Tuesday
Jun102008

Lehman (LEH) Downgraded From Outperform to Neutral at Wachovia and Credit Suisse

Two more analysts have thrown in the towel on Lehman.  Wachovia had an Outperform rating on Lehman (LEH) since upgrading it on March 15th, 2007.  They reiterated the Outperform rating 12 times since then, but today, after declining 61% from the upgrade, Wachovia downgraded the stock to Market Perform.  Credit Suisse upgraded Lehman from Neutral to Outperform on October 8th, 2007.  After a 54% decline since the 10/8 upgrade, Credit Suisse downgraded the stock to Neutral today.  Even after today's 2 downgrades, Lehman still has 7 buy ratings, 10 hold ratings and 2 sell ratings.  Are today's multiple downgrades a sign that a reversal is near, or is it just a case of better late than never?

Wachovialeh

Csleh 

Tuesday
Jun102008

Global vs US Sector Performance

52wkchangeWe recently gathered the 52-week change of MSCI's World sector indices to see how global sector performance compares to domestic sector performance.  The performance numbers are all in US dollars.  As shown in the table at right, Materials have shown the biggest difference between global and domestic performance.  MSCI's World Materials index is up 22.2% over the last 52 weeks, while the S&P 500's Materials sector is up just 10.1%.  Financials in the US are down much more than they are globally over the last year.  The S&P 500 Financials sector is down nearly 39%, while globally Financials are down 27%.  The only US sector that is outperforming its global counterpart is Energy, and it's not by much.  The S&P 500's Energy sector is up 24.7% over the last 52 weeks, while MSCI's World Energy index is up 24.3%.

52weekchange

Tuesday
Jun102008

Bespoke's Commodity Snapshot

Below we highlight our trading range charts for ten major commodities.  The green shading represents 2 standard deviations above and below the commodity's 50-day moving average, and moves above or below this area are considered overbought or oversold.  As shown, oil and natural gas are just below the top of their trading ranges, but corn is actually the most overbought of them all.  Corn's 13% rally over the last 8 trading days has put it 2.68% above the top of its trading range.  Precious metals, wheat, orange juice and coffee remain in neutral territory.

Oilnatg

Goldsilver

Platcopp

Cornwheat

Ojcof_2

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Tuesday
Jun102008

Largest One Day Increases in 2-Year Yield

Yesterday's 14% increase (33 bps) in the yield of the Two-Year US Treasury Note represents the fifth largest one-day increase since 1977.  We looked to see how stocks have historically performed following similar large moves.  As shown in the table, returns have generally been positive as investors continue to move out of bonds and into stocks.  Even more interesting, however, is that five of the ten largest one-day increases in the yield have all come this year.

Largest_increases_in_2_yr_yield_3

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Monday
Jun092008

Oil's Sixth Largest Point Drop!

If someone told you oil had its sixth largest point drop in over 20 years today, you wouldn't expect the chart to look like the one below, but after gains of $5.5 and $10.75 last Thursday and Friday, you have to squint to see today's loss of over four dollars.

Oillast_12_months_2

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Monday
Jun092008

Bespoke's Torture Index

A few months ago, we created the Bespoke Torture Index for our Premium members.  This index combines the recent performance of a number of assets and combines them to show how much pain US individuals are going through.  The index takes into account the one-year performance of stocks, the dollar, oil, gold and commodity prices.  For oil, gold and commodities, we use the inverse of the one-year performance, so when they are going up in price, they are going down in our Torture Index.  We then average all of these one-year performances to get the final Torture Index number.  The lower the number, the more pain we're in.

All five inputs going down is the worst possible scenario, and this has indeed happened over the last year or so.  As of Friday's close, the Torture Index was at -41.37, which is the most extreme it has been since early 1980.  But how low can we go?  The worst the Torture Index has ever been was -64.75 back in early 1974. 

To view the Torture Index on a regular basis, become a Bespoke Premium member today.

Tortureindex

Monday
Jun092008

Oil vs Stocks

First it was $50. Then it was $75. Then it was $100.  Over the last several years, economists have speculated where the economy's breaking point would be with regards to the price of oil.  A look at last week's trading of the S&P 500 versus oil shows that at $130 per barrel things are at least bending.

Oil_vs_sp_500_06020606

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Monday
Jun092008

Biggest Winners and Losers Since the 5/19 Top

The S&P 500 is now down 4.62% since it recently peaked on May 19th.  Below we highlight the best and worst performers in the index since then.  The list of worst performers is dominated by Financials and Consumer Discretionary stocks.  MBIA and AMBAC have been the worst performers, down 43% and 37% respectively.  Year to date, MBI is down 71% and ABK is down 91%.  Homebuilder CTX is down the third most at -30.39%.  Other notables on the losers list include Ford (F), Lehman (LEH), General Motors (GM), and Merrill Lynch (MER).

The list of best performing stocks is topped by two tech companies - Jabil Circuit (JBL) and Compuware (CPWR).  Anheuser-Busch (BUD) ranks third with a gain of 13.31%, and DELL, which reacted positively to its most recent earnings report, ranks fourth at +11.98%.  Other notables on the winners list include Monsanto (MON), SLM, NSM, AET and BIG (which continues to be the best performer in the S&P year to date).

