Tuesday
Feb262008

Bill and Melinda Gates Foundation: No Tech Allowed?

We recently pulled the most recent 13-F of the Bill and Melinda Gates Foundation to track its holdings and recent performance.  Due to Warren Buffett's generous donation, the Foundation is loaded with Berkshire shares.  At the end of 2007, BRK/B made up 46% of the Foundation's equity holdings.  Because of Berkshire, the Foundation is heavily overweight the Financials sector at 46.93% (vs 17.58% for the S&P 500).  It is also overweight Health Care, Consumer Staples and Industrials.  The Foundation is underweight Telecom, Consumer Discretionary and Energy, and it has a 0% weight in Technology, Utilities and Materials.  We're guessing that the majority shareholder in MSFT doesn't need anymore Tech stocks in the Foundation, but it's still surprising to see that the fund has no other Technology holdings.  What does that say about the struggling sector?

Gatessector

Below we highlight the holdings of the Bill and Melinda Gates Foundation from its Q4 '07 13-F.  We provide the current portfolio weighting of each stock and its estimated P/E ratio for next year, but the list is sorted by year to date percent change.  Based on its holdings at the end of the year, the equity portion of the portfolio is down just 3% year to date (pretty good compared to the S&P 500's return of -6.79%).  As shown, CNI is up the most at 15%, followed by CMCSK, CLHB, TSCO, KOF and HD.  RDNT, MRK and SGP are down the most this year, and the Foundation's biggest holding (BRK/B) is down 2.24%.

Gatesholdings

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Tuesday
Feb262008

Another First For Google?

While Google (GOOG) was considered one of the poster stocks for the bull market, at a current price of $453.80, it is now trading just 3.5% above its 52-week closing low of $438.70.  If the stock hits this level, it will mark the first time in its history as a publicly traded company that it actually traded at a 52-week low.

Goog_vs_52_wk_low

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Monday
Feb252008

Market Rallies 3 1/2% in Seven Trading Hours: How Did You Do?

The market rallied sharply from 3:15 to the close today on rumors that Ambac (ABK) would be rescued.  For those interested, we put together a table of the best and worst performers in the S&P 100 in the final 45 minutes of the trading day.  This enables investors to see which stocks led the market higher and which ones held the market back.  As shown, MER was the best performing stock in the S&P 100 from 3:15 to the close, gaining 4.82%.  MER was followed by WB, JPM, MS, RF and COF.  Not surprisingly, the 13 best performing stocks in the final 45 minutes were financials.  The only stock in the 100-stock index that failed to go higher during the market rally was MSFT (-14 bps).

Bestworst222_2

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Monday
Feb252008

Google (GOOG) Back to New Lows

On a day when the market rallied 1.5%, you would think Google (GOOG) would be up $10 or $20.  Instead, Google was down another $21 to $486.44.  What is more disconcerting is that the stock took out its prior lows from early February, breaking the support levels that GOOG owners were no doubt watching closely.  Google is another stock that used to lead the market, but like GS and AAPL, it has struggled mightily in recent months.  With the stock breaking down even more from a technical perspective and declining 4.21% on a market up day, its leadership role has clearly been diminished.

Goog2508

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Monday
Feb252008

Help Wanted: New Leadership

Below we highlight the performance of Goldman Sachs (GS), Apple (AAPL) and the S&P 500 since the start of 2004.  Goldman and Apple were the market leaders up until the middle of last year.  Many investors use the action in these two stocks to determine the overall health of the market.  Ever since these two stocks began to stumble, the market has had trouble, and it hasn't gotten better for them in recent months either.  Goldman has gone from $247 to $175 since late last year, and Apple has moved from just over $200 to its current level near $120.  Following a market decline, it's often said that new leadership emerges, and while Ambac (ABK) and MBIA (MBI) have been moving markets lately, they probably are not the type of names we should be pinning our hopes on.

Aaplgsspx

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Monday
Feb252008

Bespoke's Sector Snapshot

Below we provide our trading range charts for the S&P 500 and its ten sectors.  We also provide some additional technical commentary for most of the charts.  As shown, the S&P 500 is currently in the wedge pattern that most people have been talking about.  When wedges like this form, the move following the eventual break to the upside or downside is more extreme than normal. 

