Wednesday
Jun252008

A Look at Big Lots (BIG)

Big Lots (BIG) has been one of the best performing stocks this year.  As shown in the first chart below, it has been trading in a tight upward sloping channel for pretty much the entire year -- bouncing off the bottom and top of the channel as it has worked its way higher.  If one were to just look at this six month chart, it would seem that all was well for the stock to continue with its positive momentum.  But it's always important to look at multiple time frames when analyzing price charts to get the entire picture of a stock's price movements.

When we back the chart out a bit and go back to the start of 2006, it shows that there is significant resistance right around current price levels.  After a rally that was similar to this year's from early '06 to early '07, the stock fell by as many points as it has risen this year.  Now that's a V-shaped bottom that only the entire market can hope for. 

The first chart looks extremely positive from a technical point of view.  But the second one clearly shows that the stock still has a lot of work to do to break above its most recent highs.  There is simply a lot of supply left over from the last time the stock was this high.  If it can break through those highs, however, the positives will re-emerge.

Biglots

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Wednesday
Jun252008

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Wednesday
Jun252008

Recommended Stock Allocation Continues to Fall

Below we highlight the consensus recommended allocation to stocks from US strategists (as compiled by Bloomberg).  Currently, the consensus says investors should have 58.6% of their portfolios in stocks.  As shown in the chart, recommended stock allocation has been in a downtrend since late 2001, but it did see a pickup in late 2006/early 2007 just before the markets topped out.  When the credit crisis hit, recommended stock allocation fell sharply.  With the price of the S&P 500 included in the chart, you don't need us to tell you the usefulness (or lack thereof) of these recommendations.

Assetallocation

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Wednesday
Jun252008

Fed Expectations and Investor Wants

Yesterday we asked Bespoke readers what they thought the Fed would do and what they wanted the Fed to do with interest rates today.  Below we highlight the results from the two polls, and while less people responded to the "think" questions, the overwhelming majority believe the Fed will leave rates at 2.00% today.  While 88% think the Fed will leave rates the same today, only 50% want them to leave them there.  Forty-two percent of respondents want the Fed to begin raising rates immediately, with 27% saying to hike 25 bps and 15% saying to hike 50 bps.  Only 5% want the Fed to ease another 25 bps, and 3% want a 50 bps cut.  As the results of these polls show, investors seem more interested in curbing inflation than curing a slowing economy. 

Thinkfed_2

Wantfed

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Wednesday
Jun252008

Energy Inventories

In its latest weekly energy inventory report, the Department of Energy (DoE) announced that after five straight weekly draws, crude oil inventories increased modestly in the latest week.  However, as the chart below shows, crude oil stocks remain well below average.  At first glance, energy markets have sold off sharply on the news.  However, we don't need to tell you that things can change quickly in these markets, especially with a Fed announcement coming later in the day.

Crude_062508

Distillate fuels also showed a build in the latest week, and unlike crude inventories, stockpiles are above average and the spread versus average is at its highest levels of the year.

Distillates_062508

Finally, unlike crude oil and distillates, gasoline inventories actually declined slightly during the week.  At current levels the spread between the current and average spread is the lowest it has been all year.

Gas_062508_4   

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Wednesday
Jun252008

Fed Funds Rate Decision Days

Below we highlight the S&P 500's performance on days when the Fed has made a Fed Funds Rate decision since August 8th, 2006 when the Fed stopped its long period of hiking rates.  We also include the index's change in the week after the close on the FOMC day.  As shown, the average change in the S&P 500 on these days has been 0.46% since 8/06.  During the current easing cycle, the index has been up three times and down four times.  The days when the market has been up have generally been big up days (2.9%, 1.2% and 4.1%). 

Fedfunds625_2

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Wednesday
Jun252008

S&P 500 Short Interest...Still Rising

Yesterday's release of short interest figures for the Nasdaq confirmed the increases we saw last week in the NYSE.  Updating our figures for S&P 500 short interest shows that the average stock currently has 5.8% of its free float sold short.  While part of the rise can be attributed to hedge funds and the increased popularity of long/short mutual funds, at least some is attributable to negative investor sentiment.

Sp_500_short_interest

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Wednesday
Jun252008

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, and moves out of this area to the upside or downside mean the price is overbought or oversold.  As shown, oil and natural gas continue to trade right along the top of their trading ranges.  It has now been 13 days since oil has made a new closing high, which seems like an eternity with the action in crude prices lately.  Is the prolonged consolidation just a spring loading up for its next spike higher, or is there just too much bearishness on the commodity at these levels?

Aside from energy, gold, silver and orange juice remain in downtrends, while copper and platinum are pretty much trading sideways.  After going parabolic from flood problems Iowa, corn prices have come in slightly in recent days.  Wheat has also been going back up in June, but still remains well below the levels it saw earlier this year.  And after trading sideways for more than 3 months, coffee has recently seen big gains to move it into overbought territory.

