Friday
Jun272008

Bespoke's Prediction Poll and Last Week's Winner

The winner of last week's Bespoke Prediction Poll guessed that the Dow would close the week at 11,350 -- just 0.03% percent from today's actual close of 11,346.51.  Congratulations on the prediction and winning one free month of the Bespoke Premium service!  Please enter your prediction for where the Dow Jones Industrial Average will close next Thursday (Friday is July 4th).  The index is currently trading at 11,346.51.  Predictions must be in by Sunday at midnight.  The person with the closest answer will receive one free month of the $40/month Bespoke Premium service.  Thanks for participating!









Where will the DJIA close on Thursday, July 3rd?
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For non-members of the Bespoke Premium service, we have recently begun issuing our Week in Review newsletter that provides a detailed look at the comings and goings in the financial world over the last week.  You can sign up to receive the Week in Review along with all of our other reports by visiting BespokePremium.com.  Please click the image below to view a previous Week in Review as an example.

Along with our Week in Review newsletter, below we provide the titles of the in-depth B.I.G. Tips reports we released this week.  If any spark your interest, they are all available to our Premium subscribers.  These are anticipatory, ahead-of-the-curve research reports that cover markets, economies, stocks, commodities, housing and anything else related to making people money. 

This week's B.I.G. Tips reports: Earnings Estimate Revisions (stocks with the biggest increases and decreases in analyst estimates), Stock Ratings (a look at the most and least loved stocks from the major financial websites), July 4th Trading (market performance in the week preceding and following July 4th), Big Down Days (market performance following down days similar to Thursday), International Revenues and the Weak Dollar (how have stocks with strong international revenues been holding up?), July Market Seasonality (typical market and stock performance in July), Housing Futures (which direction is real estate heading?), Fed Funds Days (how should the market perform following this week's rate decision?), Decile Analysis (which stock characteristics are moving stocks higher and lower?), Top Stock Technicals (our chart analysis of the top rated stocks), End of Quarter Window Dressing (which stocks should benefit the most and the least from this definite trend?).

Thanks for taking part in the Bespoke Prediction Poll!  If you'd like to try out our Premium service, please sign up at BespokePremium.com.

Friday
Jun272008

Worst June Since 1930

Man, this is getting ugly.  If the month were to end today, the Dow would be down 10.30% this June.  That would mark the worst June for the Dow since 1930, and the worst month for the index since September 2002 (-12.37%).  Unfortunately, the month still has one more day next Monday.

Downjunes

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Friday
Jun272008

Writedowns and Capital Raised for Financial Firms

From data compiled by Bloomberg, financial firms have now written down $399 billion, with much more expected in the coming weeks.  On the flip side, they have raised a total of $322 billion in new capital. 

Below we highlight the writedowns and capital raised of major financial firms around the world.  Citigroup (C) tops the writedown list at $42.9 billion, followed by UBS ($38.2) and Merrill Lynch ($37.1).  Goldman Sachs and Wells Fargo are at the bottom of the list with $3.8 billion and $3.0 billion written down respectively. 

In the table we also include the current market cap for each firm as well as the ratio of writedowns to market cap.  ETrade (ETFC) tops this list with a ratio just over two (writing down $3.3 billion with a current market cap of $1.6 billion).  Washington Mutual and Merrill Lynch are the only other firms that have written down more than their company is currently worth.  JP Morgan, Goldman and Wells Fargo have the best writedown/market cap ratios.

Writedown

Writedownchart

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Friday
Jun272008

Business Week Doubles Down On Housing's Fall

At the end of January, Business Week's Peter Coy wrote a cover story titled, "Meltdown: For Housing, The Worst Is Yet To Come."  Many investors look at magazine covers as contrarian indicators, but Mr. Coy was spot on with the article since things have indeed gotten worse.

Bweekhousingfeb

We just got this week's Business Week in the mail, and once again Mr. Coy (along with Mara Der Hovanesian) has written an article on the struggling housing market.  This week's title -- The Home Price Abyss: Why The Threat Of A Free Fall Is Growing." 

Business Week could have left real estate alone since they have already been right on their February call, but they're effectively doubling down on their bet that real estate will continue to fall.

Check out the articles.  They're both good reads.

"Meltdown: For Housing, The Worst Is Yet To Come"

The Home Price Abyss: Why The Threat Of A Free Fall Is Growing"

Bweekhousing 

Friday
Jun272008

The Bursting of the Non-Bubble?

This morning's WSJ has a cover story comparing the declines in financial shares to the declines of tech stocks during the Internet bubble.  We find that comparison hard to make at this point. 

Since its peak last year, the S&P 500 Financial sector is down 45%.  While that's a large decline, it's nothing compared to the 77% decline that the Nasdaq saw from its high in 2000 to its low in 2002.  For the Financials to be 77% below their record highs, the sector would have to fall another 60% from current levels! 

And the rally in Tech stocks completely drawfs the rally that Financials had.  In the first chart below, we highlight the percent change in the Nasdaq and the S&P 500 Financial sector since 1990.  As shown, the bubble and its subsequent burst in the Nasdaq stands out like a soar thumb.  In the bottom chart, we highlight the percent change in the Nasdaq from its low made in June 1994 to its low made in October 2002.  We also include the Financial sector from its low made in October 2002 to its low made yesterday.  While it's been a tough ride for Financials recently, the Tech bubble was more than double the fun and then double the pain.

Nasdaqfinancials

Nasvsfinl

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Friday
Jun272008

Mass Transit Traffic Spikes?