Biggestlosers

Biggestwinners

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Monday
Jun092008

Bespoke's Sector Snapshot

After a downright depressing Friday, the technicals of the S&P 500 and some of its sectors have taken a big hit.  The S&P 500 broke below its 50-day moving average as well as the short-term uptrend it had formed off the March lows.  While the index is close to oversold levels (one standard deviation below its 50-day), it has been no stranger to extreme oversold levels (below the green shading) over the past year.  Friday also saw Financials, both Consumer sectors, Industrials and Health Care all move to oversold levels.  The struggling Financial sector even moved below its March lows.  On the flip side, Technology, Telecom, Energy, Materials and Utilities are all closer to the top of their trading ranges than the bottom.  We'll see if this sector divergence continues this week.

Spxte_3

Finlindu

Inftenrs

Condcons

Hlthmatr

Utiltels_2

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Friday
Jun062008

Learn More About Bespoke Products

For Think B.I.G. readers that are unfamiliar with the many unique reports we issue to Bespoke Premium subscribers, below we provide examples of a number of them.  From in-depth economic indicator analysis, to bi-monthly short interest readings, to earnings estimate revisions, ETF analysis, daily upgrades/downgrades, and concise sector analysis, Bespoke Premium keeps subscribers on top of today's difficult markets.  And don't forget our Daily Morning Lineup that traders and investors use to get their day going each morning.  Click the thumbnails below to view sample reports of the different types of analysis we issue daily at Bespoke Premium - all for just $1 a day.  Click here to subscribe and receive this unparalleled stock market research at a great price.

Economic Indicator Charts and Summary; Short Interest Report

Earnings Estimate Revisions; Market Indicator Charts

Weekly Sector Snapshot; Sector Weight Analysis

Dynamic Upgrades/Downgrades Report; ETF Trends Analysis

Daily Morning Lineup

Please click here to learn more or subscribe now.

Friday
Jun062008

Dow -3% Days

Today's decline of 3.24% for the Dow was the first -3% day since February 27th, 2007, and just the third of the bull market (if it still is one) that started in October of 2002.  Below we highlight all -3% days for the Dow Jones Industrial Average post WWII.  The average change on the day following the 60 prior occurrences has been 0.11%, while the average change over the next week has been 0.28%.  Going back 10 years, the average performance on the next day has been 0.63%.

Dow3

Friday
Jun062008

Looking Forward to Monday?

It's not often that people look forward to Mondays, but based on one piece of market analysis, it could be a lot better than today.  With the S&P 500 currently down 1.88%, the index is set to have been up more than 1.5% yesterday and down more than 1.5% today.  Over the last 50 years, this has happened just 30 other times.  The average change following these 2-day whirlwinds has been 0.14% on the following day and 0.56% over the following week.  During the current bull market (since 10/9/02), the occurrence has happened 5 times, and the index has been up more than 1.2% the next day every time for an average change of 2.17%.  Looking at today's declines, Monday can't get here quick enough.

Spx606

Friday
Jun062008

Triple Crown and Stocks: The Big Brown Sell Off?

With tomorrow's racing of the Belmont Stakes, all eyes will be on Big Brown as the horse attempts to win the Triple Crown for the first time since 1978.  To horse around a little, we looked to see how stocks have performed during Triple Crown years, and the trend is disconcerting.  Of the eleven prior winners, three occurred during the Great Depression and three occurred during the 1970s - not exactly good years for the stock market.  In total, the average performance of the S&P 500 during years when there was a Triple Crown winner was a decline of 4.2% with positive returns in only three out of eleven years (27.3%).

Triple_crown_3

While there have been eleven Triple Crown winners, there have also been 20 Triple Crown misses, where a horse won the first two legs, but failed to win the Belmont.  In these years, the performance of the Dow was considerably better with an average return of 7.8% and positive returns in fifteen out of twenty years (75%).  For reference, the overall average return of the S&P 500 over the same period has been a gain of 7.6% with gains in 63 out of 96 years (65.6%).  For the bulls, this gives them even more reason to root for Casino Drive.

Triple_crown_misses

Friday
Jun062008

Unemployment Rate Jumps By Fastest Rate Since 1975

Today's 10% rise in the Unemployment Rate from 5.0% to 5.5% marks the largest monthly increase since January 1975, and the twelfth largest increase since 1950.

Unemployment_rate_largest_increas_2   

The individual components of the report show that the largest area of weakness was among 16 to 19 year olds (it looks like a lot of kids will be playing video games this Summer).  On a positive note, the rate for married men and married women only rose by slightly more than 3%.

Unemployment_rate_5

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Friday
Jun062008

Percentage of Stocks Above 50-Day Moving Averages

Below we hightlight the percentage of stocks in the S&P 500 and its ten sectors that are trading above their 50-day moving averages.  This is a good measure of breadth to see how healthy various areas of the market are.  It's a good sign when more than 50% of stocks are above their 50-days, and as shown, the level for the S&P 500 is currently at 63%. 

The only two sectors with less than 50% of stocks above their 50-days are Financials (42%) and Consumer Discretionary (48%).  Utilities, Telecom, Energy and Technology currently have the highest percentage of stocks above their 50-days.  After hitting 0% in early January, 76% of stocks in the Tech sector are now back above their 50-days.

Spx50day

Finlindu50day

Inftenrs50day

Condcons50day

Hlthmatr50day

Utiltels50day