Monday
Jan282008

Bespoke's Fourth Quarter Earnings Calendar: Updated 1/28

We have just updated our earnings calendar to show earnings reports from 1/28-2/8.

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.

Monday
Jan282008

Worst Starts to the Year

Someone was asking us, so below we provide an updated list of the worst starts for the S&P 500 (through 1/25) since 1929, which is as far back as we have data.  As shown, 2008 is currently the worst start ever for the S&P 500.  On a brighter note though, in each year where the index was down more than 5% through 1/25, the performance from 1/25 through the end of the year was positive every single time with an average gain of 7.26%.

This year's declines in equities have also increased fears that if we are not already in a recession, we will be in one shortly.  Looking back at the S&P's prior bad starts (declines of more than 5% as of 1/25), we calculated how many months it took before the start of the next recession.  As shown, in three of the six periods, a recession began within the next nine months.  However, in the other three years, it took at least 24 months before a recession began.

Worst_starts_to_the_year_2

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Monday
Jan282008

One Strategist Says to Buy

While calls from sell-side strategists are often quickly dismissed, one recent strategist call caught our eye.  Last Wednesday, Morgan Stanley's European strategist, Teun Draaisma, said investors should move to an overweight in equities. 

Readers may recall last Summer when Mr. Draaisma issued a sell call based on a 'Full House' sell signal he saw in the markets.  At the time, we noted how prior calls from Mr. Draaisma were impressive.  In the chart below, we highlight his last two 'Full House' signals, both of which did an excellent job of calling peaks in the market.

Draaisma

In his shift to an overweight stance, Draaisma cites high levels of pessimism, a market with "valuations at recession levels", and prospects for continued cuts in interest rates.

Monday
Jan282008

Analysts Still Cutting Earnings Estimates

We noted earlier in the year that analysts were entering 2008 with a decidedly negative tone, as downward earnings revisions were on the rise.  While sentiment seemed negative at the time, it has gotten worse since then.  As of Friday, over the last four weeks, analysts have raised forecasts for 332 companies in the S&P 1500.  At the same time, forecasts have been lowered for 776 companies for a net of -30% (at the start of the year the net number was -15%). 

Below we highlight the ratio of negative earnings revisions to positive revisions by sector over the last month.  Negative sentiment has been the worst in the Consumer Discretionary and Financial sectors, with negative revisions outnumbering positive revisions by nearly a six to one margin.  On the positive side, at least relatively speaking, Energy is the only sector where positive revisions outnumber negative revisions by a significant margin.

Earnings_downgrades_4

Interestingly, while analysts have been busy taking down numbers on stocks in the Consumer Discretionary and Financial sectors, these two sectors have been holding up relatively well.  With declines of less than six percent year to date, these are the two best performing sectors of 2008.

Sectors_3   

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Monday
Jan282008

Short Interest Stock Data

Below we have updated our lists of the most and least heavily shorted stocks based on the most recent short interest data.  As shown below, NTRI is the Russell 1,000 stock with the highest short interest as a percentage of float.  Currently, 78.2% of NTRI's equity float is sold short.  NTRI is followed by IMB, MBI, VMW, SHLD and WBMD. 

Shortinterest

The list below highlights Russell 1,000 stocks with the lowest short interest as a percentage of float.  A brief look at the year to date performance of this list shows that these are down more in 2008 than the stocks with the highest short interest.

Shortinterest1

We separated the Russell 1,000 into deciles (10 deciles of 100 stocks) based on short interest and calculated the average year to date percent change of the stocks in each decile.  Currently, the decile of the most highly shorted stocks is down the least on the year, while the deciles of stocks with the lowest short interest are down the most.  This is interesting given the fact that markets are down so much in 2008.  One would think that short investors would be doing well in this type of market, but the numbers below indicate otherwise.  Could this be due to buy-side firms being forced to liquidate positions, thus pushing highly shorted stocks higher because the positions have to be bought.

Shortinterest2   

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Monday
Jan282008

"Outsmarting the Pack" with Bespoke's Earnings Report Database

This weekend's Sunday Business section of the New York Times had an article highlighting a number of services that give investors an edge during earnings season.  The article mentions Citigroup, Zack's and StarMine as having services that provide lists of potential winners and losers during earnings season.  Below is the first paragraph of the article:

Knowing a little bit more than the next guy is the name of the game on Wall Street. And during earnings season, now in full swing, betting correctly against consensus earnings forecasts may be a way to make some money, even in a turbulent market. Earnings that come in a penny or two above or below a forecast can often prompt wide — and potentially lucrative — swings in a stock price.

