Thursday
Mar272008

Bespoke's Sector Snapshot

After a nice rally off of the March 10th lows, below we highlight our trading range charts of the S&P 500 and its ten sectors.  These gains finally put a dent in the short-term downtrend of the S&P 500.  As shown in the first chart below, the index broke through the downtrend a couple of days ago, and it is now drifting on top of the new support line.  There is still a longer-term downward trend channel in place, but we won't have to worry about breaking that anytime soon. 

Spx

On a sector basis, a couple have moved to overbought territory (red shading).  Industrials, Consumer Discretionary and Consumer Staples all moved into the red zone in recent days.  In downward and sideways markets, these overbought levels are usually met with resistance.  Looking at the long-term chart of Financials, even after the sharp rally off of the lows, the sector still remains in a downtrend.  As shown in the charts, Health Care and Utilities failed to even move out of oversold territory during the recent rally.

Finlindu

Inftenrs

Condcons

Hlthmatr

Utiltels

     

Thursday
Mar272008

Shares Held By Institutions Outperform

We recently performed our decile analysis on the S&P 500 to see how the stocks most and least widely held by institutions have performed since the short-term bottom was reached on March 10th.  Each decile is made up of 50 stocks, with decile one representing the stocks most widely held by institutions and decile 10 representing the stocks least widely held.  As shown in the chart below, the decile of stocks most widely held has been the best performer since the 3/10 lows, indicating that institutions have been adding more equity exposure to their portfolios.

Decile327

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Wednesday
Mar262008

Shanghai Composite Declines

Since peaking on October 16, 2007, China's Shanghai Composite has fallen 40.8% over a period of 109 trading days.  To put these losses into perspective, we plotted the Shanghai Composite's declines along with the declines of the S&P 500 during its nasty bear market from March 2000 to October 2002.  As shown below, the S&P 500 didn't hit -40.8% until the index was very close to its bottom in 2002, and at its low, the S&P 500 was down 49.1%.  It's hard to get a true feel for the current sentiment in China since we don't live there, but one has to assume that recent months have been very, very painful -- especially for those that were the last to open one of the record 100 million brokerage accounts reached last year.

Spxshanghai

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Wednesday
Mar262008

Credit Spreads Declining...Grudgingly

The Fed's actions on March 16th to keep Bear Stearns (BSC) from going under were meant to ease the situation in the credit markets.  However, while spreads between high yield debt and Treasuries have declined 7.5%, they remain at levels they were at just two weeks ago.  After a run-up of over 250%, you need to squint pretty hard to even see the move.

High_yield_spreads_032608

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Wednesday
Mar262008

Historical Rolling 10-Year Total Return of the S&P 500

Today's front page of the Wall Street Journal has an article highlighting the "lost decade" for US stocks.  The article mentions that the S&P 500 is "up just 1.3% over the last ten years, factoring in inflation and dividends."  In early March, we performed a similar analysis in our "The Lost Decade" post that highlighted the weak performance in equities since the new millennium began. 

We took the 10-year total return performance of the S&P 500 back to 1900 (non-inflation adjusted) and charted the results below.  When the line is highlighted in red, 10-year returns were lower than they are now.  As shown, periods where returns were lower occurred in 1914, 1921, 1932, 1938, 1974 and 1977.  We also highlight years where returns peaked -- 1929, 1959, 1992 and 2000.  While the returns could easily get worse, periods that have been this bad have not lasted longer than 4 years (1937-1941) before they've started to get better.

10yrtotal

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Wednesday
Mar262008

Election Odds Update

Below we have updated our historical charts of the Intrade contracts for the Democratic primary winner along with the Presidential election winner.  The contracts either expire at 0 or 100 based on the outcome of the event.  As shown below, the contract for Obama to be the Democratic nominee is currently trading at 80.5.  Buyers would spend $80.5 to receive $100 if Obama wins.  The contract for Hillary Clinton to win is currently trading at 18.9.  Based on these numbers, the hits to the Obama camp in recent weeks barely budged the odds of him winning the nomination,

Demprimarywinner

The contracts for the winner of the Presidential election, however, do indicate that struggles in the Democratic party have caused traders to increase their bets on John McCain.  As shown, the odds for McCain to become the next President have steadily risen to 39.2 in recent weeks, while the odds for Obama to win have dropped from a high of 57.6 to 47.6.  As shown, Mr. Obama is still currently favored to win in November.

Electionwinner

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Wednesday
Mar262008

Updated S&P/Case-Shiller Housing Numbers

Caseshillertable_2The January 2008 S&P/Case-Shiller housing numbers were released yesterday for 20 US cities.  Over the past few days, we've seen some better than expected housing numbers, indicating that things might be getting "less worse," so it's important to note that these numbers lag by three months.  If things have begun to get better, these numbers will be the last to show it.  Regardless, it's important to highlight which areas of the country have been hit the hardest.

As shown in the table at right, home prices in Las Vegas and Miami fell the most from January '07 to January '08.  Las Vegas also fell the most from December '07 to January '08.  Over that one-month period, Las Vegas fell sharply at 5.1%.  Phoenix was the second worst performer month-over-month at -4.05%.  Charlotte was the only city that saw year-over-year gains at +1.75%.  Charlotte also fell the least month-over-month at -0.15%.  The Composite 20-City index fell 10.71% year-over-year and 2.28% month-over-month.

