What A Week It Was

To further summarize the volatile week we just had, below is a look at the recent performance of various asset classes using our key ETF matrix, which covers US equity strategies and sectors, currencies, country ETFs, commodities, and fixed income.  As shown, declines of 3-5% were seen across the board last week for US related equity ETFs.  The losses have left the Dow in negative territory for the year now, and the smallcap Russell 2,000 (IWM) is down nearly 10% YTD.

Energy, Materials, Industrials and Technology were the worst performing sectors last week, while Consumer Staples and Utilities were actually higher -- clearly a defensive rotation.

Globally, we did see strength in Brazil (EWZ) and Hong Kong (EWH) for the week, but everything else was in the red.  Developed Europe led the way lower, and the France (EWQ) and Germany (EWG) ETFs are now down double-digit percentage points in 2014.  Germany (EWG) is down nearly 20% YTD, and it's also down more than 20% from its 2014 highs -- putting it in bear market territory.

While oil and natural gas both fell sharply last week, gold and silver rallied.  Treasuries also saw heavy buying as the "safety trade" reigned supreme.

What's causing the market to struggle so much recently, and how should you position yourself through year end?  Find out our thoughts in our weekly Bespoke Report newsletter, available to all Bespoke clients.  Use "bespokeinvest" in the coupon code section of our Subscribe page to receive a 10% discount on your new Bespoke membership.  As always, there's a 5-day free trial, so if you're unhappy with the product, simply cancel at no charge.

Our Friday edition of The Closer always comes loaded with charts summarizing major asset class changes, equity strategy performance, and the coming week's economic data releases.  There are also all of the other features included in The Closer every night: charts, returns, big movers, Stock Odds, and Bespoke's Market Timing Model.  Subscribe now to get your free five day trial of Bespoke Premium!  From Friday's edition of The Closer: 

The worst week for stocks since May of 2012 is over.  Treasury yields continue to fall, dropping by the most in the ten year since July of 2012; oil showed some life in today’s session but crude has now declined by the most since the Taper Tantrum in June of 2013.  The decline in oil is in spite of a move lower in the US dollar index, its first after 12 weeks of gains.  A pause for moves higher mid-week in equities, credit and emerging market equities thanks to the Fed minutes Wednesday was broken up during the European session as stocks on the east side of the Atlantic plummeted, continuing moves lower that have been underway for weeks.  Economic data in the US was very light but showed no change in momentum as jobless claims continued their run of impressively low prints and the JOLTS report showed strong demand for labor.  But the global economy remains less robust, and there were disappointing releases around the world.  A great start to earnings from Alcoa (AA) was ignored by the market as the name declined 5.71% despite a strong report.  Financials get earnings really rolling next week.


S&P 500 Higher or Lower from Here?

The market fell hard this week, leaving the S&P 500 just one point above its 200-day moving average.  The Nasdaq and Dow weren't so lucky -- failing to hold above their 200-days into the close today.  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!

After a week like this one, our Bespoke Report newsletter is must read.  This week's report is packed with actionable analysis and market statistics covering the big sell-off we've seen recently in stocks.  Use "bespokeinvest" in the coupon code section of the Bespoke Premium subscribe page to get 10% off your new membership today.  As always, there's a 5-day free trial included.

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


S&P 500 Energy Sector Long-Term Chart

Below is a long-term look at the S&P 500 Energy sector.  Earlier this year, the sector experienced a big upside breakout above its pre-financial crisis highs.  As shown below, though, that breakout has given way to a breakdown back below those 2007 highs.  The sector has also broken below the bottom of its two-year uptrend channel.  There's a longer-term uptrend channel still in place that goes back to the sector's lows in 2008.  Let's see if it we get a test of that before the end of the year.


The 50 S&P 500 Stocks Farthest Below 50-Days

There's a lot of oversold stocks out there right now.  Below is a list of the 50 S&P 500 stocks that are currently the farthest below their 50-day moving averages.  As shown, the bulk of the names at the top of the list are from the Energy sector, which is no surprise given the sector's performance recently.  Noble (NE) is the farthest below at -22.89%, followed by Chesapeake (CHK) at -22.5%.  The first non-Energy sector stock that shows up is Allegheny Tech (ATI), which is a Materials name that is 17.7% below its 50-day.  