Here in the New York region of the US, the Metro-North train line is almost a staple of life.  While not everyone commutes on it every day, almost everyone has taken the train at some point in their lives. 

While it's not at all surprising, it has been interesting to see ridership increase day by day as the price of oil has risen in 2008.  Just last year, finding a seat on a train from Harrison, NY to New York City in the evening was easy.  When we got on the train last week to head to a dinner meeting, not a seat was to be found.  And riders continued to pile in as more stops were made along the way. 

With more and more commuters either taking public transit or carpooling, we have also noticed that auto traffic along the I-95 corridor (at least from Westchester County into Connecticut) has been down recently.  Leaving the office earlier than 7 PM has meant nothing but gridlock in the past, but recent trips home earlier than that have been brake free (although Thursdays and Fridays are still horrible). 

Along with our own anecdotal evidence, some recent articles on the matter caught our attention.  In the NY Times this past weekend, it was noted that Amtrak traffic had its biggest monthly traffic figure ever in May, which is usually not a heavy travel month.  The Greenwich Time recently had an article about Metro-North traffic, and just today we found this article that more and more people are running out of gas on the roads.

Got a traffic story to share with us?  Let us know in the comments section below.

Friday
Jun272008

Market Breadth Back to Lows

Below we highlight the percentage of stocks above their 50-day moving averages for the S&P 500 and its ten sectors.  Currently, just 17% of stocks in the S&P 500 are above their 50-days, which is just about as low as breadth has been during the prior lows seen back in August, January and March.  Eleven percent of Industrials and Materials stocks, 8% of Consumer Discretionary stocks, and just 3% of Financial stocks are above their 50-days.  Those looking to sell, sell, sell this market may want to wait for these oversold levels to at least move back to neutral territory.

Spx50day

Finlindu50day

Techenrs50day

Condcons50day

Hlthmatr50day 

Utiltels50day

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Thursday
Jun262008

Shorts Piling On

Since the short-term top in the S&P 1500 on May 19th, the average stock in the index is down 8.4%.  We broke the index into deciles (150 stocks in each decile) based on each stock's short interest as a percentage of float (at the market top) to see if the bears have been licking their chops.  Below we highlight the average performance of stocks in each decile from 5/19 to today.  As shown, the decile of stocks that are the most heavily shorted is down an average of 14.47% since 5/19, while the least heavily shorted decile is down an average of 6.43%.  Clearly, the shorts have been piling on and winning as the market struggles.

Shortintperf

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Thursday
Jun262008

International Declines

While markets have been bad here, they've been even worse in many other areas of the world.  Below we highlight the year to date performance of major equity indices in Japan, Germany, France, Canada, China, the UK, and the US.  As shown, Canada and Japan are outperforming the US, but the rest are down quite a bit more.  While the S&P 500 is down 12.6% this year, the UK is down 14.5%, Germany is down 20%, France is down 21%, and China is down 45%.  All you had to do was short China and buy the US and you'd be making a killing this year.  If it were only that easy.

Intlmarkets

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Thursday
Jun262008

New Lows For the Dow

The Dow just ticked to its lowest levels of the credit crisis, breaking below the lows we saw in January and March.  Since its peak in October, the Dow has now dropped 18.4% from its peak, and based on closing prices, it is about 250 points from hitting the technical definition of a bear market.  After a look at the YTD performance of the components though, it's hard to argue that we aren't already there.

Dow_ytd_0626

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Thursday
Jun262008

RIMM Trading Down on Earnings

With RIMM trading down nearly 9% in the pre-market after reporting earnings yesterday evening, below we highlight historical quarterly reports for RIMM since late 2001.  We have sorted the list by the amount that the stock has gapped at the open on the morning following earnings reports.  At -9%, it will be the second biggest down gap for the stock since 2001.  The stock's biggest down gap was -11.65% after its 4/9/02 report.  When RIMM has gapped down by 2% or more on earnings, it has gone up from the open to the close 4 times and gone down 6 times.  One week later from the open, the stock has averaged a gain of 0.87%.  Based on this analysis, investors wanting to buy RIMM at these prices might want to wait until the end of the day.

Want this analysis for stocks in your portfolio?  Call us at 914-315-1248 to inquire about the Bespoke Interactive Earnings Report database.

Rimm

Thursday
Jun262008

Running of the...Bears

The latest surveys of investor sentiment from Investor's Intelligence and the American Association of Individual Investors shows that bearish sentiment is once again on the upswing.  After bottoming in May, both measures are now approaching their highest levels of the year.

Bearish_sentiment_surveys_062808

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Thursday
Jun262008

Key ETFs Most Overbought and Oversold

Below we highlight the ETFs in our daily ETF Trends report that are currently trading the furthest above and below their 50-day moving averages.  Five commodity ETFs top the list of the most overbought ETFs.  DBA, DBC, UNG, DBO and DBE are all more than 7% above their 50-day moving averages.  Other ETFs on the list of positive trending names include XME, OIL, USO, XOP, RSX and BBH.  Two currency ETFs are also on the list -- the Mexican Peso (FXM) and the Australian Dollar (FXA).

Currently, 160 out of the 190+ ETFs that we follow closely are trading below their 50-day moving averages.  The banking ETF (KBE) is the furthest below at -18%, followed by the regional banking ETF (RKH) at -15%.  India (INP) and Belgium (EWK) trail the two bank ETFs, while Sweden, the Netherlands, South Africa, Italy, Spain, China and France are other countries that are significantly oversold.

Ketetfsabove_2

Ketetfsbelow 

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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

Bespoke Premium Free Trial

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