Bullish Sentiment Spikes 15 Points

Bullish sentiment jumped 15 points from 47% up to 62% in our weekend Bespoke Market Poll.  After four consecutive weeks of more bears than bulls in our weekly poll, bulls came out of hiding after Friday's big up day following the better than expected nonfarm payrolls report.  This was the biggest jump we've seen in bullish sentiment since August 11th when it jumped 17 points from 46% up to 63%.


S&P 500 Higher or Lower from Here?

Markets broke all kinds of technical levels on the downside earlier this week, but we saw a nice bounce back rally on Thursday afternoon and the gains continued on Friday.  So which way will the market head from here?  Please take part in our weekly Bespoke Market Poll below by letting us know whether you think the S&P 500 will be higher or lower one month from now.  We'll report back with the results on Monday before the open.  Thanks for participating and have a great weekend!

Be sure to head on over to Bespoke Premium and sign up for a 5-day free trial to see our just-published Bespoke Report newsletter -- packed with 30+ pages of actionable market analysis.

Will the S&P 500 be higher or lower than its current level one month from now?
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Apple (AAPL) vs. Samsung Stats

Our monthly Bespoke Consumer Pulse report dives deep into economic trends, but it also provides key insights into trends for various industries and individual companies.  We ask a number of questions surrounding the consumer electronics group -- especially smartphones.

Out of the 2,000+ consumers we surveyed in our September Pulse report, a certain percentage own Apple iPhones (you'll have to sign up to view the report to view this data).  For iPhone owners, we asked which phone they plan to purchase next.  This gives us an idea of the retention rates Apple can expect for the iPhone.  In our September survey -- which ran about a week after the new iPhone 6 line was released -- 91.8% of current iPhone owners said they plan to purchase another iPhone when they purchase their next smartphone.  Over the last three months, this was the highest reading we have seen, but as you can see in the chart, it has been solidly around the 90% mark the entire time.

A 90%+ retention rate is an extremely high number for any product.  So what's the retention rate for Samsung smartphones?  From our September Pulse survey, we found that 77% of Samsung smartphone owners plan to buy another Samsung on their next purchase.  Not a bad reading at all, but as you can see, it is down from July and August, likely due to the new iPhone 6 and 6+, which have larger screens similar to Samsung's and were just released prior to our survey.  Overall, the drop doesn't seem too significant for Samsung.

Late last week we published our September Consumer Pulse Report over at our sister website  Our monthly Pulse report makes up the backbone of our new Pulse subscription offering.  The report is an analysis of a 75-question survey we conduct on a statistically significant sampling of more than 1,500 US consumers.  From this unique, detailed survey, we're able to get an early read on trends in the economy ahead of the big economic data dump that comes out at the start of each month, including the widely-followed Nonfarm Payrolls report set for release this Friday.  Our Pulse report comes out a week before the monthly Nonfarm Payrolls report, giving subscribers ample time to position themselves properly based on the results from our survey.

Since the new Pulse subscription is in its early stages, we're currently offering a 30% discount on membership rates to attract a group of "charter" members.  If you have yet to sign up, there's still time to do so with the 30% discount.  All you have to do is enter "pulsecharter" in the coupon code section of the Pulse subscribe page to get 30% off the price of the service for the life of your membership.  This means you can get in for less than $1 per day!  With the 30% discount, the annual Pulse membership cost is just $350 per year.


Bespoke Bloomberg TV Appearance (10/2)

Bespoke's Paul Hickey appeared on Bloomberg's Street Smart, with Trish Regan, Julie Hyman and Liz Ann Sonders from Charles Schwab to discuss the economy and markets heading into the fourth quarter.  To watch the segment, please click on the image below.


S&P 500 Sector Trading Range Charts

Below are our trading range charts for the S&P 500 and its ten sectors.  The white line is each sector's 50-day moving average.  The light blue shading represents each sector's "trading range," which we quantify as one standard deviation above and below the 50-day moving average.

As shown, the S&P 500 and four of ten sectors are currently below their trading ranges and into oversold territory.  For now, the S&P 500 is right at the bottom of its six-month uptrend channel, but it is dangerously close to breaking below it.  

