Wednesday
Jun182008

General Garbage

The two major "generals" have been general losers both this year and this decade.  General Motors (GM) has now solidified itself as a teenager (now trading below $15), while General Electric (GE) looks to be on its way, trading at $28.  As shown below, GE is down nearly 44% since the start of the decade, while GM is down a whopping 80%.  The last few years definitely haven't been fun for "general" investors.

Generalgarbage

Wednesday
Jun182008

International Long Term Interest Rates

Interest rates on US Treasuries have been the subject of increased attention lately as the yield on the 10-year note has risen by nearly 100 basis points since the March lows.  Even after this move, though, the current yield is still at levels seen near the end of 2007.  In international markets, with the exception of Canada, the move in interest rates has been sharper and potentially more disruptive.  In the UK and Japan, yields on their ten-year treasuries have risen to their highest levels since last August, while rates in Australia and the Euro region are at or near ten-year highs.

Interest_rates_061808_2

Interest_rates_061808a_2

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Wednesday
Jun182008

Bespoke's Sector Snapshot

Below we highlight our trading range charts of the S&P 500 and its ten sectors.  The green zone represents between one and two standard deviations below the sector's 50-day moving average, and vice versa for the red zone.  Energy, Materials and Utilities are the only sectors flirting with the red zone at the moment, while the rest are generally oversold.  The S&P 500 is getting close to two standard deviations below its 50-day moving average as it tests its recent lows.  Financials continue to be pure garbage, while Industrials, Health Care, and the consumer sectors aren't far behind.  If you're a trend follower, Energy, Technology and Materials are your best bets.

Spxte

Finlindu

Inftenrs

Condcons

Hlthmatr 

Utiltels

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Wednesday
Jun182008

Agribusiness ETF (MOO) Stock Holdings

With many agribusiness stocks continuing to soar, below we highlight the current and expected valuations of the companies that make up the MOO ETF.  Most of the stocks that are up the most this year are the ones with the highest trailing P/E ratios.  Potash (POT) is up 63% and has a P/E ratio of 54.22.  Mosaic (MOS) is up 67% and has a P/E of 52.  And Monsanto (MON) is up 28% with a P/E of 47.  Not all stocks that make up the ETF have high valuations, however.  CF Industries (CF) is up 52% year to date but has a relatively low P/E of 20.  While down 15% this year, Deere (DE) has a P/E of 16.78.

But stock prices really move based on forward expectations, and since earnings expectations for these companies in the future are high, their estimated P/E ratios for next year are much lower.  POT and MOS both have very high trailing P/Es, but their estimated P/Es are 13.6 and 12.8 respectively.  The one that might be the most overvalued based on estimated P/Es is Monsanto (MON) at 33.87.

Mooholdings

Wednesday
Jun182008

RBS Spoils the Fun

Modestly positive trading in international markets overnight quickly turned negative when Royal Bank of Scotland analysts put out a report advising clients to prepare for the worst market crash in 100 years.  The analysts warned that they expect inflation to paralyze economies worldwide.  In the US, they say the S&P 500 could fall by more than 300 as early as September. 

RBS has a series of commercials with the tag line "Make it Happen."  In this case let's hope they don't.

Bloomberg_world_intraday

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Wednesday
Jun182008

Russell 1,000 Stocks Closest to 52-Week Highs and Lows

Momentum investors look to play the continued strength in the names that have done extremely well in the current market environment.  Bears also look to go short those names that continue to perform poorly day in and day out.  With that in mind, below we highlight the 25 stocks in the Russell 1,000 that are closest to their 52-week highs and the 25 that are closest to their lows.  As shown, SM, CHK and MOS are the closest to their 52-week highs, although every stock on the list is pretty much right at new highs.  Other notables on the 52-week high list include COP, ATVI, CNX and MON.  On the list of losers, 3 stocks in the index closed out the day yesterday at their 52-week lows -- ENH, CCL and HBAN.  Surprisingly, there are lots of Consumer Staples on the 52-week low list such as BDK, CCE, PBG, DLM and RAI.

52weekhighs

52weeklows 

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Tuesday
Jun172008

Key ETFs Furthest Above and Below 50-Day Moving Averages

Each day in our ETF Trends report available to Bespoke Premium members, we provide overbought/oversold statistics for more than 200 ETFs.  Below we highlight the key ETFs that are currently trading the furthest above and below their 50-day moving averages.  When ETFs get significantly above their 50-days, the risk/reward tradeoff for bulls starts to lean towards the risk side.  As shown, Energy and Energy stock ETFs currently dominate the overbought list.  The Oil&Gas Exploration ETF, XOP, is the furthest above its 50-day at 12.45%, followed closely by UNG at 12.28%.

On the oversold list, the Banking ETF (KBE) is at the top at -16.1%.  KBE is followed by the Regional Bank ETF (RKH), the India ETN (INP), and the Homebuilders ETF (XHB).  Other notables on the list include XLF, FXI and EEB.

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Etfsfurthestabove

Etffurthestbelow 

Tuesday
Jun172008

Oil Now More Popular Than Real Estate

The Google Trends site is a useful tool to analyze the search habits and sentiment of internet users around the world.  As a clear sign that the real estate bubble is dead and oil prices are now on everyone's mind, Google searches for "oil" have recently surpassed searches for "real estate."  Google Trends now allows users to download the historical search data to a CSV file, so we have done that and created a historical chart of the two searches below.  As shown, oil's runup in 2008 has moved searches for it higher, while searches for "real estate" have been in a downtrend since 2004. 

