Thursday
Jul242014

Jobless Claims Crater

If there has been one consistently positive data series in the multitude of economic data we are regularly bombarded with, it is jobless claims.  In this week's release, economists were forecasting claims to rise by 4K from last week's level of 303K.  The actual reading, though, came in 23K below forecasts at 284K.  So, how does 284K stack up against prior readings?  In order to find a lower weekly reading you have to go all the way back to February 2006!

With this week's lower than expected weekly reading, we also saw a sizable decline in the four-week moving average of jobless claims, which fell from 309.25K down to 302K.  This represents a new post-recession low and is the lowest level since April 2006.

On a non-seasonally adjusted (NSA) basis, jobless claims fell by 78.3K down to 292.3K.  For the current week of the year, this is the lowest reading since 2006, and is more than 100K below the historical average of 394.75K for the current week dating back to 2000.  With regards to the low NSA reading, we heard more than one comment dismissing the low reading as a seasonal distortion.  That's fair enough, but when you compare it to the same week of prior years this week's reading was still impressive.  Ironically enough, though, the same people who dismiss the NSA readings when they are  low are the same people who cite their importance towards the end of the year when seasonal distortions make them high.

Thursday
Jul242014

The Bespoke Morning Lineup: 7/24/14 Commentary

The below commentary excerpt is an example of what Bespoke Premium subscribers receive every morning in The Morning Lineup in addition to three pages of key headlines, charts, trends, and technical indicators.  We will be posting a sample of our commentary here each morning for the next several weeks.  If you're interested in receiving this report and our many others via email, try a 5 day free trial to Bespoke Premium today!

Equity index futures are trading up this morning after a volatile overnight session that saw the release of July Flash PMIs for the world’s three largest economic blocs: China, the United States and the Eurozone. Chinese Manufacturing PMI beat expectations by a point, jumping to an 18-month high, but global markets had a muted reaction: while spoos jumped by 2.5 points on the print there was an immediate retreat then steady wall of selling that took contracts almost five points off their overnight highs by midnight, two hours after the release of the PMI figure. Futures continued to decline after yet another weak European open but a wave of positive PMIs from that region quickly turned around both overnight index futures markets and cash equities for European countries.

In earnings, this morning results are broadly positive although homebuilders D.R. Horton (DHI, +2.06% yesterday, -3.23% pre-market) and PulteGroup (PHM, +2.01% yesterday, -0.71% pre-market) both had disappointing results. DHI missed on EPS badly and had a poor revenue quarter; PHM was even lighter on revenues but met EPS targets. With New Home Sales out at 10:00 AM EST (475,000 seasonally adjusted annual rate expected versus 504,000 prior) these names will face further downside risk in addition to their earnings prints. Also out today were Ford (F, -0.22% yesterday, +1.57% pre-market) and GM (-0.93% yesterday -2.19% pre-market). Extremely strong auto sales of late weren’t enough for Ford, where revenue missed estimates, but an EPS beat of 4 cents per share has the stock trading well. GM, meanwhile, delivered on revenue and met expectations on EPS. It’s interesting to note that the company whose revenue shrank year-over-year (Ford) is trading up, while the company that gained revenue on that basis (GM) is down prior to the market open.

In addition to New Home Sales, we got Jobless Claims at 8:30 AM (284,000 print versus 310,000 expected and 302,000 prior; continuing claims 2.50 million versus 2.51 million expected and 2.508 million prior), US Flash Manufacturing PMI at 9:45 AM (57.6 expected versus 57.5 prior), EIA Natural Gas Inventories at 10:00 AM, and the Kansas City Fed Manufacturing Index at 11:00 AM (6 expected versus 6 prior). After ten year yields nearly hit a new low for the year yesterday, printing trades around 2.449 bps, the complex is selling off on the back of very strong claims data.

Subscribers, please click the thumbnail below to access the full Morning Lineup. 

Wednesday
Jul232014

The Closer Commentary 7/23/14 - Industri-owch

The below is an excerpt from tonight's edition of The Closer, sent to Bespoke Premium and Institutional clients each night along with graphs, analysis, and timing models for both single name equities and the market as a whole.

