Monday
Dec152014

World Oversold

There have been a few times this year when the world's stock markets were nearly all overbought, and a few times when they were nearly all oversold.  Right now we're in one of those "oversold" periods.

Below is a look at our trading range screen for the 30 largest country ETFs.  For each country, the dot represents where it's currently trading within its range, while the tail end represents where it was trading one week ago.  The black vertical "N" line represents each ETF's 50-day moving average, and moves into the red or green zones are considered overbought or oversold.

After a very rough start to December, the average year-to-date change for the 30 country ETFs shown is -7.5%, so the world is now solidly in the red for the year.  With a gain of 8%+, the US is an outlier to the upside.

Twenty-one of the thirty country ETFs are currently in oversold territory, with most at extreme levels (>2 standard deviations below their 50-days).  Countries like Chile (ECH), India (PIN), Indonesia (IDX), Italy (EWI), Mexico (EWW), Thailand (THD) and the UK (EWU) are actually more than 3 standard deviations below their 50-days -- pretty much limit down and falling completely out of bed here.  After the US broke below its 50-day today, just one ETF on the list is above its 50-day -- the Phillipines (EPHE).

Not a pretty end to the year so far.  At mid-month, this has been more of a "Grinch that Stole Christmas" pullback instead of the "Santa Claus Rally" that bulls were hoping for.  Let's see what the second half of the month brings, though, before we make it official.

Monday
Dec152014

Still Bullish

After the worst week for the Dow in years, there were still more bulls than bears in our weekend Bespoke Market Poll.  As shown below, bullish sentiment came in at 54% this week versus bearish sentiment of 46%.  Bullish sentiment fell 7 percentage points from last week's reading of 61%, but the fact that it still came in above 50% after such a rough week for the market is the real headline.

Friday
Dec122014

S&P 500 Higher or Lower from Here?

Markets fell sharply this week as oil continued to crash in price.  The Dow actually had its worst week since 2011.  So 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!

Looking to make sense of this negative price action?  Sign up for a 5-day free trial to any of our subscription services, and receive our just-published Bespoke Report newsletter.  This 30-40 page weekly publication is the bread and butter of our membership services.  Easy to read and full of actionable advice, the Bespoke Report will get you back to action on Monday ready to tackle the week ahead.  Head on over to our Subscribe page to sign up and read the Bespoke Report now.  If you're not satisfied, you can cancel at no charge within the first five days of your subscription.

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
Dec122014

Big Shifts in S&P 500 Sector Weightings

Below is an updated look at the current weightings of the ten sectors that make up the S&P 500.  

As shown, Technology leads the way with nearly a 20% weighting in the index.  Financials ranks second at 16.67%, while Health Care is in third at 14.60%.  The big thing you'll notice is how low Energy's weighting has gotten.  As of today, the sector makes up just 8.05% of the index.

Below is a look at how sector weightings have changed in 2014 and since the bull market began in March 2009.  As shown, at the start of the bull market, Energy had a weighting of 14.05%, making it the third largest sector of the market.  At 8.05%, Energy is currently the fourth smallest sector.  This year alone, Energy's share of the S&P has dropped 2.19 percentage points, and it has dropped 6 percentage points since the bull market began.

On the other side of the spectrum is Financials.  At the start of the bull market, the weighting for Financials had dropped all the way down to 8.58%.  Since then, its weighting has nearly doubled, taking it up to 16.67%.  

Below are charts showing the historical movements in weightings for the ten S&P 500 sectors.  The red line represents each sector's average weighting over the last 25 years going back to 1990.  You can see which sectors are currently above their average market weighting, and which ones are currently below.

Thursday
Dec112014

More on the Energy Sector Crash

Below is a look at our trading range chart for the S&P 500.  As shown, after peaking out in the middle of overbought territory (the red zone) last week, the index has moved back into neutral territory this week as oil prices have collapsed.  

The move lower in stocks this week hasn't done too much damage to breadth yet.  As shown below, 73% of the stocks in the S&P 500 are still above their 50-day moving averages, which is barely down from its highs last week.

The chart for the Energy sector is in stark contrast to the chart for the broad market, though.  As shown below, Energy is in deep oversold territory once again, trading nearly three standard deviations below its 50-day, and literally falling off the chart to the downside.  At the moment, just 5% of stocks in the Energy sector are above their 50-day moving averages.  Hey, at least it's not at 0%, which was the case back in October.