The Times writer didn't quite do is homework or he would have mentioned the Bespoke Earnings Report Database that provides detailed earnings analysis for over 2,700 stocks at a relatively low cost compared to other services. The database provides the historical beat and miss rates for each stock so investors can easily find which companies typically do better or worse than expected.  The database also adds another dimension by showing how the stock price typically reacts to earnings reports, so investors can see if they should buy or sell a stock on earnings days based on how it gaps at the open.  If IBM beats estimates and gaps up $2, database users can pull up all prior times this has happened for IBM to see how they should trade it during the day. 

Just this morning, MCD reported better than expected earnings and is trading slightly higher a lot lower in the pre-market.  Below we pulled up all of MCD's past reports (since 2001) from the Bespoke Earnings Report Database and found that regardless MCD's opening gap on earnings, it typically trades down from the open to the close. 

Mcdearnings

Click the image below to try out a sample of the Bespoke Earnings Report Database.  Enter in any of the following stock tickers once you download the sample to test out the database - A, AA, AAI, AAP, AAPL.  Once you try it out, you'll quickly realize that owning this database gives you a clear advantage over anyone that doesn't.  If you would like to purchase the entire database or a database of a select basket of stocks or indices, call us at 914-315-1248 and receive it today.

Monday
Jan282008

The Bears Prevail (with an asterisk)

On Friday, we asked readers if they thought the S&P 500 would make a new low before it makes a new high.  Below we highlight the results from the 344 individuals who responded.  As shown, 76% of participants think the market will make a new low before it makes a new high.  We realize that making a new low is a much smaller move than making a new high, but the number still indicates bearish sentiment.

Highlow_2

We also asked readers if they were net buyers or sellers of stocks at the moment.  While the majority of participants believe the market is headed lower, 55% are actually buyers of stocks.  This means that while investors think we are probably headed lower, prices are low enough right now to not pass up.

Buyerseller_3

   

Friday
Jan252008

Fly Swatted For Now -- A Look at MSFT and AAPL

Below we highlight the market caps for Microsoft (MSFT) and Apple (AAPL) from 2000 to present.  As shown, Apple's market cap has risen from $16.5 billion in 2000 to its current value of $119.1 billion.  But just a couple of weeks ago, Apple was worth $175 billion.  From its peak on 12/28, it has lost 32% of its value.  Over the same period, MSFT has lost some value, but not nearly as much.  While Apple has filled a huge gap in the value the two companies over the last 7 or 8 years, MSFT seems to have swatted it away for the time being.

Msftaapl

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Friday
Jan252008

Nickel & Diming The Market

As the market has made historic moves to both the upside and downside this week, we have been analyzing what potential implications these types of moves will have on the market.  Throughout the week, subscribers to Bespoke Premium have received several reports on what to expect from the market going forward.  For example, on both Tuesday and Wednesday we highlighted how extremely negative opens in the S&P 500 are typically very attractive short-term buying opportunities.   

Another example of the types of analysis we have been doing this week concerns reversals.  Below we highlight an analysis similar to the one we provided for subscribers.  This week the S&P 500 completed a pattern that has been a rare occurrence over the last 25 years.  Early Tuesday morning, the S&P 500 was down more than 10% (dime) over a ten-day period.  Two days later, the index had rallied more than 5% (nickel) off of the Tuesday low.

Since 1982, there have only been nine other periods where this 'nickel and dime pattern' occurred, and for the most part these occurrences have represented good short-term trading opportunities.  One week later, the S&P 500 was higher six out of nine times for an average gain of 1.25%.  Over the next three months, the gains have been even more impressive with an average return of 9.17% and only one period of negative returns.

Nickel_and_diming_the_market

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Friday
Jan252008

Earnings Season Winners and Losers

Stocks that have reported earnings this season (368 US companies) have averaged a gain of 1.55% on the first trading day following their quarterly reports.  This is surprising given the overall weakness in the markets.  We went through the list of 368 companies that have reported since earnings season began on January 9th to see which stocks have been the biggest winners and losers. 

The first list below highlights the 30 stocks that have gone up the most on the first trading day following their quarterly earnings reports.  As shown, NVEC has had the most positive reaction to earnings thus far -- up 35.49% on 1/23.  NVEC is followed by LCBM (30.53%), ABK (28.55%), ETH (26%) and WRLD (24.73%).