In macro news tonight, the Reserve Bank of New Zealand has hiked rates, calling the current level of the NZD “unsustainable” and “unjustifiable”.  While a rate hike would normally be very bullish for a currency, the reaction to surly language from RBNZ head Graeme Wheeler has the market in sell mode, down 95 bps instantly in NZDUSD and –94 bps in NZDEUR.  The NZD has been very strong in virtually every cross this year due to its higher base policy rate; whether that “carry” trade of borrowing from a low rate and lending in a high one (being long NZD versus USD or EUR) remains to be seen.

There are too many earnings reports tonight to cover succinctly (85 names total), but TripAdvisor (TRIP, +3.06% today, -10.35% after-hours) is getting crushed on a large EPS miss despite better-than-expected revenue for the quarter.  Another web play, Angie’s List (ANGI, -3.97% today, -14.95% after-hours) is down big with a bigger loss than investors had been prepared for and lower revenue than had been expected.  Cheesecake Factory (CAKE, -0.81% today, -1.62% after-hours) had an EPS and revenue miss as well, as casual dining continues to lose out.  One winner is Facebook (FB, +2.92% today and +3.93% after-hours) delivering a double beat including revenue growth of over 60% versus a year ago.  Finally, Gilead Sciences (GILD, +1.13% today, -0.59% after-hours) crushed EPS estimates, earning $2.36 per share versus $1.80 expected.  Revenues were also higher, beating by over 10%, but shares are down post-market.

Economic data picks up a bit tomorrow as we get Initial Claims, Continuing Claims, Manufacturing PMI, New Home Sales and the Kansas City Fed Manufacturing Index along with the continued torrent of earnings.

To continue reading, subscribers can click here.  Non-subscribers can gain access by signing up for a five day free trial.

Wednesday
Jul232014

S&P 500 Sector Trading Range Charts -- Tech Into the Stratosphere

Below is an updated look at our trading range charts for the S&P 500 and its ten sectors.  These charts are included weekly in our Sector Snapshot that is published on Thursdays (see the sidebar at right for other reports that Bespoke clients receive).  

For each chart, the white line represents the 50-day moving average.  The light blue band represents the index's "normal" trading range, which is between one standard deviation above and below the 50-day moving average.  The red zone is "overbought" territory, and it's between one and two standard deviations above the 50-day.  Moves into the red zone are common during market rallies, but when prices reach the top of this range, you typically see a pullback.  The green zone is "oversold" territory, and it's between one and two standard deviations below the 50-day.  Moves into the green zone are more common during market declines, but when the price reaches the bottom of the green zone, you typically see a bounce.

As shown below, the S&P 500 has been trending in overbought territory for more than a month now, with just a brief dip into its normal trading range more recently.  Right now the index isn't at an extreme overbought level, but it is notable that we haven't been down near the 50-day in quite a while.

The main sector that stands out in our trading range charts is Technology.  Big moves higher on earnings by Tech-behemoths Apple (AAPL) and Google (GOOGL) have pushed the Tech sector to the very top of the red zone, meaning it's currently two standard deviations above its 50-day.  The rally we have seen in Tech over the last couple of months has been virtually non-stop, and unfortunately this can't last forever.  At some point the sector will take a breather, so be prepared.  When the air comes out a bit, keep an eye on support levels to see if they hold, and if they do, it will be a prime buying opportunity.

While Tech has been straight up lately, two other cyclical sectors that have been trending sideways are Industrials and Consumer Discretionary.  As you can see in their charts below, their current levels are essentially right where they were at the end of 2013.  This year we have seen rotation in and out of various sectors, with one or two sectors taking the lead to push the broad market to new highs while other sectors remain stagnant.  If Tech does take a breather soon, we'll be watching to see if sectors like Industrials and Consumer Discretionary can pick up the slack to keep this market in rally mode.

Interested in more market commentary from Bespoke?  Begin a 5-day free trial to our Bespoke Premium service today.  Our daily Morning Lineup (pre-market) and Closer (post-market) reports have you covered.  See samples of each at the Bespoke Premium website.