The drop in oil is finally getting noticed by the market.  Shocks to the system like this are not met with enthusiasm by investors, regardless of whether or not falling oil prices may ultimately be good for the economy.  For now, it looks like oil is going to need to stabilize for the market to remain in rally mode.

Looking for charts like these on all ten S&P 500 sectors.  Check out our weekly Sector Snapshot over at Bespoke Premium.  This week's report was just published after the close today.  Head on over to the Bespoke subscribe page to sign up for a 5-day free trial today!

Thursday
Dec112014

Bullish Sentiment Rises as Market Declines

Even as the S&P 500 was on the verge of its first four-day losing streak of the year, and the Dow saw a decline of nearly 300 points, individual investors turned slightly more bullish this week.  According to the weekly survey from the American Association of Individual Investors (AAII), bullish sentiment increased from 42.68% up to 45.02%.  This is the 10th straight week that bullish sentiment has been above its bull market average of 38.3%, which is the longest streak since early 2013.While investors did turn slightly more bullish this week, keep in mind that last week we saw a decline of over nine percentage points, so this week's rebound only erased a quarter of that decline.

Thursday
Dec112014

Jobless Claims Slightly Lower Than Expected

After five straight weeks of higher than expected jobless claims, this week we saw the first lower than expected reading since the first week of November.  While economists were expecting first time claims to come in at 297K, the actual reading managed to come in slightly below at 294K.  It wasn't a big beat, but better than expected is better than expected.

In last week's post on the report, we noted that claims would need to come in below 297K in order to stay below the 300K threshold, which they did.  With this reading, the four week moving average rose to 299.25K, making it 13 straight weeks that claims were below the 300K threshold.  This is the longest streak that the four-week moving average has been below 300K since mid 2000.

On a non-seasonally adjusted (NSA) basis, jobless claims rose by 94K to 388.3K.  Before you panic, though, it is important to realize that NSA always rise in early December.  In fact, this week's level is the lowest for the current week of the year since 2006, and still more than 100K below the average for the current week of the year going back to 2000.

Wednesday
Dec102014

Nothing Going Right For Crude Oil

The price of oil continues to crash today as WTI is trading down over 4% to levels not seen since July 2009.  While a 4% move sounds pretty big, in the context of the recent trading environment, moves like this have been common.  The culprit for today's move is a report from OPEC saying that demand for its oil in 2015 will be the lowest in more than a decade.  Based on its current output, that will translate to a daily surplus of more than 1 million barrels per day.

Today's weekly inventory report from the Department of Energy (DoE) just added more fuel to the fire for the shorts.  While economists were forecasting inventories to fall by 2.7 million barrels, inventories actually increased by 1.45 million barrels.  With that increase inventories have now risen in eight of the last ten weeks for a total increase of 24.1 million barrels.  As shown in the chart, inventories typically increase during the fall, but usually by this time of year they have started their seasonal decline.  As it stands now, inventories are more than 52 million above average.

Wednesday
Dec102014

Energy Sector Crashes

The S&P 500 Energy sector has now fallen 25% from its peak nearly six months ago, while the S&P 500 Oil Exploration and Production group has fallen even more at -45%.  If you want to label it a crash, be our guest.  

Below we compare the recent declines for Energy stocks to the declines that Tech and Housing experienced right after they peaked in March 2000 and July 2005, respectively.  If OPEC is deliberately trying to hurt US oil companies, they're doing a pretty good job of it so far.

Tuesday
Dec092014

Small Business Confidence Hits a 7.5 Year High

Today's release of the small business optimism index on the part of the National Federation of Independent Business (NFIB) saw its biggest increase since March, and hit its highest level in more than seven years (February 2007).  While economists were expecting the headline index to come in at a level of 96.5, the actual reading came in at 98.1.  Not only was November's reading the highest since 2007, but it also took the headline index comfortably back above its historical average of 96.0 since 2000.

As we do each month, we also wanted to highlight what members of the NFIB consider to be the number one problem they face in their business.  The table to the right summarizes the percentage breakdown among the various issues that members face.  As usual, the two biggest problems facing small businesses are Taxes (23%) and Government Requirements and Red Tape (22%).  At a combined 45%, the 'Washington' problem is now at its highest level since May, and just two percentage points shy of its multi-year high of 47% from May 2013.  

Behind Washington, the only other problems cited by 10% or more small businesses are Poor Sales (12%) and Quality of Labor (10%).  Looking at the month over month changes in each category, there were no real big moves this month.  While Taxes saw an increase of two percentage points, no other category saw a move of more than one percentage point.  In last month's report we noted that the two point increase in Quality of Labor could be a harbinger of wage pressures in the future.  In this month's report we saw Quality of Labor give back some of its gains from the prior month, so until we see a sustained increase in the percentage of businesses citing that as a problem, upside wage pressure should be held in check.