Oilrealestate

Tuesday
Jun172008

Goldman Sachs Beats Estimates by $1.16

Goldman Sachs (GS) reported earnings per share of $4.58 versus the average analyst estimate of $3.42.  Below we highlight the second quarter estimates for 20 analysts that cover Goldman.  The red and green lines indicate the change in estimates from where they were four weeks ago.  As shown, analysts were bunched up between $3 and $4 per share for Goldman.  Nine analysts lowered their estimates over the last month from levels that were much closer to the actual numbers than Goldman reported today as well.  Clearly they should have stuck to their guns.

Gsepsestimates_4

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Tuesday
Jun172008

Fed Headlines

Whenever the markets start to over or under estimate the direction of the Fed's future rate policy, an article usually appears in the Wall Street Journal or the Financial Times quoting 'senior Fed officials' who say the market may have it wrong.  It has also been our experience that the degree to which the market deviates from the Fed's views will also help to determine where the article appears.  When the market's view only differs slightly from the Fed's, the story will usually appear in one of the inside sections of one of the papers.  However, when there is a larger gap in opinion, the story usually shows up on the front page. 

With that in mind, the market's recent view that the Fed will be hiking rates sooner rather than later seems to be misplaced, as front page headlines on both the Financial Times and the Wall Street Journal suggest that the Fed is not about to pull the trigger and start raising rates.

Headlines_061708_2 

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Tuesday
Jun172008

Goldman Sachs Historical Earnings

We grabbed the historical earnings reports for Goldman Sachs (GS) from the Bespoke Earnings Report Database to see how the stock has traded recently on the day of its quarterly releases.  Since the credit crisis began, the company has had three prior quarterly reports, and as shown, it has gapped up at the open each time.  Following its last report (3/18), the stock gapped up nearly $14 and went up another $10.63 from the open to the close for an overall point change of $24.57 on the day.  Following the two reports prior to the last one, however, the stock gapped up at the open then headed lower from the open to the close.  One other thing worth noting is that the stock has been higher one week from the open following all three reports by an average of 4.98%.

Gseps

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Tuesday
Jun172008

Oil Outperforming Oil Stocks

Below we highlight the ratio of oil stocks to the price of oil.  This ratio divides the price of oil into the price of the S&P 500 Oil&Gas sector that has been around since 1989.  When the line is falling, oil is outperforming oil stocks (and vice versa for a rising line).  Since the start of 2007, oil has been outperforming oil stocks in a steady fashion.  The ratio recently hit its lowest level since November 1992, taking out lows made in early '03 and late '04.  At some point, the line will rise again, but only time will tell when that happens.

Oiloilstocks

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Monday
Jun162008

Lowest P/E Ratios in the Nasdaq 100

Below we highlight the 25 stocks in the Nasdaq 100 with the lowest estimated P/E ratios for the current year.  As shown, Flextronics (FLEX) currently has the lowest at 8.93, followed by CDNS, AMGN and LRCX.  One of the more surprising valuations on the list is that of Garmin (GRMN).  Garmin is the GPS-maker that was once one of the most loved stocks on the street.  After hitting $123.80 at the end of October, however, the stock has collapsed and is down 53% year to date.  Its current price of $45.85 gives it an estimated P/E ratio of 11.35.  Right behind Garmin on the list is Steel Dynamics (STLD).  Its P/E ratio is 11.58, but the stock has gone in the complete opposite direction of GRMN this year -- up 32%.  With estimated P/E ratios at about the same low levels, which stock is better?  The one that is up 32% year to date or the one that is down 53%? 

Nasdaq100

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Monday
Jun162008

Expected Earnings Growth Through Q1 '09

Earlier we posted estimates for Q2 earnings growth.  Below we highlight expected year-over-year quarterly earnings growth from Q2 '08 through Q1 '09.  As shown, things are expected to get progressively better after the current quarter, but it's important to remember that the bar has been set much lower for growth since earnings didn't really start to get weaker until Q3 '07.  As an example, Financials are expected to see year-over-year earnings growth of 452.7% in the fourth quarter versus Q4 '07.  Technology, Energy and Consumer Staples are expected to provide the most consistent earnings strength over the next four quarters.

Sectorepsgrowth

Sectorepsgrowth1

Sectorepsgrowth2   

Monday
Jun162008

Expected Second Quarter Earnings Growth

This week is somewhat of a practice round for second quarter earnings season that really kicks off in early July.  Along with FedEx (FDX), which reports on Wednesday, Morgan Stanley (MS) and Goldman Sachs (GS) report their numbers this week.  Since earnings season is almost upon us, we thought we'd highlight the current growth expectations for the S&P 500 and its ten sectors.  In the first chart below, we highlight year-over-year growth expectations for the S&P 500 in Q2 '08.  At the start of the year, estimates were actually positive at 3.2%, but they have steadily drifted lower and currently stand at -7.7%.

The bottom chart looks at current Q2 growth estimates for the ten S&P 500 sectors.  Once again, Financials and Consumer Discretionary are the main cause for the negative overall number.  As shown, Financial earnings are expected to be down nearly 46% from the second quarter of last year.  Consumer Discretionary ranks second worst at -19%.  On the positive side, Energy is not surprisingly expected to see the strongest growth at 20.5%.  Energy is followed by Technology at 12%, Consumer Staples at 8.6%, and Health Care at 5.9%.

Epsgrowthq2

Epsgrowthsector