The Energy sector broke its uptrend back in September, but we saw Materials break down today.  Technology appears most at risk for breaking down next.  For now, Financials and Health Care have the most uptrending patterns.  Industrials and Consumer Discretionary have been in sideways ranges for some time.

These charts are included in our weekly Sector Snapshot available on Thursdays to Bespoke Premium members.  You can see a sample of of the report here.  To check out this week's just-published report, try out a 5-day free Bespoke Premium trial today.


Hello, Oversold World

Below is our trading range screen of the 30 largest country ETFs traded on US exchanges.  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.  Moves into the red zone are considered overbought, while moves into the green zone are considered oversold.  

As shown, all but 3 of the 30 country ETFs highlighted are in oversold territory -- most of them deeply oversold.  Just one country remains above its 50-day (Vietnam) after Thailand (THD) broke below its 50-day today.  As of the close today, two-thirds are down for the year.

Are we due for a bounce soon?  Markets can stay oversold for long periods of time, just as they can stay overbought.  Before entering an oversold name, we like to see it at least make a short-term bottom and turn higher, similar to countries like Australia (EWA), Taiwan (EWT) and Malaysia (EWM) have done over the last week.  Countries where the dot is to the left of the tail are ones to avoid, as it's like catching the proverbial "falling knife."  

Interested in seeing these trading range screens on a regular basis, or running them on your portfolio?  Sign up for the Bespoke Institutional service today. 


What Happens At 11:30 Again?

Global risk assets got pounded this morning, with gruesome price action in European equities putting big pressure on US equity futures as well as emerging market equities.  Selling reached a crescendo at 11:30 AM ET as closing bells rang across Europe.  Within 15 minutes, US risk markets bottomed and by 1:00 PM US small caps were positive.  Below, we show the day-over-day change in a variety of risk assets, including European equity indices, US equity index futures, MSCI emerging markets equity index futures, and the USDJPY cross.  For a full update on the chart and complete commentary on the moves today in the US and Europe, make sure to subscribe to Bespoke Premium.  Subscribers rececive The Closer every evening in their inbox.  The Closer recaps daily action for US equities, while also giving recaps of the daily moves in global financial markets and economic data that impact US investors.  We also give highlights of major economic releases upcoming, recent asset class performance, key ETF data, and our market outlook.  Subscribe today and receive a free five-day trial!


Bullish Sentiment Takes a Hit

With stock prices starting succumb to the pressures of the weak European economy, geo-political issues, and fears over Ebola, individual investors have also been reigning in their bullishness.  According to the weekly survey from the American Association of Individual Investors (AAII), bullish sentiment declined from 41.84% down to 35.42% this week.  This represents the fifth weekly decline in the last six weeks, and it is also the first time since early August that bullish sentiment has dropped below its bull market average.  It's hard to say that investors are getting fearful, but there doesn't seem to be an excessive amount of complacency either.


Jobless Claims Better Than Expected

After some weak economic data to start the month, investors got some better than expected data on Thursday with a better than expected jobless claims report.  While economists were forecasting a slight increase to 297K from last week's level of 295K, claims actually fell by 8K down to 287K.

With this week's decline in initial claims, the four-week moving average fell to 294.75K, which is just 1K above the post-recession low of 293.75K that we saw nine weeks ago at the start of August.  In next week's count, we will be dropping a weekly reading of 316K from the count, so barring a big increase, it is likely that we will see a new low in this reading.

On a non-seasonally adjusted (NSA) basis claims were even more impressive this week.  At a level of 227.1K, this week's reading was the lowest weekly reading (for any week) in more than 14 years, and nearly 90K below the historical average of 316.2K for the current week of the year dating back to 2000.  Obviously, there is a reason claims are seasonally adjusted due to the fact that they typically fall in September and rise in December.  That being said, we find it odd that the same people who start trotting out the NSA numbers in December (when they are high) are silent now.


10th Worst Start to October in History

The S&P 500's 1.32% decline today was the 10th worst start to October in the index's history going back to 1928.  Somewhat surprisingly, two of the five worst starts to October have come during this bull market as well.  On October 1st, 2009, the S&P fell 2.58%, and then on October 3rd, 2011 (the first trading day of that month), the index fell 2.85%.  The first trading day of October has been rough on investors over the last five years.