Wednesday
Jul232014

High Yield Spreads Widen: Should You Be Worried?

One area of the financial markets that we constantly monitor for signs of confirmation or divergence in the trend for equities are spreads between interest rates on high yield debt and comparable treasuries.  High yield debt is far out on the risk spectrum of fixed income, so it tends to have a closer correlation to equities.  Therefore, when stocks are rising, we typically see spreads on high yield debt tighten as investors have a bigger risk appetite.  Conversely, when equities decline you see spreads on high yield debt normally widen as investors demand more in the way of yield to compensate for the added risk.

Over the last four weeks, we have seen a divergence between high yield spreads (red line) and the S&P 500 (blue line).  Whereas the S&P 500 has kept rallying, high yield spreads have been widening (in the chart below spreads are shown on an inverted basis).  The question now is should you be worried?  Earlier today, we sent out a report to clients highlighting the S&P 500's performance following similar divergences over a four-week period.  Clients who wish to view the report can click on the link below.  If you are not yet a Bespoke Premium client, sign up today for our free trial and instant access.

High Yield Spreads Widen

Wednesday
Jul232014

Dow 30 Trading Range Screen

Below is an updated look at our trading range screen for the 30 stocks in the Dow Jones Industrial Average.  For each stock, the black vertical "N" line represents its 50-day moving average.  Moves into the red zone are considered overbought, while moves into the green zone are considered oversold.  A more detailed description of the trading range parameters is provided at the bottom of this post.  

Heading into afternoon trading, 12 Dow stocks are currently overbought, while 6 are oversold.  McDonald's (MCD), United Tech (UTX), Travelers (TRV) and General Electric (GE) are the most oversold after struggling following earnings.  All of these stocks have moved well below their 50-day moving averages, which should have "buy-the-dippers" bargain hunting them.  On the overbought side, Goldman Sachs (GS), IBM and Microsoft (MSFT) are the most extended here, with UnitedHealth (UNH) and Verizon (VZ) not far behind.  Given how overbought these names are, it's probably best to wait for a short-term pullback before going out and buying them.

The average Dow stock is up about 4% year-to-date, but 12 of the 30 members are in the red for the year.  Boeing (BA) and General Electric (GE) are the two worst performers year-to-date with decline of more than 7%.  On the upside, Intel (INTC) is leading the way with a gain of 32.28%. 

Wednesday
Jul232014

Energy Inventories Move In Opposite Directions

This morning's release of energy inventories from the Department of Energy (DoE) showed a divergence between stockpiles of crude oil (declined) and gasoline (increased).  In the case of crude oil inventories, traders were expecting inventories to fall by 2.9 million barrels, but the actual decline was over a million more than expected at 3.969 million for the fourth straight weekly decline.  While it is typical for crude oil inventories to fall at this time of year, the 17 million barrel decline over the last four weeks is considerably more than the 10.3 million average decline that we have seen over the same period in the last ten years.  Even with the larger than expected decline, however, crude oil inventories are still well above their historical average for this time of year.

While crude oil inventories declined, gasoline stockpiles increased more than expected.  Traders were expecting an increase of 1 million barrels, but the actual increase was more than three times that at 3.379 million barrels.  This was the largest weekly increase in stockpiles since early January, and as shown in the chart below, helped to create a small cushion in inventories relative to their historical average.

Wednesday
Jul232014

The Bespoke Morning Lineup: 7/23/14 Commentary

The below commentary excerpt is an example of what Bespoke Premium subscribers receive every morning in The Morning Lineup in addition to three pages of key headlines, charts, trends, and technical indicators.  We will be posting a sample of our commentary here each morning for the next several weeks.  If you're interested in receiving this report and our many others via email, try a 5 day free trial to Bespoke Premium today!

In Europe this morning every single developed market is higher on the day, with the EuroStoxx 50 moving to the top of a critical pivot zone between 3150 and 3200, while Austria and Germany are leading the way forward with 50 bps gains. Markets have already begun to disentangle themselves from the big news events of the last few weeks. Perhaps this is temporary; Putin’s shenanigans will remain a possible shadow over the market indefinitely, although likely a minor one, in our view. The struggles of Banco Espirito Santo, meanwhile, are no longer being viewed as some kind of existential threat to Europe, a position we are glad to see the market come to its senses on.

