While the S&P 500 is less than 12% off of its intraday high from October, individual stocks are faring far worse. As the chart to the right indicates, the average stock in the S&P 1500 is now over 30% off of its 52-week high. Grouping stocks by their market cap shows that while large caps have been holding up better than average, small caps have been decimated.
On a sector basis, while financials are what led the market lower, it is consumer stocks that have been hit the hardest, with an average decline from highs of 43.4%. Perhaps the most surprising sector is technology. While tech stocks led the market higher in 2007, the recent declines have put the average stock in that sector 33.6% below its 52-week high. So much for follow through.
Bloomberg released their most recent survey of 66 economists on a number of economic indicators earlier this week. Below we highlight the consensus estimates along with where they stood last month. As shown, while 4th quarter '07 GDP estimates went higher, all quarters in 2008 were lowered. Consensus estimates still aren't pointing towards recession however. Employment rate and CPI estimates ticked slightly higher in the past month, while Fed Funds Rate estimates ticked lower.
With the Tech sector's double-digit declines to start 2008 as well as its expected double-digit earnings growth over the next few quarters, many stocks in the sector have seen their PEG (p/e to growth rate) ratios fall well below one. A PEG ratio below one is seen as cheap for a Tech stock. Currently, stock prices are completely underestimating forward earnings estimates, and if earnings can even come inline with forecasts, it will leave valuations at extremely attractive levels. Below we highlight Russell 1,000 tech stocks with PEGs less than one. As highlighted with red shading, many stocks are already down more than 10% year to date on no news.
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One would think that if an analyst lowered the price target for a stock they cover by more than 68%, their outlook for the stock wouldn't be too rosy. Citigroup, however, thinks otherwise. Today, the Citi analyst covering MBI lowered the firm's price target on the stock from $60 to $19, but kept the stock rated a buy. Below we highlight the historical recommendations and price targets the analyst has had on MBI. I guess if they liked it at $60, they have to love it at $14.
There was an unusually large amount of both upgrades and downgrades today, and below we list them and provide our dynamic price analysis for each. Each morning at Bespoke Premium, we put out a similar report that not only shows which stocks were upgraded and downgraded, but also how the stocks have reacted on previous analyst actions. This gives investors a critical piece of information that is lacking in the other daily upgrade/downgrade reports that are out there.
In the table below, we highlight where the stock was upgraded or downgraded and the average price change on days when the stock has been upgraded or downgraded in the past. We also highlight the average performance of stocks that were upgraded or downgraded at various firms.
As an example from today's report, DELL was upgraded at JP Morgan from Neutral to Overweight. When DELL has received an upgrade in the past, it averages an opening gap of 1.94% and an open to close change of 0.39%. This means that DELL typically gaps up and then continues higher from the open to the close when it gets upgraded. Additionally, when JP Morgan upgrades a stock, it usually gaps up about 2.5% and then goes up an additional 25 bps from the open to the close.
Other key upgrades today were CAT, HON, NOK and VZ. Key downgrades were AXP, GWW and JNPR.
If you would like to receive the Bespoke Dynamic Upgrades/Downgrades report each morning, subscribe to Bespoke Premium today! We also have a historical Upgrades/Downgrades database showing all analyst actions for over 2,000 stocks since 2002. For each upgrade or downgrade, we also highlight the stock price performance on the day of the report. If you would like to purchase this database, please call 914-315-1248 or email firstname.lastname@example.org
Below we highlight our trading range charts of 22 countries that have trackable ETFs. For a list of these ETFs, click here. When the price moves into the green zone, it is between 1 and 2 standard deviations below its 50-day moving average. When it moves below the green zone, it is more than 2 standard deviations below its 50-day and in extreme oversold territory. Currently, Australia, France, Japan, South Africa, Sweden and Spain are in extreme oversold territory. On the upside, China, Brazil, India, Russia and Malaysia are still holding up well. Malaysia is actually in extreme overbought territory, hitting record highs today on hopes that a general election will be held soon.
lt's not often that a largecap stock like American Express gaps down as much as it is in the pre-market this morning. Yesterday after the close, the company announced a fourth-quarter writedown of $275 million to cover customer defaults. The stock is currently trading down 6.62%, which would be the biggest down gap since 9/17/01. Below we highlight all AXP opens of -5% or more since 1990, along with how the stock performed from the open to the close.
