Monday
Feb042008

Where Do Analysts Think The Dow Is Headed?

Last week we highlighted the various S&P 500 price targets of Wall Street strategists to get a sense as to where they thought the market was headed.  Today, we look at the sentiment of individual analysts by using their price targets for each of the 30 stocks in the Dow.  As shown below, based on the average analyst price target, the Dow is expected to rise by 16% from current levels.  On the positive side, analysts are most bullish on AIG, MRK, HPQ, and MSFT.  For each of these names, they are expecting gains of about 30%.  While none of the Dow thirty stocks are expected to decline, the ones expected to show the smallest gains are JPM, WMT, HD, and C.  While analyst price targets should normally be taken with a grain of salt, it often helps to know what others are expecting.

Targets

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Monday
Feb042008

Bespoke's Country Snapshot

In our last post, we highlighted trading range charts for nine commodities, and below we provide charts of 22 countries that have trackable ETFs.  The top of the red zone is 2 standard deviations above the index's 50-day moving average, while the bottom of the green zone is 2 standard deviations below the 50-day.  The light blue shading represents 1 standard deviation above and below the 50-day moving average.  After trading well below extreme oversold levels, most countries have moved back into neutral territory.

Unfortunately, the recent global market selloff put most country indices in technical downtrends, but Russia, India, Singapore, Brazil and Malaysia managed to hold their long-term uptrends.  For those looking to put money to work, these countries may offer the best opportunities. 

Click here for a list of country ETFs.

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Country1

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Monday
Feb042008

Bespoke's Commodity Snapshot

Below we highlight our trading range charts of nine major commodities.  The green shading represents two standard deviations above and below the commodity's 50-day moving average, and moves above or below this shading indicate overbought or oversold levels. 

Precious metals have taken over as the commodity of choice, with gold, silver and platinum all at the very top end of their trading ranges.  Coffee and corn are also trading near overbought territory, with coffee testing key resistance.  Oil, on the other hand, is stuck in a downtrend and is currently trading closer to the bottom of its range.  Natural gas and orange juice are about in the middle of their trading ranges.

Oilngas

Goldsilv

Platcopp

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Corn    

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Friday
Feb012008

Premium Activity

The market had a busy week, and we issued a number of B.I.G. Tips reports over at Bespoke Premium to cover it.  Below we provide the titles and thumbnails of each of the reports, and 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: Earnings Triple Plays (list of stocks with the best and worst reports), Earnings Season Analysis (sector performance on earnings), Talk About Your Ups and Downs (how the market does after similar volatility levels), February Seasonality (historical February market performance), Tomorrow's Employment Report (sector performance based on a better or worse than expected jobs number), GDP Divergence (a look at the divergence between economists and investors on the economy), Margin Debt (the effect of margin debt levels on equity performance), Fed Days (where we are in the current Rate Cut Cycle), YHOO, GOOG Earnings (typical trading patterns on earnings), Trading Places (a look at the recent performance of China and homebuilders), High Probability Earnings Trades, Earnings Estimate Revisions.

Tip1_3 Tip2 Tip3 Tip4 Tip5 Tip6Tip8 Tip10 Tip7 Tip12 Tip9_2 Tip11_2

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Friday
Feb012008

ISM Commodities Survey

In addition to coming in stronger than expected on the headline number and the prices paid component, Friday's ISM report for January was also higher than expected on another front.  The monthly survey, which measures the number of commodities up and down in price over the month, increased from 15 to 19, bringing the 3-month average up to 16.  This indicator is still well off its highs from 2004 and the levels we saw in early 2007, but any increase is unwelcome and therefore bears watching.

Ism_commodities_0108

Friday
Feb012008

Fourth Quarter EPS Beat and Miss Rates by Sector

With 776 companies reporting since Alcoa (AA) kicked off earnings season on January 9th, we're now more than halfway through the fourth quarter reporting period.  Earlier today, we put out a detailed analysis on how sectors have been performing based on their recent earnings reports in one of our B.I.G. Tips reports.  The report yielded some interesting data for the market going forward. 

Below we highlight a table from the report that shows the EPS beat and miss rates by sector.  As shown, Utilities stocks have beaten estimates the most (just 18 companies have reported though), followed by Materials, Technology and Industrials.  At the bottom of the earnings beat barrel is Financials at 47.3%.  Interestingly, Financial stocks have done exceptionally well this earnings season even though they are beating estimates the least often.  This implies that their beat-downs in the last quarter of 2007 were overdone.

Q4analys

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Friday
Feb012008

Super Bowl Indicator: At Least The Dolphins Are Out of It

With the big game coming up on Sunday, we decided to play with some numbers a little.  While there have been several variations over the years, the Super Bowl Indicator basically says that equities do better when the NFC wins the Super Bowl.  Below we have summarized the average performance of the S&P 500 from the date of the Super Bowl through year end depending on which conference the winner comes from.  As shown, over time, the bias has certainly been in the NFC's favor, with an average gain of 13% and positive returns 86% of the time.