Spx22508_2

The same wedge pattern is currently in place for the Industrials sector as well.  Technology and Telecom remain in downtrends, while Consumer Discretionary recently broke its downtrend and is currently consolidating.  Energy, Consumer Staples, Materials and Utilities have all managed to stay above their lows from late 2007, which is a positive sign for the sectors.

Finlindu

Techenrs

Condcons

Hlthmatr

Utiltels   

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Monday
Feb252008

Greenspan's Oil Call

Alan Greenspan is making headlines again this morning after statements he made in a speech in Saudi Arabia.  The former Fed Chairman said that economic growth in the US has stalled and that the recovery, when it happens, will take longer than usual.  Even more interesting, however, are Mr. Greenspan's comments regarding oil.  Even though he sees a more protracted than average decline in US economic growth, he believes the boom in oil prices is likely to "go on forever" because demand for the commodity is unlikely to weaken.

Before we all go out buying oil futures on Greenspan's comments, we would remind readers of some of his other calls. First, in December 1996 he made his famous irrational exuberance speech where he implied that the market, especially tech, might be overvalued.  The bull market went on for another three plus years. While Greenspan seemed to be bearish on tech stocks in 1996, in March 2000, he couldn't stop singing tech's praises.  As a result of technology's productivity enhancing characteristics, he said that "it has become increasingly clear that this business cycle differs in a very profound way from the many other cycles that have characterized post-World War II America."  We all know what happened next.

Regarding interest rates, in February 2004, Greenspan highlighted the evolving trends in the mortgage industry and said "there are lots of innovative programs, especially targeting low-income and first time buyers."  He went on to suggest that homeowners could save thousands of dollars by switching from fixed-rate to adjustable rate mortgages (We won't even go into how those comments were basically an endorsement about what is going on in the sub-prime mortgage industry). 

Below we highlight a chart of the Fed Funds rate over the last eight years.  Almost right after Greenspan suggested homeowners switch to adjustable rate mortgages, the Fed then went on to raise the rates that these adjustable rate mortgages were tied to!  While his ill-timed calls regarding the stock market are understandable, Greenspan's comments regarding short-term rates are especially puzzling.  Unlike the stock market where he had no direct control, Fed Chairman Greenspan had ultimate control of where the Fed Funds rate was headed.  Suggesting that homeowners migrate out of fixed rate and into adjustable mortgages right before a three-year 5.25% increase in the key short-term rate was not only a bad call, but also irresponsible.

Fed_funds_and_greenpan

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Monday
Feb252008

Yale's Valuation Confidence Index

We recently came across the Yale School of Management Stock Market Confidence Indexes via The Kirk Report and found the information intriguing.  One of the more interesting indices was the Valuation Confidence survey of Institutions.  The index is a survey of institutions on their confidence in the valuation of the stock market.  We plotted the survey in the chart below and compared it to the S&P 500 historically. 

As shown, valuation confidence reached record lows in April 2000 -- just when the market peaked.  It reached record highs in January 2003 -- very close to the bear market bottom.  Based on those two peaks and troughs, the index seems to work pretty well.  Interestingly, confidence in the valuation of the market made another peak in January 2007.  This time the market was making new highs instead of new lows, meaning institutions still viewed valuations as attractive -- completely different than the views from institutions at the highs made in 2000.  Since January 2007, valuation confidence has been declining, however.  It is currently at levels similar to those seen in 2004 and 2005.

Yalesom1

Click here to view this index and the other indices provided by the Yale School of Management.

Monday
Feb252008

Best and Worst Performing US Stocks Year to Date

Below we highlight the best performing stocks in the Russell 3,000 year to date (eliminating stocks currently trading under $5).  Momentum investors like to keep track of these stocks and view their charts to look for big pickups in volume or ones that are trading at good entry points.  There are sure to be at least a few of these stocks on the best performing list at the end of the year as well.  As shown, Stillwater Mining (SWC) is currently the best performing stock in the index in 2008 -- up 95.65%.  EchoStar (SATS) is second at 95.11%, followed by CAO and IDIX.  Currently, there aren't many big-name companies in the top 30, but it's good to see some homebuilders like MHO, PHM and HOV on the list.

