Tuesday
Jun172008

Key ETFs Furthest Above and Below 50-Day Moving Averages

Each day in our ETF Trends report available to Bespoke Premium members, we provide overbought/oversold statistics for more than 200 ETFs.  Below we highlight the key ETFs that are currently trading the furthest above and below their 50-day moving averages.  When ETFs get significantly above their 50-days, the risk/reward tradeoff for bulls starts to lean towards the risk side.  As shown, Energy and Energy stock ETFs currently dominate the overbought list.  The Oil&Gas Exploration ETF, XOP, is the furthest above its 50-day at 12.45%, followed closely by UNG at 12.28%.

On the oversold list, the Banking ETF (KBE) is at the top at -16.1%.  KBE is followed by the Regional Bank ETF (RKH), the India ETN (INP), and the Homebuilders ETF (XHB).  Other notables on the list include XLF, FXI and EEB.

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Etfsfurthestabove

Etffurthestbelow 

Tuesday
Jun172008

Oil Now More Popular Than Real Estate

The Google Trends site is a useful tool to analyze the search habits and sentiment of internet users around the world.  As a clear sign that the real estate bubble is dead and oil prices are now on everyone's mind, Google searches for "oil" have recently surpassed searches for "real estate."  Google Trends now allows users to download the historical search data to a CSV file, so we have done that and created a historical chart of the two searches below.  As shown, oil's runup in 2008 has moved searches for it higher, while searches for "real estate" have been in a downtrend since 2004. 

Oilrealestate

Tuesday
Jun172008

Goldman Sachs Beats Estimates by $1.16

Goldman Sachs (GS) reported earnings per share of $4.58 versus the average analyst estimate of $3.42.  Below we highlight the second quarter estimates for 20 analysts that cover Goldman.  The red and green lines indicate the change in estimates from where they were four weeks ago.  As shown, analysts were bunched up between $3 and $4 per share for Goldman.  Nine analysts lowered their estimates over the last month from levels that were much closer to the actual numbers than Goldman reported today as well.  Clearly they should have stuck to their guns.

Gsepsestimates_4

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Tuesday
Jun172008

Fed Headlines

Whenever the markets start to over or under estimate the direction of the Fed's future rate policy, an article usually appears in the Wall Street Journal or the Financial Times quoting 'senior Fed officials' who say the market may have it wrong.  It has also been our experience that the degree to which the market deviates from the Fed's views will also help to determine where the article appears.  When the market's view only differs slightly from the Fed's, the story will usually appear in one of the inside sections of one of the papers.  However, when there is a larger gap in opinion, the story usually shows up on the front page. 

With that in mind, the market's recent view that the Fed will be hiking rates sooner rather than later seems to be misplaced, as front page headlines on both the Financial Times and the Wall Street Journal suggest that the Fed is not about to pull the trigger and start raising rates.

Headlines_061708_2 

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Tuesday
Jun172008

Goldman Sachs Historical Earnings

We grabbed the historical earnings reports for Goldman Sachs (GS) from the Bespoke Earnings Report Database to see how the stock has traded recently on the day of its quarterly releases.  Since the credit crisis began, the company has had three prior quarterly reports, and as shown, it has gapped up at the open each time.  Following its last report (3/18), the stock gapped up nearly $14 and went up another $10.63 from the open to the close for an overall point change of $24.57 on the day.  Following the two reports prior to the last one, however, the stock gapped up at the open then headed lower from the open to the close.  One other thing worth noting is that the stock has been higher one week from the open following all three reports by an average of 4.98%.

Gseps

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Tuesday
Jun172008

Oil Outperforming Oil Stocks

Below we highlight the ratio of oil stocks to the price of oil.  This ratio divides the price of oil into the price of the S&P 500 Oil&Gas sector that has been around since 1989.  When the line is falling, oil is outperforming oil stocks (and vice versa for a rising line).  Since the start of 2007, oil has been outperforming oil stocks in a steady fashion.  The ratio recently hit its lowest level since November 1992, taking out lows made in early '03 and late '04.  At some point, the line will rise again, but only time will tell when that happens.

Oiloilstocks

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Monday
Jun162008

Lowest P/E Ratios in the Nasdaq 100

Below we highlight the 25 stocks in the Nasdaq 100 with the lowest estimated P/E ratios for the current year.  As shown, Flextronics (FLEX) currently has the lowest at 8.93, followed by CDNS, AMGN and LRCX.  One of the more surprising valuations on the list is that of Garmin (GRMN).  Garmin is the GPS-maker that was once one of the most loved stocks on the street.  After hitting $123.80 at the end of October, however, the stock has collapsed and is down 53% year to date.  Its current price of $45.85 gives it an estimated P/E ratio of 11.35.  Right behind Garmin on the list is Steel Dynamics (STLD).  Its P/E ratio is 11.58, but the stock has gone in the complete opposite direction of GRMN this year -- up 32%.  With estimated P/E ratios at about the same low levels, which stock is better?  The one that is up 32% year to date or the one that is down 53%? 

Nasdaq100

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Monday
Jun162008

Expected Earnings Growth Through Q1 '09

Earlier we posted estimates for Q2 earnings growth.  Below we highlight expected year-over-year quarterly earnings growth from Q2 '08 through Q1 '09.  As shown, things are expected to get progressively better after the current quarter, but it's important to remember that the bar has been set much lower for growth since earnings didn't really start to get weaker until Q3 '07.  As an example, Financials are expected to see year-over-year earnings growth of 452.7% in the fourth quarter versus Q4 '07.  Technology, Energy and Consumer Staples are expected to provide the most consistent earnings strength over the next four quarters.