First Solar (FSLR) is the most oversold Tech stock at -16.21% below its 50-day.  Some other notables on the list include Gap (GPS), Harman (HAR), CBS and TripAdvisor (TRIP).

For more in-depth market analysis, sign up for a 5-day free trial to Bespoke Premium today.


Sector YTD Returns Heatmap

Below, we chart a heatmap showing the year-to-date performance for each sector at the end of every trading day of the year.  Red areas indicate underperformance versus other sectors year-to-date, while green areas indicate outperformance.  So the darkest red sectors are the worst performers year-to-date at whatever point in the year you're looking at, while the darkest green sectors are the best performers year-to-date at that point.  Using this visualization, it's easy to track the over- or under-performance for each sector as the year has progressed.

It has been a goofy year.  Health Care, Consumer Discretionary and Financials were the hottest sectors in early January, but then Financials and Discretionary trailed off quickly.  Discretionary hasn't been able to recover all year.  Health Care and Utilities were the top performers over the first quarter, but then Health Care trailed off in the second quarter while Utilities remained on top.  Once July and August rolled around, Health Care picked up again, and it's currently the top sector year-to-date with a gain of 16%.  

The Technology sector struggled early on versus other sectors, but since July it has remained as a top performer year-to-date.  Industrials was a middle-of-the-pack sector up until August, but since then it has been a relative underperformer.  Finally, Energy started off relatively weak, but then it turned into a big outperformer in the middle part of the year.  Since September rolled around, though, Energy has gone straight down, and it's now the worst performing sector in the market year-to-date. 


S&P 500 Sector Breadth Levels

Just 32.2% of stocks in the S&P 500 are currently above their 50-day moving averages.  Below is a look at breadth levels for the ten S&P 500 sectors.  As shown, three sectors stand out as having very positive breadth, while the remaining seven sectors are weak relative to the index as a whole.  Utilities -- the most defensive sector there is -- has a breadth reading of 83.3%.  Consumer Staples -- another defensive -- has a reading of 65%.  Behind Consumer Staples is Health Care with 64.2% of its stocks above their 50-days.

On the downside, Energy continues to get beaten down.  Just 2% of S&P 500 Energy stocks are above their 50-days.  Just 19.7% of Technology stocks remain above their 50-days, which isn't a good sign given that the sector makes up 20% of the market.

Below we have run the 30 largest stocks in the Energy sector through our trading range screen.  As you can see, 29 of the 30 stocks are in oversold territory -- most of them deeply oversold.  Kinder Morgan (KMI) is the only stock in the screen that is not oversold, but it is below its 50-day moving average.

Yesterday we noted that oil was about to enter bear market territory, and with it, Energy stocks continue to crater.  When will the bleeding stop?


Bullish Sentiment Rebounds

After four declines in the last five weeks, bullish sentiment on the part of individual investors rebounded this week.  According to the weekly sentiment survey from the American Association of Individual Investors (AAII), bullish sentiment increased from 35.42% up to 39.88%, which was the largest weekly increase since the last week of August.  This week's increase also brought bullish sentiment back above its bull market average of 39.4%.  While bullish sentiment increased this week, bearish sentiment was nearly unchanged, rising from 30.90 to 30.98%, so all of the increased bullishness came from the neutral camp.

Although the S&P 500 was up during the week in which the survey was conducted, this week's jump in bullish sentiment was a little bit of a surprise given all the volatility we have seen in the market of late.  Volatility is usually a turn-off for individual investors, but at this point they don't seem to mind.

Earnings season kicked off Wednesday, so stay on top of things with our top-of-the-line earnings season analysis. Become a Bespoke Premium member today.  Use "endofsummer" in the coupon code section of our Subscribe page to receive 10% off the membership price.  As always, there's a 5-day free trial period once you start your subscription.


