Wednesday
Jun042008

Recent Stock Performance Based on Analyst Ratings

The average stock in the S&P 500 is down slightly more than 3% since the May 19th peak.  We released a B.I.G. Tips report this morning highlighting the performance of stocks based on various fundamental and technical characteristics.  One of the characteristics we analyzed was analyst recommendations.  When we broke the S&P 500 into deciles (50 stocks in each decile) based on analyst ratings for stocks, we found that those most favored by analysts have held up the best during the declines, while stocks least favored have performed the worst.  As shown below, the decile of stocks with the highest recommendations are down an average of 1.81% since 5/19, while the decile of stocks with the lowest recommendations are down 6.39%.

Decileperf604

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Tuesday
Jun032008

US Dollar: Marathon Update

About a month ago, we posted a chart on the US Dollar pointing out that bulls should treat a rally in the currency as a marathon and not a sprint.  After declining in the latter half of May, the Dollar was able to hold the bottom of its newly formed uptrend and head slightly higher again.  Below we provide a chart of the currency, highlighting its trend channel.  If things continue in their current direction, we have a little more to go on the upside before the Dollar reaches the top of its range.

Usdollarjune

Tuesday
Jun032008

Bespoke on CNBC Tuesday 6/3 at 2:10

Street_signs_4Paul Hickey will appear on CNBC's Street Signs today at 2:10 PM ET to discuss the performance of dividend stocks in the current environment.

Tuesday
Jun032008

Safety in Dividends?

Yesterday we discussed how dividend paying stocks have underperformed the overall market over the last year.  While high yielding stocks are generally thought of as providing a cushion of safety during times of market declines, other trends over the last year suggest this to be anything but the case.  Of the 101 stocks in the Dow Jones Select Dividend Index, only 14 stocks (14%) are up over the last year compared to 35.2% of the stocks in the S&P 500.  Meanwhile, even though the Nasdaq 100 has the fewest dividend payers and is thought of by most as being the most risky, over the last year, 44% of the stocks in the index are up.

Percentage_of_stocks_up_in_each_ind

Tuesday
Jun032008

Bespoke's Sector Snapshot

Below we highlight our trading range charts of the S&P 500 and its ten sectors.  The red shading is between one and two standard deviations above the sector's 50-day moving average, and vice versa for the green shading.  Sectors are considered overbought when the price moves in or above the red zone and oversold when the price moves in or below the green zone.  As shown below, the S&P 500 is trading in neutral territory just above its 50-day moving average.

The Financial sector is the only one currently trading into oversold territory, and it is getting very close to moving below its March lows.  Thankfully it's no longer the biggest sector in the S&P 500.  Utilities, Telecom, Materials, Energy and Technology are still in or close to overbought territory, while both Consumer sectors and Health Care are seeing a tightening of their trading ranges as prices consolidate.

Spxte

Finlindu

Inftenrs

Condcons

Hlthmatr

Utiltels      

Tuesday
Jun032008

EIA Petroleum Report: Problem Solving The Bureaucratic Way

As many readers probably recall, the release of last week's Petroleum Report from the Energy Information Administration (EIA) was surrounded with controversy as the release was posted early on the bureau's website.  This week, the EIA came out and said it will be administering a number of steps to ensure that this doesn't happen again.  One step that the agency announced was that "EIA will delay the weekly Wednesday release of the Weekly Petroleum Status Report and the Thursday release of the Weekly Natural Gas Storage Report for 5 minutes until 10:35 a.m. Eastern time."

Call us skeptical, but how does changing the scheduled release time ensure that it doesn't get released early?  Or are they just scheduling the release for 10:35, so that way if it is accidentally released early it will still come out after 10:30?

Tuesday
Jun032008

S&P 500 vs S&P 500 Equalweight

Through most of 2007, the cap-weighted S&P 500 finally began to outperform the S&P 500 Equalweight index for the first time during the bull market.  This meant that the biggest stocks in the index were doing much better than the smaller ones (falling line in top chart).  In 2008, the trend has once again reversed, however, as smaller companies in the index have begun to outperform again (rising line in upper chart).

The bottom chart below compares the prices of the S&P 500 (cap weighted) and S&P 500 Equalweight index since the end of 1989.  Through most of the 90s, the two traded pretty much inline with each other until the cap-weighted index began to do better in the late 90s.  The bull market that began in October 2002, however, has been dominated by the equalweight index.  For those interested, RSP is an ETF that tracks the S&P 500 Equalweight index.

Spxequalwgt

Spxequalwgt898_2

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Monday
Jun022008

Yield Hunters Struggle

Those that have owned the Dow Jones Dividend Select ETF (DVY) over the last year know that dividend stocks have severely underperformed the overall market.  Below we highlight a chart comparing the price change of SPY and DVY since the start of 2006.  As shown, the two traded pretty much inline with each other until the credit crisis hit dividend-paying financial stocks last summer.  Investors looking for a nice yielding dividend ETF have gotten anything but that over the past year with DVY.