That being said, our longer-term concerns over Europe remain: with high trailing P/Es (the EuroStoxx carries a 21.6x multiple, the CAC 40 trades at 25.71x, while the very broad Bloomberg European 500 index sits at a 21.17x P/E; the S&P 500, meanwhile, is a paltry 18.3x) and a very uncertain growth environment weighted towards downside risk, European equities hardly seem a bargain on a broad basis. While there’s some discount on forward earnings (the EuroStoxx, for instance, trades at a 14.4x multiple versus next 12 months earnings, while the S&P 500 has a much loftier 15.8x valuation on that metric), we feel that the risks of persistent slow to non-existent growth in Europe should probably command a larger discount. A program of quantitative easing from the European Central Bank would be a massive help, but until Germany consents to an increase in the money supply one will not be forth coming. Some investors are comfortable with a “central bank put”; this strategy has certainly worked wonders for the past half-decade in most global markets. But being long Europe on a regional basis (as opposed to identifying specific pockets of value in single names or trading in a shorter term) is, in our view, putting a great deal of faith in the ECB and the efficacy of any programs it does roll out.

Subscribers, please click the thumbnail below to access the full Morning Lineup. 

Tuesday
Jul222014

The Closer Commentary 7/22/14 - Don't Drink The Diet Shakes

The below is an excerpt from tonight's edition of The Closer, sent to Bespoke Premium and Institutional clients each night along with graphs, analysis, and timing models for both single name equities and the market as a whole.

Earnings season is really in full swing now.  As mentioned earlier, AAPL and MSFT both reported tonight, joining a healthy number of reports this morning.  Thus far there have been a few notable trends.  Firstly, financials have exceeded expectations.  Bank revenue has hurdled expectations that were weighed down by Department of Justice settlements, low interest rates, and shoddy mortgage production.  Our view is that this has been a) a case of extremely low expectations and b) a minor sign of improved credit conditions, allowing some loan growth.  The second point is reinforced by the recent growth of commercial and industrial loans evidenced in the weekly H.8 releases from the Federal Reserve.

A second theme has been slow revenue growth for consumer-facing stocks.  Mattel (MAT), YUM! Brands (YUM), Six Flags (SIX), Hasbro (HAS) and McDonalds (MCD) have all had very underwhelming reports.  While the figures haven’t been anything panic-inducing, many consumer names are clearly struggling at the moment, and it’s not clear what the implications there are for the broader economy.  Wage growth has absolutely been positive this year with hourly earnings for non-supervisory employees less CPI (real wage growth) in positive territory since the beginning of 2013.  This has taken place at a time when employment has expanded significantly (in terms of non-farm payrolls expanding and the unemployment rate falling) so the decline in consumer appetite is curious indeed.

Finally, we are seeing extremely resilient profit margins.  As of this afternoon, the EPS beat rate for the season was standing at 63% versus 57% on revenues.  In other words, while revenue growth has been lackluster, companies are still making their money.  How long this can continue is an important question, but we continue to be surprised at the resilience of corporate America’s profitability.

To continue reading, subscribers can click here.  Non-subscribers can gain access by signing up for a five day free trial.

Tuesday
Jul222014

CPI Attribution By Sector

Today's CPI report for the month of June showed that overall price levels increased 0.3% relative to May.  While the fractional increases we typically see in each month's CPI report seem like small moves, over time they add up.  For example, over the last eight years the overall level of consumer prices has increased by nearly 18%.  And that's just the official government figures.  Talk to some people and they'll tell you the actual rate of inflation is much higher.

Using the official figures from the CPI, the table to the right breaks out the change in prices for each of the eight major sectors in the report.  For each sector, we also include the sector's weight in the overall CPI, its percentage change since June 2006, and its contribution to the total increase in CPI.  As shown , the sector that has seen the largest increase in prices has been Medical Care, which has seen an increase of 29.6%, and is responsible for just under 9% of the total overall increase in the CPI.  While one of the promises of the Affordable Care Act was that it would lower the cost of health care, as of now those benefits have yet to materialize.  Even more than four years after the bill was signed into law and more than two years after the Supreme Court upheld the law, the 2.61% increase in the cost of Medical Care over the last year is higher than any other sector. 