Biggestup

FCFS has had the worst reaction to earnings, falling 34.09% after reporting on 1/23.  MERX follows FCFS at -33.7%.  Other significant names on the list of losers are MOT (-18.75%),  INTC (-12.38%) and AAPL (-10.65%).

Biggestdown

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Friday
Jan252008

Microsoft (MSFT) Earnings

Microsoft's earnings report and the reaction of its stock price is similar to the last time the company reported earnings back in October 2007.  On 10/26/07, MSFT gapped up 12.47% after reporting strong quarterly results in the after hours on 10/25.  On 10/26, traders faded the gap on MSFT, sending the shares down 2.64% from the open to the close.  With MSFT trading up 5% on earnings once again this morning, will traders fade the gap once again?

Msft1025

Friday
Jan252008

Correction Over?

With the market at least making a very short-term bottom, we want to know what Bespoke readers think about equities at the moment.  Is the correction over or are we due for more declines?  Are you buying stocks or selling stocks?  Please answer the two questions below and we'll report the answers early next week.


Will the S&P 500 make a new low before it makes a new high?
Yes
No
  
Free polls from Pollhost.com


Are you a net buyer or seller of stocks right now?
Buyer
Seller
  
Free polls from Pollhost.com

Friday
Jan252008

Sector P/E Ratios

Looking at a stock or sector's historical P/E ratio is much better than looking at its current P/E ratio to determine valuations.  Below we highlight the one-year trailing 12-month P/E ratios of the S&P 500 and its ten sectors.  With fourth quarter earnings season about halfway done, some key moves have taken place in P/E ratios recently. 

The P/E ratio of the S&P 500 is currently at 18.2.  This is lower than it was at the market's peak, but much higher than it was back in August, even though the market is at about the same price level.  This indicates overall earnings have declined.

On a sector basis, it's easy to see who's the culprit.  As shown below, the P/E ratios of the Financial and Consumer Discretionary sectors have spiked significantly, while the rest of the sectors have seen their P/Es decline.  Based on P/E ratios, Health Care, Industrials, Technology, Consumer Staples and Telecom look especially attractive now versus any time in the last year.

These charts are part of our weekly Sector Snapshot available to Bespoke Premium subscribers.

Spxpe

Finlpe

Hlthpe

Indue

Enrspe

Techpe

Condpe

Conspe

Matrpe

Utilpe

Telspe          

Thursday
Jan242008

Sector Relative Strength

Following yesterday's fifth rate cut of the current easing cycle (including the original cut in the Discount Rate on 8/17), today we updated our charts highlighting sector relative strength over the last year.  In each chart, rising lines indicate periods where the sector is outperforming the S&P 500.  Charts with red shading indicate that the sector has underperformed over the last year.  Finally, in each chart we have also included red dots which indicate the five Fed rate cuts since August.

While the first four cuts did nothing for the Financial and Consumer Discretionary sectors, Tuesday's cut in the Fed Funds rate gave both sectors at least a short-term pop.  While the Financial sector still remains below its downtrend since last summer, the Consumer Discretionary sector actually broke its downward trendline.  Interestingly enough, the strength in that sector appears to have begun a few days before the Fed's surprise cut.  The Energy sector has recently corrected but still remains above its longer term uptrend.  In the last two days, the Health Care sector has declined, even as the market has rallied.

The market's recent action is sending mixed signals.  On the one hand, while cyclical sectors such as Consumer Discretionary and Financials have shown strength recently, other early cycle sectors such as Energy and Technology have been extremely weak.  But the defensive trade hasn't really been working either, as Health Care, Telecom Services, and Utilities have all recently underperformed the market.

Sectors012408

Sectors012408a

Sectors012408b   

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Thursday
Jan242008

Thank You Rogue Trader

Thanks to Societe Generale's rogue trader who most likely caused foreign markets to fall much more than they should have on Monday, US equity markets have losses this year that are almost half that of many European and Asian indices.  The US also got a surprise rate cut of 75 bps because of the panic that ensued in futures markets due to Monday's global declines.  Go stocks (and watch out inflation)!   

And wait -- we also got a rushed fiscal stimulus plan that the US government seemed way too happy about today.  Did anyone else notice how happy Nancy Pelosi and Hank Paulson were at their press conference ("Checks will be in the mail shortly!") because they actually got something done?  They were so proud of themselves, it almost seemed like they just finished rewriting the Constitution or something. 

Below we highlight our trading range charts of the country indices that we presented in our prior post.  As anyone can see, the declines have been swift and severe.

Country

Country1

Country2

Country4

Country5

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