So what's in store for the market over the next few days and for the remainder of the month?  Earlier today over at, we published a B.I.G. Tips report for members highlighting the answer to this question.  The results were very noteworthy and consistent, but you'll have to sign up for a 5-day free trial to Bespoke Premium to check them out.  Head on over to our Subscribe page now to sign up and view the report.  Enter "october" in the coupon code section of the Subscribe page to receive a 10% discount on your new membership!


The Elusive Rise in Rates

Interest rates may not be going up, but consumers certainly continue to expect them to.  One of the questions we ask consumers in our monthly Bespoke Consumer Pulse Survey is where they expect interest rates to be one year from now.  As shown below, 57.6% of participants expect interest rates to be higher one year from now.  This is a statistically significant sampling of US consumers, so there's a clear expectation out there that interest rates are going up.  On the flipside, only 5% expect interest rates to be "lower" or "much lower" one year from now, a ridiculously low number.  

Mr. Market loves to prove the consensus wrong, and it has definitely done a good job of that in regards to interest rates for quite a while now.  

To view our entire Consumer Pulse Survey analysis, sign up for a 5-day free trial to our new Pulse service today!  Act now and get 30% off your subscription price for the life of your membership.  Simply enter "pulsecharter" in the coupon code section of the Pulse subscribe page when you sign up to receive the discount.  You can learn more about the Pulse service from this post we published here yesterday


Ford Truck Sales Disappoint

Along with a disappointing ISM Manufacturing report to start off the month, sales of pickup trucks in the month of September were mixed.  Sales of pickup trucks are often a sign of strength or weakness in the small business and construction sectors as these types of businesses are the most common users of these vehicles.  

Normally, we use sales of Ford F-Series trucks as a proxy for the overall market, and this month sales of F-Series trucks dropped below 60K (59,863) for the first time in seven months.  It was also the first year/year decline in September sales since 2008.  September's decline also brought the year to date total sales for Ford F-Series trucks down to 557K, which also represents the first y/y decline in sales during the first three quarters of the year since 2009.

While these figures portray a weak environment for pick-up truck sales, there is one important caveat.  As we have noted in prior months, due to the fact that Ford is in the process of a major re-design of the F-150 truck, a lot of sales have presumably been pushed out in to the future as consumers wait for the new model to come online.  Additionally, while Ford sales declined this month, truck sales from its competitors like General Motors and Chrysler saw y/y gains of 19% in September.  The fact that the whole industry didn't see similar declines to Ford in September is certainly an encouraging sign.


Disappointing ISM Manufacturing Report

Just as it hasn't been a good start to the month for the market, it also hasn't been a good start for economic data. A case in point is the ISM Manufacturing report for the month of September.  While economists were expecting a slight decline to 58.5 from last month's level of 59.0, the actual reading came in considerably weaker at 56.6.  While September's level represented a decline from July and August, it is still above levels we were at just three months ago.

Just like the headline reading, the internals of September's report were also weak.  Of the ten components to the monthly report, just two registered a month/month increase in September, and one of those was Prices Paid, which is usually the one component where you don't want to see increases.  Of the components where we saw the largest m/m declines, New Orders and Backlog Orders showed the largest declines.  On a year/year (y/y) basis, breadth in this month's report was slightly better with the components evenly split between increases and decreases.


A Poor End to a Bad Month

With the month of September and the third quarter now in the books, below is a look at the performance of various asset classes using key ETFs traded on US exchanges.  It was a rough month for stocks, especially for smallcaps.  The Russell 2,000 (IWM) finished the month down 6.19% and the quarter down 7.96%.  

Six sectors finished the quarter lower, while four traded higher.  Health Care and Technology were the winners of Q3, while Energy was the big loser.

Foreign markets didn't fare well in September either.  The Brazil ETF (EWZ) was by far the worst with a decline of 19.09% for the month.  Australia (EWA) fell the second most at -11.86%.

Commodities and fixed income fell as well in September.  For the quarter, commodities took it on the chin, with declines of more than 10%.  

About the only thing that did well in September was the US dollar index.


