Wednesday
Jul232008

Bespoke's Commodity Snapshot

Below we highlight our trading range charts of ten major commodities.  The green shading represents two standard deviations above and below the commodity's 50-day moving average.  When the price moves above/below the green shading, it is considered overbought/oversold. 

Even after a $20+ decline in oil, the commodity still isn't oversold.  This shows how strong the uptrend in oil was leading up to the recent declines.  But now that the uptrend is broken, it looks like oversold territory could be reached soon.  Natural gas is oversold, however, after declining more than 25% from its peak on July 3rd.  It also broke its uptrend, and the technical damage done in recent days is nothing to laugh at.

Gold and silver have actually held up well as other commodities have been falling.  Interestingly, platinum has diverged from gold and silver on the downside and is trading well into oversold territory.  And after peaking on June 26th, corn has now fallen 27% as well.  US consumers are definitely welcoming these declines.

Oilnatg

Goldsilv

Platcopp

Cornwheat

Ojcof

    

Wednesday
Jul232008

BAC Buyback Announcement: Who Cares

Bac_buyback_2The Financial sector and BAC more specifically are getting a bit of a pop on news that BAC is going to buyback 75 mln shares.  However, before we start dancing in the streets thinking BAC is now flush with cash, we would point out that the announcement replaces its previous buyback plan that was announced in January 2007, which authorized the repurchase of 200 mln shares.  This represents a 62% decrease in the number of shares the company is authorizing to buy back.  Additionally, of the 200 mln shares that BAC originally intended to buy back since January 2007, the company actually only ended up buying 74.1 mln, most of which was purchased during Q1 07.  So as for actual buybacks getting done, don't hold your breath.

Wednesday
Jul232008

Wealth Manager ETF Guide

We recently found this cool ETF guide in Wealth Manager magazine.  The print version is much better, but if you're looking for an all-in-one list online, their PDF version is pretty good.

Etfguide

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Wednesday
Jul232008

A Glut of Petroleum Products

This week's inventory data from the Department of Energy (DOE) shows that while crude oil inventories showed a larger than expected decline, supplies of gasoline and distillate fuels are now above average.  In January, inventories of distillates were well below average, causing fears that we would have shortages this winter.  Six months later, we're now looking at a situation where distillate inventories have risen for 11 straight weeks, causing supplies to rise to their highest levels of the year.

Distillate_2

Gas_0718_2

Crude 

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Wednesday
Jul232008

Apple Erases All of Post Earnings Losses

After declining by more than 10% in reaction to its earnings report after the close on Monday, Apple Computer (AAPL) has now erased all of its declines and is now actually up.  So much for concerns regarding the health of Steve Jobs.

Aapl_intraday_072123

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Wednesday
Jul232008

Strategists' 2008 S&P 500 Price Targets

Below we have updated strategist price targets for the S&P 500 from the weekly survey done by Bloomberg.  The most recent firm to drop out from forecasting is Wachovia. 

Since we last updated the list below, Lehman, Merrill, HSBC and Credit Suisse have lowered estimates.  The only firm that hasn't lowered estimates since the start of 2008 is Deutsche Bank.  Since the start of the year, they have kept their year-end target at 1,650.  Credit Suisse and HSBC have lowered their targets the most at about -20%.

Currently, the average forecast from the strategists still participating in the survey is 1,471, which is 16% above current levels.  While Credit Suisse is the most bearish firm, they're still looking for the market to be higher at year end than it is now.

Spxpricetarget_3

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Wednesday
Jul232008

Three One Percent Gains In Five Days

What a difference a couple of weeks makes.   Over the last five trading days, the S&P 500 has risen by at least 1% on three different days.  That's right -- up days.  Given the market's declines over the last several months, one would expect to see multiple large down days in a short period of time, but when was the last time we saw this many up days so close together?  As shown in the chart below, over the last year there have been quite a few instances where this occurred.  So while it's certainly a welcome respite from the declines, the market still needs to show a lot more before investors can start to believe again.