In order to get a better view of what areas of the economy have been driving the overall level of prices higher, the chart below shows how each sector has cumulatively accounted for the overall increase in CPI.  While there are eight sectors shown, the chart clearly shows that the main drivers of inflation in the CPI are Housing, Transportation, Food & Beverages, and Medical Care.  Together, these four sectors account for more than 85% of the total increase in the CPI over the last eight years.

Tuesday
Jul222014

Bespoke's New Model Dividend Income Portfolio

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Yields on Treasuries in the US and around the world are at or not far from their lowest levels in what for many investors amounts to more than their entire lifetimes.  As yields have dropped, investors looking for yield have been forced to move increasingly further down the capital structure to get it.  Now, with corporate bond and high yield debt trading near record low yields on both an absolute basis and relative to Treasuries, investors are increasingly turning to the equity market in their search for yield.

With a yield of just under 2.5% for the 10-year US Treasury, the S&P 500's 1.91% yield doesn't look too bad to some investors who like the option of a similar yield and the potential for some capital appreciation as well (albeit with more risk).  Outside of the US, the yields of some equity markets look even more attractive relative to yields on their respective 10-year sovereign debt.  In Spain, the IBEX 35 has a yield of 4.75% compared to a yield of 2.57% on 10-year Spanish sovereign debt.  In more economically stable countries, we see a similar scenario. The FTSE-100 has a yield of 4.66% compared to a yield of just 2.57% on 10-Year British Gilts, and in Germany the DAX has a yield of 2.76%, which is more than twice the yield in 10-year Bunds!  No matter where you look, if you are an investor looking for yield, the fixed income market just doesn't seem to be cutting it, and that has caused some to turn to equities.

As a result of the lack of income in fixed income investments, we have seen an increase in interest from clients regarding dividend paying stocks.  For example, in a recent survey of Bespoke clients, there was a lot of feedback from readers looking for more information and coverage of dividend paying stocks.  To that end, we have launched our Bespoke Dividend Income Model Portfolio.  This portfolio is meant to be a diversified list of mid to large cap equities across the spectrum of market sectors.  While the names included are not necessarily the highest payers, they have above average payouts relative to other dividend payers in their sector, and have a history of consistently not only maintaining -- but also increasing -- their dividends.  Also, the percentage of earnings that they pay out in the form of dividends has typically been low or at a reasonable level (less than two-thirds of earnings).  Finally, in an attempt to avoid stocks that have high yields because of falling stock prices, we also incorporated a filter to weed out stocks that have been poor performers relative to the overall market.

As is always the case with any stocks we highlight, we do not recommend that investors go out and blindly buy the stocks included in our Dividend Income Model Portfolio.  Instead, we suggest that you research each name accordingly to make sure it fits in with your overall investment objectives.  Additionally, while dividend paying stocks have seen their popularity grow inversely to the decline in interest rates, we would remind investors that equities are at the bottom of a company's capital structure.  Therefore, if a company does run into liquidity problems, anyone holding the common stock of the company is at the very back of the line behind holders of senior debt, subordinated debt, convertible debt, and preferred equity among others.  No one ever said there was a free lunch.

The Bespoke Model Dividend Portfolio is available to all Bespoke subscribers (Newsletter, Premium and Institutional).  Please click on the thumbnail image above to see the layout of the Bespoke Dividend Income Portfolio.  To view the portfolio, click on the button below to sign up for a 5-day free trial today!

instantaccess

Tuesday
Jul222014

The Bespoke Morning Lineup: 7/22/14 Commentary

The below commentary excerpt is an example of what Bespoke Premium subscribers receive every morning in The Morning Lineup in addition to three pages of key headlines, charts, trends, and technical indicators.  We will be posting a sample of our commentary here each morning for the next several weeks.  If you're interested in receiving this report and our many others via email, try a 5 day free trial to Bespoke Premium today!