Jobless Claims Better Than Expected

Jobless claims for the latest week fell by 1K, falling from 288K down to 287K, which was 8K below the consensus forecast of 295K.  This week's lower than expected reading was the fourth straight week that claims came in lower than expected, which is the longest streak of better than expected reports since March.

With this week's better than expected report, the four-week moving average for jobless claims fell to 287.75K, which is a new low for the current recovery cycle.  In fact, you have to go all the way back to one week in February 2006 to find a lower reading, and before that you have to go all the way back to June 2000.

On a non-seasonally adjusted basis (NSA), jobless claims rose by 30K to 257.7K.  In spite of the increase, though, claims are still low for this time of year.  As shown in the chart below, the average NSA reading for jobless claims in the first week of October is 346.9K, and you have to go back to 1999 to find a week where NSA claims in the first week of October were lower.

Earnings season kicked off Wednesday, so stay on top of things with our top-of-the-line earnings season analysis.  Become a Bespoke Premium member today.  Use "endofsummer" in the coupon code section of our Subscribe page to receive 10% off the membership price.  As always, there's a 5-day free trial period once you start your subscription.


Big Down Day Followed By Even Bigger Up Day

The S&P 500 fell 1.51% yesterday, but it followed up that big loss with a gain of 1.75% today.  Over the two-day period, the S&P is up about 4 points.  

Big down days followed by even bigger up days have been rare during the current bull market that began on March 9th, 2009.  In fact, situations like the last two days where the S&P fell more than 1.5% only to rally back even more the next day have only occurred six other times, and we highlight them in the table below.

You may think it's bullish to see an upside day that eclipses extreme losses on the day prior, but that hasn't been the case during this bull market.  As shown below, the S&P has averaged declines going forward in the near term (over the next day, week and month).  The last time this happened was on October 18th, 2011, when the S&P rallied 2.04% after falling 1.94% the day before.  On October 19th, 2011, the S&P fell 1.26%.  Over the next week the S&P saw a small 30 basis point gain, but over the next month, the index was down 75 basis points.  

Sign up for a 5-day free trial to Bespoke Premium to check out today's Closer, where we dive into today's move in more detail and focus on what's in store for the market next.


New Oil Bear Market?

Oil (West Texas) is currently trading just above $87.  As long as the commodity closes below $88.42, it will enter bear market territory.  

A bear market is a drop of at least 20% that was preceded by a rally of at least 20%.  Below is a chart showing bull and bear markets for oil since 2009 when the Financial Crisis was coming to an end.  As shown, this would be the fourth bear market for oil over the last five years, and it would already be the longest at 397 calendar days.

Over at Bespoke Premium, we have just published a B.I.G. Tips report taking a look at historical bear markets for oil.  How long do they typically last, and how severe do they get?  We answer these key questions in the report.  Sign up for a 5-day free trial to Bespoke Premium to access the report today.


Bespoke -- Your Go-To Resource During Earnings Season

Earnings season begins on Wednesday with Alcoa's (AA) report.  Below is a chart showing the number of earnings reports by day through the end of November for Russell 3,000 stocks.  As you can see, things don't really pick up until late October and early November.  

With a relatively small number of companies set to report over the next two weeks, now is the time to prepare yourself for the deluge of daily reports that will hit later this month.  

So how do you get prepared?  Bespoke has you covered with multiple earnings-related offerings.

Our Interactive Earnings Season Calendar contains a list of all of the stocks set to report earnings this season sorted by both date and stock.  This is not just any list, though.  Our calendar contains key earnings data for each stock, including its historical earnings and revenue beat rates, guidance trends, and finally -- how the stock typically moves on earnings.  The calendar is sent out in both PDF and Excel formats.  With the Excel version, you can sort and filter the calendar in any way you wish.

The full version of our Q3 earnings calendar is only available to Bespoke Premium and Bespoke Institutional clients.  But you can see a sample of the Q3 calendar by clicking here.  In the sample version, the alphabetically sorted sheet contains a number of stocks with "A" tickers, while the sheet sorted by date includes stocks set to report over the next week.  The full version of this quarter's calendar contains report dates for more than 2,250 stocks set to report between now and early November!  Subscribe to Bespoke Premium or Institutional today for access.