Sp_500_072308

Tuesday
Jul222008

Sector Performance Surrounding Earnings

Below we highlight the average performance of stocks in each sector on the first trading day following earnings reports this season.  Since Alcoa (AA) reported on July 8th, Financial stocks that have reported earnings have averaged a gain of 5.48% on the day.  This is by far the highest of any sector and highlights that investors most likely overdid things on the downside for many banks and brokers (at least in the short term).  Industrials have been the second best performing stocks on earnings, averaging a gain of 4.51% on the day.  Health Care is the only other sector where stocks have averaged gains in response to earnings.  Telecom, Consumer Staples, Energy and Materials have averaged the biggest declines in response to earnings reports.  These are sectors that many people have expected to do well during a slowdown, and means they might have overshot to the upside leading up to this earnings season.  Overall, the average US stock has averaged a gain of 1.89% on reports this earnings season.

Epschange

Tuesday
Jul222008

Bespoke's Paul Hickey on CNBC Street Signs Today at 2:15 PM ET

Street_signs_4Bespoke's Paul Hickey will appear on CNBC's Street Signs today at 2:15 PM ET to discuss oil and the stock market.

Tuesday
Jul222008

Oil $150 or $110 Results

Yesterday we asked readers if they thought oil would hit $150 or $110 first.  As shown in the chart below, 58% of the 366 respondents think oil will head lower and hit $110 before it hits $150.  Typically at peaks, bullishness is extremely high and not low as it has generally been for oil during its run-up.  But the psychology is definitely different when most consumers want something to go down (oil prices) instead of up (stocks, real estate).

Oil150110_5

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Tuesday
Jul222008

Oil and Energy Stock Correlation

Below we highlight the rolling one-year correlation between the daily price changes (%) in oil and the S&P 500 Energy sector.  As shown, from early 2004 through the middle of 2006, oil and oil stocks became more and more correlated.  But after the peak in correlation in 2006, it has been steadily decreasing.  Interestingly, the correlation increased during the first big run-up in oil from about $35 to $75.  However, the most recent run-up from $60 to $140 has seen the correlation between oil and oil stocks decrease, as oil the commodity has left the stocks behind.  For bubble theorists, this decline in correlation helps their argument because it shows that the commodity has taken on a life of its own.  It will be interesting to see how this relationship does going forward.

Correlation722

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Monday
Jul212008

Get Your Business News Here

Remember to visit our B.I.G. News page every day to stay up to date with the top business news stories that we're reading.  Click the button below to check it out.

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Monday
Jul212008

Asset Class Correlations

Today's Wall Street Journal had an interesting article about asset class correlations.  With that in mind, below we highlight (click here for PDF) a correlation matrix of various asset classes including the S&P 500 sectors, oil, gold, the dollar, the yen, emerging markets, the 10-year note and the FTSE 100.  The first matrix highlights the correlation between the daily percent changes of asset classes since the S&P 500 peaked on October 9th, 2007.  Each column (vertical) is color coded from green to red based on highest to lowest correlations.

The second matrix highlights the correlations between the same asset classes, only from a much longer time horizon (1990-present).  Then, in the bottom chart, we highlight the difference between the short-term and long-term correlations to see where differences arise.  Correlations that have increased since the bear market began in 10/07 are shaded in light green, while correlations that have decreased are shaded in light red.  In each column, the biggest increase and decrease in correlation is highlighted in dark green or red.  As shown, correlations have generally increased among sectors, while stocks have become less correlated with oil, gold and Treasuries.  Correlations between stocks and the yen have increased the most in the short-term compared to their long-term correlations.  To view the matrices in PDF form, please click here.  It's definitely an interesting data set to analyze and it's better to let the info speak for itself.

Correlation721

Monday
Jul212008

S&P 500 Earnings Update

Monday afternoon's earnings flow was poor, as AXP, SNDK and TXN all missed EPS forecasts.  Additionally, while AAPL beat, their guidance was extremely weak.  That coupled with questions surrounding the health of Steve Jobs sent the stock down by over 10% in after-hours trading.  The end result is that since the start of July, nearly 20% of the stocks in the S&P 500 have reported EPS, and of those companies, 67% have beat EPS forecasts.  While this is down from the levels in the low seventies that we saw last week, it is still above the average of the last ten years.  Let's hope the news flow turns for the better in the morning and helps sentiment improve.

Quarterly_beat_rate_0721pm

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Monday
Jul212008

Which Way is Oil Headed?

Please take a moment to participate in our poll below on oil prices.  The commodity has declined about $15 since peaking above $145 (closing basis) last Monday.  We're wondering about investor sentiment on oil after this brief pullback.  What price level will oil hit first -- $150 or $110?  We'll report back with the results soon.


With oil at $131/barrel, will it hit $150 or $110 first?
$150
$110
  
Free polls from Pollhost.com

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