We regularly track a variety of sentiment and confidence indicators to get read on what other investors are thinking. Whenever sentiment goes too far to one extreme, it is time to look for a move in the opposite direction. With that being said, a look at the current state of various sentiment measures shows that investors, and the public overall, are looking at the glass as less than half empty. Below we highlight some of the more widely quoted sentiment and confidence measures. As the chart illustrates, with the exception of the Investor's Intelligence Bullish Sentiment, all of the indicators we track are at or very close to their lows of the last year.
While sentiment is currently negative versus its short-term range, we also noticed that bullish sentiment among individual investors is in a much longer term downtrend. Below we highlight the historical range of the AAII weekly survey which shows the percentage of bullish investors. While the indicator generally trended higher from 1988 through 2002, since then the trend has clearly been down.
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We recently broke the S&P 500 into deciles (50 stocks in each decile) based on a stock's institutional ownership. When then calculated the average year to date performance of each decile. As shown in the chart below, the decile of stocks with the highest institutional ownership is by far down the most. The two deciles of stocks with the least amount of institutional ownership are holding up the best year to date. Clearly, institutions are unwinding positions. This is probably due to a combination of increased bearishness, investor redemptions, and a decrease in the amount of leverage allowed.
We have just updated our earnings calendar to show earnings reports from 1/10-1/25.
In order to help you stay on top of earnings season, Bespoke has created an in-depth calendar that highlights over 2,000 US stocks due to report in the next month and a half. The calendar is more advanced than typical earnings calendars because it includes detailed information about each stock's historical reports. We looked at each company's quarterly reports going back to the end of 2001 and calculated the percentage of the time the company has beaten or missed EPS and revenue estimates as well as guided higher (we only provide beat rates for companies that we have at least 8 historical report dates for). In addition, we also provide the average one-day price change following earnings reports to highlight how the stock typically trades on earnings. The average absolute one-day price change is included as well to highlight the stock's volatility in reaction to earnings.
Bespoke will continuously update its earnings calendar to show the next two weeks worth of earnings reports. However, if you sign up for our www.BespokePremium.com service, you will receive a more in-depth interactive file of the entire earnings season calendar that is sortable by stock and all other categories.
To access the basic Bespoke Earnings Calendar, click the button below or at the top right of this page. For the premium interactive calendar, subscribe at www.BespokePremium.com.
As shown in the chart of China's Shanghai Composite, the index recently held its long-term uptrend, made a double bottom, and broke its short-term downtrend.
While Chinese equity markets have held up well and are up for the year, many Chinese ADRs trading on US exchanges have been hit hard. As shown, CSUN is down 26%, GRRF is down 19.5%, CNTF is down 19% and TSL is down 18.6%. Currently, 72% of the Chinese ADRs that we track are down for the year. Have these ADRs been unjustly punished because they are trading on US exchanges?
Below we highlight the trading range charts of the S&P 500 and its ten major sectors. When the price trades below the green zone, it has reached extreme oversold territory and vice versa for the red zone. As shown, the S&P 500 is trading well below the green zone, but it also broke below the August and November lows, signifying a shift from a range bound market to a downward trending market.
Some sectors look like death while some look great. Financials and Consumer Discretionary continue their downtrends, but they are trading at the bottom of their downward channels, and a bounce to the top of their channels should come soon. Unfortunately, Industrials and Technology recently broke key support levels, but they remain very oversold as well. On the positive side, Energy, Consumer Staples and Utilities look great.
Since Alcoa's (AA) quarterly report kicks off earnings season, we figured we would highlight it as an example of our Bespoke Interactive Earnings Report Database. Below is a snapshot of the "Stock Query" lookup in the Earnings Database. Entering the ticker AA brings up all of Alcoa's historical reports going back to 2001. It highlights how the stock did versus earnings and revenue estimates, forward guidance, and the stock price reaction on the first trading day following the report. It also summarizes the typical earnings report for the stock and the average performance when it gaps up or down on earnings or beats or misses estimates. Our database can run this query on over 2,500 stocks.
Currently, Alcoa is up about 60 cents in pre-market trading. Historically, when the stock has gapped up on earnings, it has averaged a decline of 1.42% from the open to the close.
Want to know how stocks in your portfolio typically react to earnings? Please email email@example.com or call 914-315-1248 to inquire about the Bespoke Earnings Report Database.
With earnings estimates for companies getting cut sharply over the past month, we set out to find the few that have actually seen increases in earnings expectations. Below we highlight stocks from the Bespoke Earnings Calendar that are reporting between now and February 7th that analysts have raised estimates on over the past month. As shown, STT has seen its earnings per share estimates rise 27 cents to $1.31 over the past 4 weeks. With so much negativity out there, a premium will be put on the few bright spots out there this earnings season.
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