) -- made news for surpassing Twitter in the user column.  We've also identified this trend in our monthly Consumer Pulse reports available over at http://bespokeintel.com.  

Another thing you can look at when analyzing the social media space is Google Trends.  Running a search analysis of "Twitter" versus "Instagram" produces the chart below.  As you can see, Twitter (TWTR) has been trending downward since peaking in 2013, while Instagram has been straight up.  Twitter still holds a small lead in terms of Google search, but the two are converging quickly.  Can a new CEO stop this downtrend for Twitter?

Another noteworthy trend we identified on Google Trends was "Amazon" searches.  As shown below, "Amazon" hit yet another high for searches on Google this holiday season, which bodes well for both the stock (AMZN) and retail sales as a whole.

Monday
Dec222014

S&P 500 Sector Trading Range Charts

Below is a good look at where the S&P 500 and its ten sectors stand heading into the new year.  These trading range charts help to identify both short and long-term trends, and they also give you an idea of how extended (to the upside or downside) a stock or index is at any given time.  The light blue interior band represents each sector's "normal" trading range, which we calculate as between one standard deviation above and below the 50-day moving average (white line).  The red zone represents between one and two standard deviations above the 50-day, and it is generally thought of as "overbought" territory.  The green zone represents between one and two standard deviations below the 50-day, and it is generally thought of as "oversold" territory.

Due to the pick-up in volatility that we have seen since October, the trading range for the S&P 500 has widened significantly.  As you can see in the chart, the distance between the upper and lower band for the S&P was minimal back in May.  In fact, the difference between the top of the red zone and the bottom of the green zone was just 3.5%.  As of the close today, the difference stands at 14%.  And even though the S&P 500 closed at a new all-time high today, it's just barely into overbought territory right now, whereas it has been much more extended to the upside when it has hit new highs in the past.

Three sectors hit new bull market highs today -- Financials, Technology and Utilities.  Two other sectors are just on the cusp of breakouts -- Industrials and Consumer Discretionary.

Interestingly, Health Care -- which has been a market leader throughout periods of tumult in the second half of 2014 -- looks to have failed to break out here.

As you can see in the charts below, some of the sectors that are at or near new highs have gotten pretty extended.  Keep that in mind when trading over these last few days of the year.

For more sector analysis, become a Bespoke Premium member today and receive our weekly Sector Snapshot report.

Monday
Dec222014

A Losing Streak for the Record Books

According to AAA, the national average price of gasoline dropped another 1.4% over the weekend taking prices at the pump to their lowest levels in more than five and a half years.  Even more noteworthy is the fact that the national average price hasn't seen a daily increase since 9/24/14.  That 88 day stretch without an increase now ranks as the longest streak without an increase on record (going back to 2004).  Prior to the current streak, the longest stretch without a one day increase in price was in late 2008 during the credit crisis.  In that period, gasoline prices fell 57% over a period of 87 days without an increase.   While the current streak hasn't been nearly as steep (-28%), consumers will take it nonetheless.

Monday
Dec222014

Bulls Back in Full Force

Bullish sentiment jumped 11 points in our weekend Bespoke Market Poll, rising from 54% up to 65%.  A gain of 4%+ over a three-day period will do that to market sentiment!

Friday
Dec192014

S&P 500 Higher or Lower from Here?

Talk about a crazy week.  After plunging to start the week, the S&P 500 surged over the last three days and is once again making a run at all-time highs.  So which way will the market head from here?  Is there more pain ahead or smooth sailing into January?  Please let us know by taking part in our weekly Bespoke Market Poll below.  Simply tell us 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 sign up for a 5-day free trial to our Bespoke Premium service if you're looking for in-depth analysis of this market.  Become an annual member and you'll receive a hard copy of our awesome Bespoke Market Calendar for 2015.  Right now you can enter "endofyear" in the coupon code section of our Subscribe page to receive a 10% discount on the life of your membership!  Happy Holidays from Bespoke.

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

Friday
Dec192014

Bespoke CNBC Appearance (12/19)

Bespoke's Paul Hickey appeared on CNBC's Fast Money last night to talk about the divergence between the S&P 500 and the Energy sector over the last six months.  To view the segment, click on the image below.

Friday
Dec192014

Bullish Sentiment Declines

It looks as though all of this volatility is getting to investors' nerves and causing them to be a little more risk averse.  In the latest weekly survey of investor sentiment from the American Association of Individual Investors (AAII), bullish sentiment declined by 6.28 percentage points, falling from 45.02% down to 38.74%.  In spite of the large decline in bullish sentiment, though, bullish sentiment remained marginally above its bull market average of 38.31%.  This marked the 11th straight week of above average bullish sentiment, which is the longest streak since February 2013.  As you can see in the chart below, bullish sentiment has seen a big drop from its recent high of 57.93% from mid-November.  That being said, the trend of higher highs and higher lows remains intact.