Oilnatg

Goldsilv

Platcopp

Cornwheat

Ojcof

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Tuesday
Jun242008

Looking for Action? S&P 1500 Most Volatile Stocks

For traders with a more short-term time horizon, we have compiled a list of the S&P 1500 stocks that have the largest intraday high-low ranges (based on the average percent spread between the intraday high and low over the last fifty days). We then grouped the stocks based on whether they have a rising or falling 50-day moving average. Stocks highlighted in gray are new to the list this month.

As the table shows, most of the stocks on the list are trading in the single digits, and while percentages are the same no matter what the price, some traders will avoid stocks trading that low in price.  With that in mind, we have also included a list of the most volatile stocks trading above $10 per share.  For this list, we have only included the ten most volatile names with rising 50-day moving averages and the ten most volatile names with falling 50-day moving averages.

Intraday_spreads_062408

Intraday_spreads_062408_10

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Tuesday
Jun242008

Plotting the April Case/Shiller Housing Numbers

CaseshilleraprilChalk it up to seasonal factors, but it's good to see some green in the month over month readings of the S&P/Case-Shiller Housing indices.  As shown at right, 8 of the 20 cities that Case-Shiller track showed increases in home prices from March to April.  Cleveland saw the biggest month over month increase at 2.94%, followed by Dallas (1.12%), Denver (0.83%), and Seattle (0.72%). 

There were plenty of declines in April as well, however.  Miami fell another 4% in just one month, while Las Vegas, Tampa, Minneapolis, LA, San Fran, San Diego and Phoenix all fell by more than 2%. 

And the year over year numbers are still quite depressing.  The Composite 10-City index was down 16.3% from April 2007 to April 2008.  And Charlotte, which was the last city to hang onto year over year price gains, finally turned negative versus a year ago.

Below we highlight historical charts of the monthly year over year percent change in median home prices for the 20 cities tracked by S&P/Case-Shiller.  If you look real closely, you'll see that in April the year over year declines stopped declining by as much as they have been recently.

Caseshill

Caseshill1

Caseshill2

Caseshill3

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Tuesday
Jun242008

What's A Fed To Do?

Focus will be on the Fed tomorrow as they are set to provide an update on the Fed Funds Rate.  Mr. Bernanke and friends are in a tough spot these days, and investors want to know whether they're more worried about a slowing economy or runaway inflation.  Regardless of what the Fed does, some investors will be happy and some will be upset with the decision -- and the market should move based on whoever is in the majority. 

As we typically do around Fed days, below are two polls asking Bespoke readers what you want the Fed to do versus what you think the Fed will do.  Please take a quick second to answer the two survey questions, and we'll report back with the results before the 2:15 PM ET decision tomorrow.  Thanks for participating!


What do you want the Fed to do?
Leave the Fed Funds Rate at 2.00%.
Lower the Fed Funds Rate to 1.75%.
Lower the Fed Funds Rate to 1.50%.
Raise the Fed Funds Rate to 2.25%.
Raise the Fed Funds Rate to 2.50%.
  
Free polls from Pollhost.com


What do you think the Fed will do?
Leave the Fed Funds Rate at 2.00%.
Lower the Fed Funds Rate to 1.75%.
Lower the Fed Funds Rate to 1.50%.
Raise the Fed Funds Rate to 2.25%.
Raise the Fed Funds Rate to 2.50%.
  
Free polls from Pollhost.com

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Tuesday
Jun242008

Consumer Confidence and the Markets

Consumer Confidence is now about as low as it has ever been since the economic indicator began back in 1967.  Below we have plotted the monthly Consumer Confidence number with the one-year forward return (%) of the S&P 500.  So the red line indicates the change in the S&P 500 one year ahead of time.  As shown, stock performance has generally been positive over the next 12 months when Confidence levels have been this low.

Consconf

Tuesday
Jun242008

Bespoke's Paul Hickey on CNBC's Street Signs Today

Street_signs_4Bespoke's Paul Hickey will appear on CNBC's Street Signs with Erin Burnett today after 2:30 PM ET to discuss the markets and end of quarter window dressing.

Tuesday
Jun242008

Bespoke's International Snapshot

The recent selloff in equities has really spared no one.  As shown in our trading range charts below of 22 major country indices, the trend has been down across the board in recent weeks.  Even Brazil, Mexico and Russia, who had all held up relatively well this year, have sold off quite a bit. Currently, 19 of the 22 countries are trading in oversold territory (Canada, Japan and Russia are neutral).  European countries like France, Germany and Italy have really taken it on the chin, while China and India remain the biggest losers in 2008.  After forming short-term uptrends off of the March lows, global equity markets have now lost most of their gains and are looking to move back into downtrends.

Austbraz

Canachin

Honggerm

Franindi

Italjapa

Malaspx5

Mexiruss

Singsout

Swedspai

Soutswit

Taiwftse

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Monday
Jun232008

Bank Index (BKX): Sound and Fury Signifying Nothing

With its closing price of 60.87, the KBW Bank Index has now erased 100% of the gains it had off of its October 2002 low.  Even worse, the index now sits less than 2 points above its low from October 1998.  Talk about a lost decade

Bkx_index_0608_2

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