Spydvy

Monday
Jun022008

Homes -- Buy One, Get One Free

A San Diego developer recently offered a "buy one, get one free" promotion on homes in Southern California.  From a recent article at 10news.com:

Michael Crews Development is offering new, 2000-square foot cityscape row-homes worth $400,000 in Escondido for free -- if you buy one Royal View Estate home in San Pasqual Valley starting at $1.6 million.

Times are definitely tough in real estate land.

Buyonegetone

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Monday
Jun022008

Dow 30 Now Underperforming S&P 500 For The Year

After outperforming by a pretty large margin for most of the year, the Dow Jones Industrial Average is now underperforming the S&P 500.  As shown below, the Dow 30 is now down 6.12% in 2008 versus -6.01% for the S&P 500.  With AIG, MRK and GM all down more than 30% this year, and C and MSFT down more than 20%, it's not hard to see why the Dow is now struggling.  At the start of the year, not too many people thought they would be thanking Wal-Mart (WMT) for holding the index up.

Dowspx

Dowmembers_2   

Monday
Jun022008

May ISM: The Good and Bad News

Today's ISM report for the month of May was notable for two reasons - one good and one bad.  First the bad news.  For the fourth month in a row, the report came in below 50, which indicates four straight months of contraction.  Looking at prior periods where the ISM went negative for four straight months shows that it typically remains weak for months to come and has always continued to contract during the fifth month.

Ism_four_month_losing_streaks_2

Now the good news (or at least the less bad news).  With a reading of 49.6, even though today's ISM report showed an economy in contraction, it was still an upside surprise given the consensus forecast of 48.5.  This is the fifth straight month that the report managed to beat expectations and represents the longest streak of stronger than expected ISM reports in at least 10 years.  While the weak readings in the ISM are not positive for the long-run performance of the market, the fact that the extent of the weakness to this point has been consistently overestimated helps to cushion the blow.

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Monday
Jun022008

May Sector and Stock Returns

As shown below, Technology was the best performing sector in May with gains of 5.5%.  Materials came in 2nd at 4.6%, followed by Telecom, Energy and Utilities.  Financials stunk up the joint again with a decline of 6.4% in May.  Every other sector was up, so banks and brokers definitely held the index back.

Maysector 

Below we list the 20 best and worst performing stocks in the Russell 1,000 for the month of May.  Patriot Coal (PCX) was the best performer at 63.7%, followed by Continental Resources (CLR), W&T Offshore (WTI) and Compuware (CPWR).  On the downside, LCC, LNG, UAUA and IMB led the declines in May.

Maystocks

Maystocksdown 

Monday
Jun022008

Bespoke's Commodity Snapshot

Below we have updated 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.  When prices move above or below this range, we consider the commodity overbought or oversold.  As shown, oil's pullback from $135 to $125 barely shows up on its price chart.  Oil is now trading just at the bottom of the short-term uptrend channel formed earlier this year.  The commodity hasn't even been close to oversold since the start of February, and it would have to go all the way down to $98 to be oversold based on its current range. 

Like oil, natural gas is also close to the top of its trading range, but the rest of the commodities we highlight have pulled back recently and are closer to oversold levels.  Copper is the most oversold, while precious metals are getting close to the bottom of their ranges.  Wheat and orange juice continue their downtrends, while corn and coffee are just about neutral.

Oilnatg

Goldsilver

Platcopp

Cornwheat

Ojcof

    

Friday
May302008

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), First of the Month (strong performance to start the month?), DELL EPS Reports (typical stock performance), Brokerage Short Interest (short interest picks up significantly), June Seasonality (market performance during the month of June), Screen of the Week (top retail stocks), XOM Down 4 Days In A Row (what happens next?), Consumer Confidence (surprising market results when things get this bad), Chicago Fed Business Index and Recessions (does the market listen?).

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Friday
May302008

Weekend Reading: Technical Analysis Using Multiple Timeframes

Shannonbook_2 We recently read Brian Shannon's new book, Technical Analysis Using Multiple Timeframes: Understand Market Structure and Profit from Trend Alignment.  As the title of the book suggests, Brian is a believer in trend trading.  For those unfamiliar with Brian's work, he does some unique analysis on his Alpha Trends blog site where he has done a great job of combining YouTube and technical analysis in order to analyze and explain his thoughts regarding specific stocks.  We definitely suggest taking a look at his site.

In the book, Brian does a good job of clearly explaining his methods and approaches to technical analysis without the incoherent jargon typically associated with some books.  He also highlights numerous examples using clear and coherent charts, making this book is an excellent resource for anyone looking to add to their investment 'toolkit'.  Brian closes the book with a chapter titled, "Trading Tips and Truisms To Think About".  Our favorite on the list?  "Smart Money" doesn't always do smart things with their money.