Risk assets are near their highs on the day as the EUR sells off, European equities rally, and US yields fall. The cross-asset set up this morning is one of the stranger ones we’ve seen in quite some time, but for the time being it is supporting US equity futures, which are about ~25 bps higher on the day, with slight outperformance from Nasdaq 100 futures.

...The Russian ruble is also rallying, with the USDRUB cross moving from 35.15 to 34.90 (-72 bps in the cross; RUB 72 bps stronger than USD) since the London open. Putin is also on the tapes this morning (~7:45 AM) with relatively sane comments that should serve to alleviate some tension, at the margin.

Elsewhere in currency markets, the EURUSD cross got smoked this morning just after 6:15 AM in a strikingly similar move to Friday’s morning dive below 1.35 in the cross, which we mentioned on Twitter (@bespokeinvest) at the time. While that move was short lived and widely blamed on summer Friday liquidity (EURUSD recovered to its pre trade level around 1.3525 almost immediately) today’s leg downward has been larger and for the time being is proving more resilient; there’s been some chatter that the move was driven by a large flow in CHFUSD, which has also moved lower on the day notably, leading the EUR down intraday. While none of these developments are earth-shattering, they’re notable in advance of US CPI data, which can have a large impact on all of the USD crosses.

In addition to the CPI at 8:30 AM which was in-line with forecasts on the headline (0.3%) and weaker than expected on a core basis (0.1% vs. 0.2%), we also get FHFA Housing Prices at 9:00 AM (0.3% month-over-month expected versus 0.0% prior), Existing Home Sales at 10:00 AM (4.99 million seasonally adjusted annual rate expected versus 4.89 million prior) and also at 10:00 AM the Richmond Fed Manufacturing index (5.5 expected versus 3 prior).

Subscribers, please click the thumbnail below to access the full Morning Lineup. 

Monday
Jul212014

The Closer Commentary 7/21/14 - Just Dip It

The below is an excerpt from tonight's edition of The Closer, sent to Bespoke Premium and Institutional clients each night along with graphs, analysis, and timing models for both single name equities and the market as a whole

One headwind for US equity prices recently has been the underperformance of high yield credit, whose performance can be captured via ETF.  Both major high yield ETFs have been underperforming significantly versus stocks recently: while the S&P 500 is up 60 bps over the last month both the iShares iBoxx High Yield Corporate Bond ETF (HYG) and the SPDR Barclays High Yield Bond ETF (JNK) are off over 1.5%.  High yield credit spreads have also risen since their lows on June 22nd of 335 basis points versus Treasuries, as measured by the Bank of America Merrill Lynch High Yield Master II Index.  Friday’s reading of 378 basis points is elevated relative to June, but still historically low; the move upwards represents an adjustment but may not yet be a bottom for spreads.  A sustained increased back towards the levels that prevailed last year would be a concern, and a weight on equity prices; the current move upwards certainly hasn’t helped as stocks have been hard-pressed to hold gains during the spread widening.  It’s also important to note that investment grade credit spreads have not moved appreciably in the same period, so the recent developments in credit should be viewed as a headwind for equities rather than a hallmark of financial system stress.

In earnings news this morning, the reports prior to open were mixed, although tilted towards EPS beats (8 of 14 firms).  Allergan (AGN) performed well in a down tape today after releasing better-than-expected EPS and stronger revenues.  Halliburton (HAL) reported inline EPS and higher than expected revenues.  Shares popped at the open, but sold off consistently through the day as the market digested the oil services firm’s report, finishing the day up just 10 bps.

After hours, we got reports from momentum darlings Chipotle (CMG, -0.42% today, +7.94% after-hours) and Netflix (NFLX, +1.75% today, +1.59% after-hours).  Chipotle is probably the single stand out report of the earnings season: profits and revenues surged (beating street estimates) despite a 1.5% increase in food costs, as customers were willing to stomach price increases along with pricier burrito tickets.  Revenues, profits, and the share price are now at an all-time high for the name (assuming after-hour prices follow through at all tomorrow), blowing past its previous all-time high of $611.12 in March.  NFLX reported a more restrained quarter, but still beat revenue expectations slightly.  Streaming subscriber growth was higher than expected, as was international subscriber growth.  Other major reports this evening included a beat on EPS/miss on revenue from Canadian National Rail (CNI, -0.15% today, +2.02% after-hours) and top/bottom line beat with inline guidance from Texas Instruments (TXN, +0.72% today, -0.63% after-hours). 