Tuesday
Dec092014

JOLTS Mixed; Private Sector Momentum Continues

Today's Job Opening and Labor Market Survey (JOLTS) showed continued momentum in the private sector labor market, with the Private Quit Rate holding steady at 2.2%, its 9th month in a row at or above 2%. Total Quits fell slightly.

Private layoffs rose slightly, but remain in their tight, low range around 1.4%; total layoffs held steady as the public sector issued slightly fewer pink slips.

The total separations rate (quits, layoffs, and other separations such as retirements or deaths combined) rose to its highest level of the cycle.  While there are demographic effects that have a significant impact on this particular indicator that do not have as much influence over Quits or Layoffs, it's still a notable high and indicates confidence on the part of workers.

Looking at Total Job Openings, the number of openings is just a hair below the cycle high set in August after a decline in September, and stands at 4.834 million, its 9th month above 4.0 million.

Looking at the same statistic via a rate (instead of gross numbers) shows that while total openings declined, private openings continue to rise steadily.

All told, this report had no new insights: labor demand remained steady in October, and our view of steady improvement that should lead to higher wages remains in place.

Monday
Dec082014

Tesla (TSLA) Seven Down Days and Counting

Prior market-darling Tesla Motors (TSLA) fell yet again today, leaving the stock on a seven-day losing streak.  Below is a look at the stock's historical losing streaks since it went public a few years ago.  As shown, seven days is the longest losing streak it has had.  The only other time it occurred was back in January 2013.  The only reason we're noting it is because following that seven-day losing streak, the stock turned around and proceeded to go up over the next eight days.  Tesla bulls would be happy with just one day of gains at this point.

Interested in Bespoke's view on Tesla (TSLA)?  Earlier today we sent out a B.I.G. Tips report to Bespoke Premium and Bespoke Institutional members with a call on the stock.  Sign up for a 5-day free trial to view the report today.

Monday
Dec082014

Another Case of the Mondays

US equity markets are off to a rough start to the week, with the Nasdaq taking it on the chin by more than 1%.  This fits a pattern that we've seen a lot this year.  Mondays have typically been weak.  We saw the same thing happen last Monday when the Nasdaq fell 1.34% and many growth stocks fell 5-10%.

Below is a chart showing the average performance of the Nasdaq Composite by weekday so far in 2014.  As shown, two days have actually averaged declines this year -- Monday and Thursday.  Mondays have averaged a decline of 0.05%, while Thursdays have averaged an even bigger decline at 0.10%.  

While Monday has been negative this year, Tuesday has been the day where bulls have made their money.  As shown, the Nasdaq has averaged a big gain of 0.32% on Tuesdays this year, followed up by a gain of 0.11% on Wednesdays.  

Monday
Dec082014

Bullish Sentiment Back Above 60%

Bullish sentiment in our weekend Bespoke Market Poll jumped back above 60% this week, moving up from 53% to 61% on a week-over-week basis.  This was in contrast to the weekly AAII number released Thursday that showed a decent-sized drop in bullish sentiment.

Monday
Dec082014

Bespoke's Proprietary Stock Ratings

Ever wonder which stocks Bespoke likes most or how Bespoke views the stocks in your portfolio?  Our weekly Bespoke Stock Scores database is a proprietary ranking system for all of the stocks in the S&P 1,500, which is a combination of the S&P 500, S&P 400 (midcap) and S&P 600 (smallcap).  Our ranking system uses a “fusion” approach by combining three important research methods – fundamentals, technicals, and sentiment.   By entering a stock’s ticker symbol in our interactive spreadsheet, subscribers can instantly see Bespoke’s overall ranking for the name as well as its ranking within each of the three categories mentioned above.   Our Bespoke Stock Scores database of the entire S&P 1,500 is available in Microsoft Excel and CSV formats, and subscribers can use it to easily pull up the top rated stocks within each of the ten market sectors.  We also highlight a list of the top 40 rated stocks in the S&P 1,500 when we release updates to the database each and every Tuesday after the close.  

Below is a snapshot of this week's top 40 rated stocks with the ticker symbols removed.  If you're interested in seeing the actual names at the top of the list, sign up for a 5-day trial to Bespoke Premium today!  For the holiday season, we're offering a 10% discount on all research memberships.  Sign up here today!