Below we highlight historical monthly year-over-year changes for all 20 cities and the two Composite indices.

Caseshiller1

Caseshiller2

Caseshiller3

Caseshiller

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Wednesday
Mar262008

S&P 500 Stocks Furthest Above and Below 50-Day Moving Averages

In our last post, we highlighted the percentage of stocks above and below their 50-day moving averages.  Below we highlight the individual stocks furthest above and below their 50-day moving averages.  As shown, Big Lots (BIG) is currently the furthest above at 33.56%.  BIG is followed by DRI, CIEN, CSX, HRB and NUE.  Other names on the list that usually appear on the 'furthest below' list include THC, NYT, KBH, HCBK, DFS and PHM.

Furthestabove

It's not surprising that Bear Stearns (BSC) is the furthest below its 50-day moving average in the S&P 500.  BSC is followed by CIT, ABK, WLP, HUM, NCC and S.  Other notables on the oversold list include LEH, GM, IP, VLO and SNDK.

Furthestbelow

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Wednesday
Mar262008

Market Breadth Looks Much Better

Along with looking at the technicals of simple price charts, we analyze the underlying breadth of indices and sectors by looking at the percentage of stocks above their 50-day moving averages.  Below we highlight these percentages for the S&P 500 and its ten sectors. 

As shown, with the recent break of the S&P 500's downtrend line, the percentage of stocks above their 50-days in the index has also broken out of the range that has been in place since late 2007.  This indicates that the rally has been accompanied by underlying strength.  At 57%, it also indicates that the rally could have further to go, since overbought levels aren't reached until the number hits the 80% mark.

On a sector basis, both Consumer sectors, Materials, Industrials and Technology have the highest percentage of stocks above their 50-day moving averages, while Health Care, Utilities, Telecom and Energy have the least.  Financials are right about inline with the index as a whole.

Spx50day

Finlindu

Inftenrs

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Utiltels      

Tuesday
Mar252008

S&P 500 Closes Above 50-Day Two Days in A Row!

You know it has been a bad market when the first quarter is nearly over and the S&P 500 is just now closing above its 50-day moving average for the first time.  We'll take what we can get though.  Following today's intraday rebound after the much weaker than expected Consumer Confidence report, the S&P managed to close above its 50-day for the second day in a row!  In addition, the index also broke above its downtrend line which had been in place since late November.  As the market digests its gains of the last few days, one sign of the market's health will be a hold above these levels.

Sp_downtrend

While the 58 consecutive trading days that the S&P 500 traded below its 50-day moving average may have seemed like an eternity, since 1928, there have actually been 28 other streaks where the index went as long or longer without trading above it.  The most recent streak ended in August 2002, when the S&P 500 went 86 days without trading above its 50-day.

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Tuesday
Mar252008

S&P 1500 Most Volatile Stocks

For traders with a more short-term time horizon, we have compiled a list of the S&P 1500 stocks which have the largest intraday high/low ranges (based on the average percent spread between the intraday high and low for the last fifty days).  We then grouped the stocks based on whether they have a rising or falling fifty-day moving average. Tickers highlighted in gray are new to the list since last month's screen.

While housing stocks have been on the list for several months now, they have typically been on the list of stocks with falling moving averages.  However, as this month's list highlights, homebuilders are now well represented on the list of volatile stocks in uptrends.

Most_volatile_stocks_032508

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Tuesday
Mar252008

Consumer "Nonfidence"

After a flattish open, the major averages took a hit at 10am with the release of the much weaker than expected Consumer Confidence report.  While economists were looking for the overall index to come in at 73.5, which itself is weak, the actual number came in at 64.5.  While the overall reading was very weak, the expectations component of the report hit its lowest levels since the early 1970s (47.9).

Consumer_confidence

Tuesday
Mar252008

Global Markets Off To The Races

Major global indices are up sharply this morning with Hong Kong's Hang Seng leading the way -- up 6.4% overnight.  While strong overseas markets typically set the tone for a positive open in the US, we would remind readers that most of these indices were closed yesterday in observance of Easter.  Therefore, international markets are playing catch up from yesterday's rally in the US.  As far as today's trading in the US is concerned, many investors are watching the 1,350 level on the S&P 500, where the downtrend that's been in place since last Fall comes into play.

One_day_change_0325_4

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Monday
Mar242008

GOOG Downtrend Broken

After a 45% decline in less than six months, Google (GOOG) shares are up over 7% today.  As a result, the stock has broken its downtrend that has been in place since last December.

Goog_032408_2

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Monday
Mar242008

Bonds Taking a Beating

Bonds are having their worst day since January today as the yield on the Ten-Year Treasury is back above 3.5%.  Below we have updated our trading range charts of international long-term interest rates.  As shown, with the exception of Australia, rates remain in downtrends near their lowest levels in a year.  So while today and the next few days may be tough for bond investors, the longer-term trend in interest rates remains down.

Intrates0324

Intrates0324a

Intrates0324b

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