Average_perf_nfc_afc

Turning our attention to individual teams shows that bullish investors should be rooting for the Giants.  The table below shows the average return through year end following the Super Bowl depending on which team won (In order to make the list a team had to win at least two Super Bowls.)  The average return of the S&P 500 following the three Patriots wins (2002, 2004, and 2005) is a decline of 3.6%.  Following Giants wins (1987 and 1991), the average return was a gain of 7.8%.  No matter who wins this year, let's just be thankful that the Dolphins, with their 1-15 record, will be watching from home.  They won the Super Bowl twice (1973 and 1974), and following each victory the S&P 500 declined by 18% and 27%, respectively.

Teams_with_multiple_superbowl_win_2 

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Friday
Feb012008

Magazine Cover Indicator: Is the Housing Bottom In?

We just got our Business Week in, and the cover is pictured below.  We all know the contrarian nature of magazine covers, and with homebuilder stocks already rallying more than 50% off their bottom, it makes the case even stronger that the housing bottom might be in.

Businessweek_3

Spxhome

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Friday
Feb012008

Google Down on Earnings and Yahoo/Microsoft Merger

Google (GOOG) is set to open lower this morning after reporting disappointing earnings and the potential threat from a combination of Microsoft (MSFT) and Yahoo (YHOO).  Below we highlight prior negative gap openings from GOOG from our Bespoke Earnings Database.  As shown, of the three times GOOG has gapped lower, it has finished up from the open twice, and in all three periods the stock closed within two percent of its open.

Goog

Regarding the combination of MSFT and YHOO as a potential threat to GOOG, we think using the Olympic analogy makes sense.  Which would you rather have?  A gold medal, or a silver and a bronze?

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Friday
Feb012008

Best and Worst Performing Russell 3,000 Stocks YTD; IDIX, WCI, IFC and LFG Top The List

Now that we're one month in, below we highlight the best and worst performing stocks in the Russell 3,000 year to date.  We have taken out any stock currently trading below $5 per share.  As shown, IDIX is up the most at 92%, followed by WCI, IFG, LFG and SATS.  So far, 2008's winners are made up mostly of last year's losers - making it the year of the rebound.

Best08

MGI leads the list of worst performers, down 65% on the year already.  MGI is followed by SHOR, CADX, TWIN and ABK.  This list is made up mostly of Technology names.

Worst08

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Friday
Feb012008

Financial Sector P/E Ratio Ticking Higher

In our weekly Bespoke Sector Snapshot available to Bespoke Premium members, one of the categories we highlight are historical P/E ratios.  As shown below, the P/E ratio of the Financial sector has shot up since fourth quarter earnings season began as earnings have been coming in flat and even negative.

Financialspe

We decided to take the P/E back a little further to see where the current ratio of 15.59 compares with historical levels.  As shown, while the spike is significant, it's still below the historical average since 1995.  Usually, spikes in P/E are due to a rise in the price instead of a decline in earnings however.

Financials 

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Thursday
Jan312008

Top Ten Worst Januarys: S&P 500 & Nasdaq

For both the S&P 500 and Nasdaq, this month made the top-ten list for the worst starts in each index's history (For the Dow, this January marked the 14th worst ever).  In fact, for the Nasdaq, this was its worst January in history.  Below we highlight the worst ten Januarys for each index, and how it fared during the month of February and the rest of the year.  Unfortunately for the bulls, while February has a positive bias, the historical record for the rest of the year leans towards the negative side.

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Thursday
Jan312008

Bespoke Money Management

If you're interested in learning about Bespoke Investment Group's Money Management services, please email info@bespokeinvest.com or call 914-315-1248.  We'll send you an introductory packet and then begin to create a personal investment strategy if you wish to form a relationship with Bespoke.  We offer aggressive and conservative equity strategies as well as an all-ETF asset allocation strategy.

Thursday
Jan312008

Is The Hedge Fund Unwind Winding Down?

Earlier in the year, in two reports for Bespoke Premium subscribers we highlighted how the worst performing stocks during the opening days of the year were the stocks which had the highest ownership among large hedge funds and institutional investors.  As shown in the chart below, since the start of the third quarter, the stocks with the highest ownership levels among hedge funds have steadily underperformed the market.

However, as noted in the lower chart, over the last two weeks, the gap between each group's performance has narrowed, indicating that the selling pressure that was evident in names widely held by hedge funds has, at least temporarily abated.  We'll be watching this over the near future, but if this trend continues it will be a good signal for the overall market.

Hedge_fund_holdings_2

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Thursday
Jan312008

S&P 500 Stocks With The Lowest Relative P/E Ratios

We recently calculated the relative P/E ratios of the stocks in the S&P 500.  The relative P/E ratio compares the stock's estimated P/E ratio over the next 4 quarters to the average P/E ratio of the sector that the stock is in.  A relative P/E ratio less than 1 means the stock's P/E is less than its sector's average.  We like to use relative P/E ratios because it compares apples to apples instead of apples to oranges. 

Below we highlight the 5 stocks in each sector with the lowest relative P/E ratios.  These stocks have low valuations compared to other stocks in their sectors.  In the list below, we like to see stocks that have low relative valuations but also have low PEG ratios (P/E to growth rate) and are up on the year.

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Relativepe   

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