Economic data tomorrow includes CPI at 8:30 AM (headline month-over-month change 0.3% expected versus 0.4% prior; less food & energy 0.3% versus 0.2% prior), the FHFA Housing Price index at 9:00 AM (0.3% month-over-month expected versus 0.0% prior), Existing Home Sales at 10:00 AM (4.99 million seasonally adjusted annual rate expected versus 4.89 million prior) and finally, also at 10:00 AM, the Richmond Fed Manufacturing index (5.5 expected versus 3 prior). 

To continue reading, subscribers can click here.  Non-subscribers can gain access by signing up for a five day free trial.

Monday
Jul212014

Best and Worst Performers on Earnings this Season

The market has moved sideways since earnings season began on July 8th, but so far, the average stock that has reported earnings has fallen 0.43% on the first trading day following its report.  (For companies that report before the open, we look at that day's change.  For companies that report after the close, we use its next day's change.)

While the average stock that has reported earnings has fallen in reaction to its report, some companies have hit it out of the park with earnings, and others have struck out.

Below is a list of the 25 best performing stocks on earnings so far this season.  As shown, NeoGenomics (NEO) has had the best one-day response with a gain of 20.09% on its report day.  Resources Connect (RECN) has done the second best with a one-day gain of 15.31%, and then Skyworks (SWKS), AeroVironment (AVAV) and AAR Corp (AIR) rank third through fifth with gains of 9% or more.  A few blue-chips are on the list of earnings season winners as well.  These include the likes of Intel (INTC), Alcoa (AA), Google (GOOG) and JP Morgan (JPM).  Of the large cap stocks that have reported, Intel (INTC) has been the big winner so far this season with a one-day gain of 9.27% on its report day.

Below is a list of the 25 worst performing stocks on their earnings report days so far this season.  Advanced Micro (AMD) has been the biggest loser with a 16.19% decline on its report day.  First Republic (FRC) ranks second with a decline of 15.09%, while SanDisk (SNDK) ranks third with a drop of 13.56%.  Other notables on the list of losers include YUM! Brands (YUM) with a fall of 6.89%, Mattel (MAT) with a fall of 6.58%, and Yahoo! (YHOO) with a fall of 5.11%.  

Earnings season really heats up this week with more than 500 reports.  For detailed coverage, sign up for a 5-day free trial to Bespoke Premium today!  Be sure to use "earnings" in the coupon code section of our Subscribe page to receive a 10% discount on the life of your membership.

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
Jul212014

Gas Prices Picking Up Steam to the Downside

If you're like most Americans, you tend to drive more in the summer.  With the increase in travelling, you still may be spending more at the pump (because you're filling up your car more often), but the price per gallon has actually been declining for the last three months.  Since its high for the year of $3.70 on 4/27, the national average price of a gallon of gasoline has declined by just under 4% to its current level of $3.57.  

Looking at the chart below, there are two trends that stand out.  First of all, since its all-time high of $4.11 in 2008, the national average price of a gallon of gas has been steadily trending lower.  With each rally we have seen, prices have peaked at lower levels.  Additionally, the subsequent decline has ended at consistently lower prices.  Gasoline prices may still remain high compared to levels we saw a decade ago, but in recent years they haven't really been going anywhere.  This is further reinforced by the fact that in the last four years, gas prices have either been higher or right around current levels at this time of year (red dots).

Now, if we compare the change in gasoline's average price per gallon this year to its average change in prior years, you can see how muted this year's rally has been.  Looking at prior years since 2005, gasoline prices usually rally over 20% leading up to Memorial Day, level off, and then begin to drift lower after Labor Day.  This year, we saw the typically rally early on in the year, but the magnitude of the move was considerably less and the price has already started drifting lower.

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