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

Thursday
Feb212008

T. Boone Pickens Q4 Stock Holdings

With T. Boone Pickens dominating the oil news today with his call for short-term declines from current levels, we updated our table of Mr. Pickens' hedge fund (BP Capital) holdings from his Q4 '07 13-F.  As of the end of last year, his biggest holding remained Suncor Energy (SU), and he increased his share amount in the stock by 18,000 from the end of the third quarter.  XOM is his second biggest holding, followed by OXY, DNR and SLB.  From the 13-F, two stocks were liquidated from his fund in Q4 -- RIG and GSF.  SGR was the only stock that remained in his portfolio that he sold shares in.  Mr. Pickens also added two new companies to BP Capital in the fourth quarter of last year.  He added nearly 100,000 shares of Valero Energy (VLO) and 392,500 shares of Clean Energy Fuels (CLNE).

Based on his holdings at the end of last year, these positions are collectively down 7.71% on the year.  ABB, JEC, SLB and KBR are down the most, while DNR, SGR, IOC and GBX are the only stocks that are up. 

Bpickens2

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Thursday
Feb212008

Gold vs. Gold Stocks

Since we've been on somewhat of a commodities kick lately, we decided to take a look at how gold has been trading relative to gold mining stocks.  The chart below highlights the ratio of the Amex Gold Miners Index to gold the commodity (gold stocks/gold).  When the line in rising, gold stocks are outperforming gold.  When the line is falling, gold is outperforming gold stocks. 

Throughout the late 90s, gold outperformed gold stocks, but that reversed in the earlier part of this decade through the start of 2004.  Since 2004, however, the two have been trading relatively inline with each other, with gold stocks lagging for about a year and a half now.  The ratio is currently just slightly above the average since 1993.  But if the trend continues downward like it did in the late 90s, gold will continue to outperform.

Goldgoldstocks1

For those interested, below we provide the stocks that make up the Amex Gold Miners Index along with their performance year to date.

Amexgold_2

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Thursday
Feb212008

Commodities: The Past and The Future

Below we highlight the one-year price change (%) of 18 commodities.  As shown, the gains have been enormous for many of them, with wheat leading the way at 99%.  Lead, platinum and soybeans rank 2nd, 3rd and 4th, all with gains of more than 70%.  Oil is up 65% and gold is up 39% (doesn't it seem like gold is up much more than that?).  Only two commodities are down over the past year -- Zinc and Nickel.

Commoditypricechange

So what are analysts expecting for these same commodities going forward?  Bloomberg tracks the consensus price forecasts of commodity analysts, and below we highlight the difference between current prices and year-end 2008 price expectations.  While only two commodities are down over the past year, only two are expected to be higher than they are now by the end of 2008.  The two commodities that are up the most over the past year are expected to go down the most going forward.  Oil is expected to decline 19% to $80/barrel, and Gold is expected to decline 15% to $807/ounce.       

Commodityexpectations_2 

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Thursday
Feb212008

Corporate Spreads Closing In On All-Time Highs

As a sign that the issues in the US credit markets still have a ways to go before being resolved, yesterday, the spread between US corporate bonds and comparable Treasuries reached its highest levels since October 2002 (240 bps).  While spreads still have a ways to go before matching their all-time highs in the Fall of 2002, at the rate they have been increasing since last Summer, it may not take long.

Corporate_bond_spreads

Wednesday
Feb202008

Bespoke on Bloomberg TV and CNBC

Street_signs_4Bloomberg_4Bespoke's Justin Walters will appear on Bloomberg TV at 8:10 AM ET tomorrow morning.  Later in the day, Paul Hickey will appear on CNBC's Street Signs with Erin Burnett just after 2 PM ET.  We'll be discussing recent B.I.G. Tips reports on commodities, stocks and ETFs.