Sectorepsgrowth

Sectorepsgrowth1

Sectorepsgrowth2   

Monday
Jun162008

Expected Second Quarter Earnings Growth

This week is somewhat of a practice round for second quarter earnings season that really kicks off in early July.  Along with FedEx (FDX), which reports on Wednesday, Morgan Stanley (MS) and Goldman Sachs (GS) report their numbers this week.  Since earnings season is almost upon us, we thought we'd highlight the current growth expectations for the S&P 500 and its ten sectors.  In the first chart below, we highlight year-over-year growth expectations for the S&P 500 in Q2 '08.  At the start of the year, estimates were actually positive at 3.2%, but they have steadily drifted lower and currently stand at -7.7%.

The bottom chart looks at current Q2 growth estimates for the ten S&P 500 sectors.  Once again, Financials and Consumer Discretionary are the main cause for the negative overall number.  As shown, Financial earnings are expected to be down nearly 46% from the second quarter of last year.  Consumer Discretionary ranks second worst at -19%.  On the positive side, Energy is not surprisingly expected to see the strongest growth at 20.5%.  Energy is followed by Technology at 12%, Consumer Staples at 8.6%, and Health Care at 5.9%.

Epsgrowthq2

Epsgrowthsector

 

Monday
Jun162008

Bespoke's Commodity Snapshot

Below we highlight our trading range charts for ten major commodities.  The green shading represents between one and two standard deviations above and below the commodity's 50-day moving average.  When prices move above the green shading they are considered overbought (and oversold for moves below the green shading). 

It's no surprise that the price of oil is trading at the top of its range.  The last time it traded close to oversold territory was in early February when all commodities experienced a selloff.  Since then, crude and natural gas have diverged from the rest of the bunch.  Gold, silver, copper and platinum continue to trade sideways or in downtrends, and the same goes for orange juice and coffee.  Flooding in the Midwest has caused corn and wheat prices to spike once again.  As shown below, corn prices went parabolic last week.

Oilnatg

Goldsilver

Platcopp

Cornwheat

Ojcof

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Monday
Jun162008

Option Expiration Weeks

A look at historical returns during option expiration weeks shows that the week is opening off according to script.  Since 2006, Mondays have typically been the worst day of the week, as it is the only one with an average return that is negative (-0.08%).  On Tuesdays, things get a little more dicier.  While it has the best overall average return (0.33%), it is also the most volatile.  On Tuesdays of expiration weeks, the S&P 500 has had a 1% move (up or down) 45% of the time.  Things typically start to settle down on Wednesday.  While it does not have the highest average return (0.21%), it has been the most consistently positive, with gains 69% of the time.

Option_exp_week

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Monday
Jun162008

AAII Bearish Reading Above 50%

Last week's American Association of Individual Investors' (AAII) survey of investor sentiment showed that bearishness among this group is back above 50%.  As of June 12th, the percentage of bullish investors came in at 31.25%, 53.58% were bearish, and 15.18% were neutral.  This week's bearish reading was the 11th time in the last year that negative sentiment based on this survey exceeded 50%.  The only other time since this survey began in 1987 that bearish sentiment reached these levels this many times in a one-year period was back in 1990-1991, when there were 14 weekly readings of bearish sentiment above 50%.

Aaii_bearish_above_50

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Saturday
Jun142008

This Week's B.I.G. Tips Reports at Bespoke Premium

Below we provide the titles of the in-depth B.I.G. Tips reports we released this 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. 

This week's B.I.G. Tips reports: The Week In Review (summarizing the week's events), Extreme Divergence in Sector Performance (Energy and Financials move in opposite directions), Treasury Yields Rally (what happens to stocks and bonds after yields rally as much as they have?), Retail Sales by Category (interesting charts provide a breakdown of this month's Retail Sales report), Financial Declines (when will the bleeding stop), Largest Four-Week Declines in Oil Inventories (how do oil inventories affect oil prices), Global Technicals (chart analysis of 21 country stock markets), Throwing Good Money After Bad? (should investors be helping Financial firms raise extra capital?), Market Bottoms and 52-Week Lows (has the bottom been made yet?).

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Friday
Jun132008

Links for Friday the 13th

As if the market hasn't been bad enough lately, tomorrow is Friday the 13th.  For those readers who are superstitious, we calculated the historical performance of the S&P 500 on these days going back to 1960.  The average return on Friday the 13th has been a gain of 0.03% which is right inline with the average of all days since 1960.  Over the last ten years, though, the returns improve significantly with average returns of 0.28% and positive returns 63% of the time.

Friday_13th_61208_3

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Friday
Jun132008

Stocks Down, Bonds Down: Global Returns

Below we highlight the year-to-date changes of major equity indices and ten-year government bond yields for a number of countries.  As shown, the majority of equity indices are down, while the majority of bond yields are up (bond prices down).  Across the globe, stocks and bonds haven't really worked this year, as the money has all flowed into commodities.  China's Shanghai Composite is still by far the worst performing index at -45%.  China is followed by India, Hong Kong, Italy, France and Germany.  The US has held up relatively well, ranking 6th out of 21 countries analyzed in terms of market performance.  Mexico, Brazil, Canada and South Africa are the only countries with positive stock market returns.

Bond yields have risen the most in Singapore, where their 10-year government bond rate has gone up 47% in 2008.  South Africa, Japan, the UK and Switzerland trail Singapore with the highest rises in yields.  Again, the US hasn't done poorly when compared to other countries.  With yields up just 6% this year, government bonds here haven't gotten hit nearly as hard as elsewhere.

Ytdstocksbonds   

Equityperf

Govtbondyields

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