An even more more expansive database that we offer is our Interactive Earnings Report Database.  This database contains detailed information for every company's quarterly earnings reports going back to 2001.  Unlike the Earnings Calendar, which is available to Bespoke Premium members, our Earnings Report Database is only available to Bespoke Institutional members.  

Below is a snapshot of the earnings information that you can pull up for any stock using our database.  The example below is Netflix (NFLX), which we have earnings data for since it IPOd.  As shown in the table, you can quickly track how often NFLX beats or misses EPS or revenue estimates, how often it raises or lowers guidance, any seasonal earnings trends that show up, and finally -- how the stock typically reacts to better or worse than expected earnings.

Our Interactive Earnings Report Database comes in Excel format, so you can easily enter in a stock ticker and it will pull up its quarterly information for you automatically.  Along with the ability to query for any stock, you can also sort and filter the master list of all stocks.  This gives you the ability to run numerous back-tests on various earnings outcomes to develop trading strategies during earnings season.  We have a number of Institutional clients that use the database religiously for this purpose.   

This database is updated each quarter once earnings season ends, so Institutional clients always have an up-to-date version.  To check out its layout, you can view and interact with a very limited version of it here.

Learn more about the Bespoke Institutional membership at our Institutional page.  A membership comes with much more than just the earnings database.  It's a great value for just $2,500 per year.  Give us a call at 914-315-1248 to speak with either of Bespoke's co-founders about the Institutional research package today.


JOLTS Leaps, Suggests Continued Labor Market Gains

The Job Openings and Labor Market Turnover Survey (JOLTS) released today by the Bureau of Labor Statistics suggests that demand for labor continues to grow, confirming the strong payrolls growth reported last week in the Employment Situation Report.  While wages are still flat (average hourly earnings were flat month-over-month for September), demand for labor is very strong, as shown by the job openings rate.  Employers have more unfilled positions now than ever, and after adjusting for labor force growth, the rate is as low as it has been since 2001.

The improvements in the number and rate of job openings were due entirely to private openings increases this month.  The less-volatile government series actually declined versus last month.

One other piece of good news: layoffs are basically a thing of the past at this point, with the Layoff & Discharge Rate falling to all-time lows.

But it wasn't all good news: the quit rate is stubbornly low.  Given that wages are refusing to move higher, this shouldn't be a huge surprise.  Without a higher wage waiting for them at a new job opening, why would a worker depart their existing employer?  Quits are just another sign that while demand is increasing for labor, supply remains high, keeping prices (wage growth and quits) low.

Interested in getting an edge on monthly economic indicators, including employement indicators like JOLTS or NFP?  Check out Bespoke Consumer Pulse, our new survey-based product developed to give clients a direct insight into the health of the US consumer.  With subscriptions starting at only $35 per month (use code 'pulsecharter' at checkout for a 30% discount), Bespoke Consumer Pulse is an affordable package of insight and analysis.  Sign up today to gain access.


GT Advanced (GTAT) Leads the Shorts Lower

The Fed Short-sellers are practically printing money these days.  Over the last couple of weeks, we have highlighted that the most heavily shorted stocks have been getting hammered recently, which has been a dream environment for traders on the short side.  Today's action in GT Advanced Technologies (GTAT) is a perfect, albeit extreme, example.  After surprising nearly everybody, shares of GTAT are trading down more than 90% today.  It's the first time in recent memory, and one of probably only a few times ever, that a stock trading above $10 per share filed for bankruptcy.

The table below lists the 27 stocks in the S&P 1500 that had more than 25% of their free-floating shares sold short as of mid-September.  For each stock we have also included its performance since the start of September.  As shown, it hasn't been a pretty few weeks for these stocks.  The average performance of these 27 stocks is a decline of 16.23% (median: -11.7%) compared to a decline of just 2.2% for the S&P 1500.  The average for the most heavily shorted stocks looks more like something we would have seen during the financial crisis, not a period where the market saw just a minor sell-off.

