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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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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