Checking on the "Pulse" of the Consumer

Late last week we published our September Consumer Pulse Report over at our sister website  Our monthly Pulse report makes up the backbone of our new Pulse subscription offering.  The report is an analysis of a 75-question survey we conduct on a statistically significant sampling of more than 1,500 US consumers.  From this unique, detailed survey, we're able to get an early read on trends in the economy ahead of the big economic data dump that comes out at the start of each month, including the widely-followed Nonfarm Payrolls report set for release this Friday.  Our Pulse report comes out a week before the monthly Nonfarm Payrolls report, giving subscribers ample time to position themselves properly based on the results from our survey.

Since the new Pulse subscription is in its early stages, we're currently offering a 30% discount on membership rates to attract a group of "charter" members.  If you have yet to sign up, there's still time to do so with the 30% discount.  All you have to do is enter "pulsecharter" in the coupon code section of the Pulse subscribe page to get 30% off the price of the service for the life of your membership.  This means you can get in for less than $1 per day!  With the 30% discount, the annual Pulse membership cost is just $350 per year.

So what did we learn from our September Pulse survey?  While we obviously can't provide you with the bulk of our key findings (you'll have to subscribe for that!), we are willing to highlight a few statistics so you can see just what this new service is all about.  

Jobs data will be dominating the financial headlines over the next three days, so below are a few labor-market related results from our September survey.  

Our first chart shows the results from our question that asks how current income levels compare to levels from one year ago.  As shown, consumers have clearly made big gains in income levels over the last year, with 42% responding "more" or "much more" compared to just 16.2% responding "less" or "much less".  

Another employment-related question in our survey asks participants if they have filed for unemployment assistance over the past month.  As shown below, the September reading came in at 4.7%, which is the lowest level we have seen in the last three months.

In terms of forward expecations for employment, survey participants are moderately positive, with 32% expecting the unemployment rate to be "better" or "much better" compared to 27.7% expecting the unemployment rate to be "worse" or "much worse".

One of the unique questions we ask Pulse survey participants is whether they consider themselves "living paycheck-to-paycheck".  Over time this question will provide Pulse members with a great sentiment gauge on the consumer.  While we're witholding the month-to-month trend of this "paycheck-to-paycheck" indicator, below is a look at the results from this question in our September report.  Unfortunately, a higher percentage of consumers currently consider themselves living paycheck-to-paycheck than not.  43.5% either "agree" or "strongly agree" while 34.4% either "disagree" or "strongly disagree".  A fifth of survey participants (20.1%) "strongly agree" compared to just 12.9% who "strongly disagree".

The labor-market results featured above are mostly positive, but one of the negative trends we found in this month's survey was expected spending on discretionary items over the next few months.  As shown below, while a majority (53.7%) expect to spend the same on discretionary items, the percentage that expect to spend "less" or "much less" was double (30.9% vs. 15.4%) the percentage that expect to spend "more" or "much more".  This is not a great sign for consumer spending heading into the holiday season.

It has been widely documented over the last few years that even though the economy has been growing at a decent pace, consumers just aren't that happy with it.  As shown below, the percentage of respondents that have a negative view on the economy is more than double the percentage that are positive.  While we saw a slight tick-up in the percentage of "positive" views in September, these numbers clearly skew negative.  

While we'd like to see a more confident consumer, contrarians treat this kind of reading as a positive.  Just as you don't want to see bullish sentiment towards the stock market get too high, you don't want to see consumers get overly excited or complacent about the economy either.  That's when the cycle is likely topping out.  Given current economic sentiment levels, there's a ton of room for improvement!

All of the data points featured above are included in this month's Bespoke Consumer Pulse Report.  But this is just a very small portion of the treasure-trove of findings in the entire publication.  To view the full report, you can sign up now for a 5-day free Pulse trial and access it immediately.  Yes, you can view this report for free by taking advantage of our 5-day free trial offering.  If you're not satisfied, simply cancel within the 5-day period and you won't be charged.

Head on over to the Pulse subscribe page to view the full September Pulse report now.  And remember -- use "pulsecharter" in the coupon code section to receive a 30% discount for the life of your membership!

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