Even without the impact of GTAT, the performance of the stocks on this list is still extremely poor.  Just three of the 27 stocks listed are up since the start of September, and ex the 94% decline from GTAT, the average change is still -13.2% (median: -9.3%).  Additionally, more than half of the stocks listed are down over 20%, including five names besides GTAT that have lost more than one-third of their value.  A couple of weeks ago, we referred to the weakness in the most heavily shorted stocks as being like shooting fish in a barrel.  At this rate, it's more like shooting fish in a can of sardines.

Earnings season kicks off this Wednesday, so stay on top of things with our top-of-the-line earnings season analysis.  Become a Bespoke Premium member today.  Use "endofsummer" in the coupon code section of our Subscribe page to receive 10% off the membership price.  As always, there's a 5-day free trial period once you start your subscription.


The Bespoke Earnings 50

We have just published our third quarter Interactive Earnings Season Calendar over at Bespoke Premium.  If you're looking to track the report dates for certain companies this season, our calendar is a very resourceful tool.

Using our earnings databases here at Bespoke, each quarter prior to the start of earnings season, we publish a list of the 50 most volatile stocks on their report days.  (For companies that report in the morning before the open, we look at that day's change.  For companies that report in the evening after the close, we look at the next day's change.)  To make the list, a company has to be in the Russell 3,000, have at least three years worth of quarterly earnings reports, and be set to report its next quarterly number between now and the end of November.

As shown, BroadSoft (BSFT) is the most volatile stock on earnings with an average one-day change of +/-15.82% when it reports each quarter!  The only other stock that averages a move of more than 15% is Fuel Systems (FSYS).  Number three on the list is Netflix (NFLX), which has historically moved +/-14.05% on its report days.  If Netflix experiences an average move when it reports on the 15th of this month, it will see a gain or loss of $65/share.  Two travel companies round out the top five -- Orbitz Worldwide (OWW) and Travelzoo (TZOO).

All of the stocks on the list below have historically seen moves of more than +/-10% on their earnings report days.  Pretty much all of them are widely followed by traders, but some of the more notable ones include First Solar (FSLR), Priceline (PCLN), Keurig Green Mountain (GMCR), Intuitive Surgical (ISRG) and SanDisk (SNDK).  Priceline now trades at $1,121, so its average one-day change on earnings equates to $138/share at current levels.

One stock not on our list of the 50 most volatile earnings names is Apple (AAPL).  We have 52 quarterly reports for Apple (AAPL) going back to 2001 in our Interactive Earnings Report Database.  Apple's average move on its 52 report days has been +/-5.44%.  This is actually less than the average move of +/-5.52% for all US stocks reporting earnings!

Looking for top-of-the-line earnings season analysis throughout the upcoming reporting period?  Become a Bespoke Premium member today.  Use "endofsummer" in the coupon code section of our Subscribe page to receive 10% off the membership price.  As always, there's a 5-day free trial period once you start your subscription.


Gas Prices Down 11% From YTD Highs

With a nearly uninterrupted decline in the price of gasoline, the national average price (according to AAA) has dropped from a high of just under $3.70 per gallon to under $3.30 today.  With that decline gas prices are now down 11% from their year to date highs in the Spring and at their lowest levels since February.

With the last leg lower in gas prices since late September, the national average price of a gallon of gas is now down 1% for the year.  The table below shows the average price of gasoline as of 10/6 for each year since 2005.  At a level of $3.29, the current price is the lowest for this time of year since 2010.  More importantly, though, it is the first time in the last ten years that gas prices have actually been down on a year to date basis at this point in the year.

If the typical seasonal pattern for prices at the pump are any indication, the price of gas may have further to fall.  The chart below compares the current movements in gas prices so far this year to a composite of its performance throughout the year for every year since 2005.  As shown in the blue line, gas prices have historically continued to decline throughout the fall and haven't bottomed until just before year end.