Bestworst225

SiRF Technology (SIRF) is currently the worst performer in the index at -73.46%.  SIRF is followed by ARUN (-65.46%), SHOR (-63.64%) and CADX (-61.17%).

Bestworst22508

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Sunday
Feb242008

Summary of Last Week's Bespoke Premium Reports

Below we provide the titles of the in-depth B.I.G. Tips reports we released last 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.  And Premium subscribers also receive many more reports as shown on our Products page.

This week's B.I.G. Tips reports: Loved or Loathed (stocks and sectors with the best and worst analyst ratings), Philly Fed and Recessions (an ominous indicator), Philly Fed and the Markets (market performance following similar low readings), Institutional Holdings (which stocks and sectors have hedge funds been buying and selling), Now vs 1990 (similar patterns emerge), Earnings Reports by Stock (the best and worst stocks during earnings season), Oil vs Oil Stocks (the recent underperformance of oil stocks relative to oil the commodity), Commodities Overbought (commodities ETFs flashing red), Earnings Season: That's a Wrap (which sectors and stocks benefited the most from earnings season), Tomorrow's CPI (typical market performance on days when CPI is better or worse than expected), Earnings Surprises (the change in earnings growth estimates by sector), Retail Sales by Category (charts of all retail sales components).

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Friday
Feb222008

ETFs With The Highest Short Interest

We recently gathered all of the ETFs from our ETF Trends report and calculated their short interest as a percentage of their current shares outstanding.  Many investors look for stocks with high short interest because good news usually sends shares soaring due to short covering.  Oddly, a number of ETFs that we track have much higher levels of short interest than their reported shares outstanding.  This seems to be due to "multiple borrowings" according to Morgan Stanley.

Below is a list of the most heavily shorted ETFs based on short interest as a percentage of shares outstanding.  As shown, reported numbers indicate that more than three times the number of shares outstanding are short for RTH, the retail group ETF.  KCE, USO, IWM, IYR, OIH and IAI are other ETFs whose numbers suggest that more shares are shorted than shares outstanding. 

The next time the market rallies sharply, look for these ETFs to do well.   

Etfshort

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Friday
Feb222008

Another Bite Out of Apple (AAPL)

Apple (AAPL) just broke below its lows of $117.27 from earlier this month, with shares now trading at $117.  The next real level of support for the stock is between $95 and $100.  The stock is now down 42.35% from its high of $202.96 reached on December 27, 2007.  Apple has been a market darling for years now, but this year it ranks at the top of the list of worst performers.  Apple's recent collapse is not helping investor sentiment by any means.

Appl

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Friday
Feb222008

Sectors vs 52 Week Lows

Sectors_vs_lows_5While Financials and Consumer Discretionary Stocks led the market lower initially, the two sectors appear to be taking a breather and passing the bearish baton on to Tech, Telecom, and Health Care.  As shown in the table to the right, these three sectors are the closest to their 52-week lows, while Consumer Discretionary and Financials have managed to stay further above their lows than even the S&P 500.

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Friday
Feb222008

S&P 500 Percentage of Stocks Above 50-Day Moving Averages

Many traders like to monitor the breadth of the market and its sectors by tracking the percentage of stocks that are above their 50-day moving averages.  Currently, 31% of stocks in the S&P 500 are trading above their 50-day MAs.  As shown in the historical chart below, this is not at the extremes we saw when the market made lows in August and January, but the indicator continues to make lower highs just as the market has. 

Spx50day

Looking at the percentage of stocks above their 50-day MAs by sector, Consumer Staples and Utilities surprisingly have two of the lowest readings.  Just 18% of Consumer Staples stocks and 6% of Utilities stocks are above their 50-days.  Energy and Materials are the only two sectors with readings currently above 50%.   

Sector50day

Sector50day1

Sector50day2

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Friday
Feb222008

Would You Buy This?

Last_six_months

Would you buy the above chart?  One person who we guess would not is Hillary Clinton (and we all know how she knows commodities).  While it may resemble the price chart of gold or wheat, the chart is actually the historical Intrade contract for Barack Obama to be the Democratic Presidential nominee.  The contract has risen from 12.5 in November to 80 today.  The Intrade market for Hillary Clinton, however, is looking more and more like a CDO.

Clinton_obama