Friday
Apr112008

S&P 500 Testing 50-Day Moving Average

With today's market declines, the S&P 500 is in danger of breaking its short-term uptrend line as well as its 50-day moving average.  The index is currently trading just a half of a point below its 50-day moving average and will need to close above that level for the uptrend to hold.

Spx50day

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Friday
Apr112008

Bespoke on Bloomberg TV

Bespoke's Justin Walters will appear on Bloomberg TV around 1:30 PM ET and 4:30 PM ET to discuss earnings season and the outlook for stocks.

Friday
Apr112008

Bespoke's Commodity Snapshot

Below we highlight our trading range charts of ten major commodities.  The green shading represents two standard deviations above and below the commodity's 50-day moving average.  Moves above the green shading represent overbought levels and moves below represent oversold levels.  As shown, most commodities found a bottom in recent weeks after sharp declines late in the first quarter.  Oil found support at the $100 level and is looking to break through $110 resistance.  Metals have also staged rallies in recent weeks as the dollar has struggled, but they haven't moved back into overbought territory yet.  Corn is in overbought territory, while wheat, orange juice and coffee are closer to the bottom of their trading ranges than the top.

Oilnatgas

Goldsilver

Platcopp

Cornwheat

Ojcof

    

Friday
Apr112008

General Electric (GE) Q1 Estimates Widely Off The Mark

General Electric (GE) reported earnings of $0.44 per share this morning, 7 cents worse than expected.  The actual number came in 6 cents worse than the low analyst estimate of $0.50 per share.  GE is known for reporting inline with estimates, so it's no surprise that the stock is down more than 10% in the pre-market on this news. 

We looked at the historical consensus Q1 EPS estimate for GE since last November, and it was surprising to see that estimates barely budged, even though estimates for the S&P 500 as a whole fell from expected EPS growth of 10% to -10%.  Estimates have come down quite a bit for most stocks and sectors (although many think they haven't fallen nearly enough).  They just didn't for GE, and the market is now suffering.

Geepsest

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Thursday
Apr102008

Energy Sector Most Overbought Since July 2006

Tonight as we updated our S&P 500 Sector Snapshot for Bespoke Premium subscribers, we saw that the Energy sector, as measured by the ten-day advance/decline (a/d) line, is at its most overbought levels since July 2006.  Typically, overbought readings imply that the sector is due for some consolidation.  However, when we looked at extreme overbought readings in Energy stocks, we found that while it averages a minor decline in the two weeks following the peak reading, over the next month and three months, the sector has typically traded higher.

Energy_sector

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Thursday
Apr102008

US 2008 GDP Growth Estimate Ranks 177 out of 181 by IMF

The International Monetary Fund recently published their World Economic Outlook.  The IMF has done a great job making their website much more interactive, and they now offer their Data Mapper that maps out their global estimates for a number of economic indicators.  Below is a screenshot of the Data Mapper showing the IMF's estimates for 2008 GDP growth across the globe.  Check out the Mapper here.

Datamapper

As shown in the map, the IMF is expecting the US to be one of the slowest growing countries in 2008.  When we downloaded a full list of their 2008 YoY GDP Growth estimates, we found that the US ranks 177th out of 181 countries.  Below is a chart of the ten countries with the lowest 2008 GDP growth estimates (local currency) based on the IMF's forecasts.

Gdpgrowth

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Thursday
Apr102008

A Tale of Two Coasts

The CME has housing futures that track the S&P/Case-Shiller home price indices.  These futures allow big investors to trade or hedge against real estate prices nationwide.  Since last September, the Composite 10-City futures contract that expires in February 2009 has fallen 12.56%, meaning investors have gotten more bearish on the outlook for real estate prices early next year.  There is a big discrepancy between the outlook for Los Angeles and New York, however.  As shown, the February '09 contract for median home prices in Los Angeles has fallen nearly 28% over the last seven months, while the contract for New York has barely budged.

Feb09homeprices_3

The actual change in home prices from their peaks also shows that the West Coast is struggling much more than the Northeast.  The Composite 10-City index has fallen 13.36% from its peak, while Los Angeles has fallen 18% and New York has fallen 7%.  The current price of the February '09 Composite 10-City contract is forecasting that from current levels, prices will fall by as much as they already have from their peaks.  The contracts for Los Angeles are suggesting another 23.35% decline from current levels, while New York is expected to fall just 5%.

Homepricedeclines_2

 

Thursday
Apr102008

Boxed In Exporters

The way things have been going lately, isn't it fitting that one of the areas that is helping to prop up the US economy (exports) is being hindered by a shortage of containers.  As the WSJ reported this morning, many firms are finding that the only reason they are unable to fill orders is because they cannot locate enough container boxes to ship the goods in.

With that in mind, we looked for pure play companies on the shortage in shipping containers.  Unfortunately, two of the purest plays we found are not very liquid.  The first is Textainer Group (TGH) which owns, manages, and sells dry freight containers.  Another attractive aspect of the stock is that it pays a 5% dividend.  The second company is CAI International (CAP), and they provide container leasing and management services.  As the charts of each company illustrates, both companies have had strong rallies since January following sharp declines during the fourth quarter.

Container_companies

Thursday
Apr102008

Withdrawal Pains

It seems like just last year that individual investors without seven figure incomes were trying with little success to get into hedge funds.  Today, they can't get out of them.  In an article in today's WSJ, Greg Zuckerman highlights that in addition to institutions and the wealthy, smaller investors are finding that requests for withdrawals are being refused as funds institute their lock-up policies.  It's also probably safe to assume that given their large asset pools in the line for the exits, the institutions and the clients with the most assets will be the 'women and children', while the smaller investors will be the most likely to go down with the ship while paying management fees to the bitter end. 

Whether it's the above example of hedge funds, the lock up of the Auction Rate Securities (ARS) market, or the issue we cited with the ETF DCR yesterday, when presented with an investment opportunity, investors should know not only what they are investing in, but also understand what limits they will have on their funds.

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Thursday
Apr102008

Historical S&P 500 P/E Ratio

For those interested, below we highlight the historical trailing 12-month P/E ratio of the S&P 500 since 1942.  The green and red shading represents bull and bear markets of the S&P 500.  Bull markets are rallies of 20% that were preceded by a decline of 20% and vice versa for bear markets.  Generally you see P/E expansion during bull markets and P/E contraction during bear markets.  However, the most recent bull market saw P/Es contract from high levels, and during the recent correction, P/Es have expanded.  The current trailing 12-month P/E of the index is 20.5 versus an average of 15.90 since 1942.

Spxpe410

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Thursday
Apr102008

Energy Stocks Up 8 Days In A Row

The S&P 500 Energy sector has been up 8 days in a row for a gain of 6.59%.  Over the last 20 years, the sector has been up 8 days in a row 9 other times, and it has gone higher on the 9th day 67% of the time for an average gain of 0.24%.  Over the next week, however, the average change turns to -1.76% as investors lighten up on shares.

Energystockstreak

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Wednesday
Apr092008

Stick With Sashimi -- Rice Prices Soar

Now that rice riots across the globe are making headlines, we thought we'd post a historical chart (non-inflation adjusted) of the commodity since 1988.  Since bottoming at $3.43 in 2002, rice has risen 503.5% to its current price of $20.7 for 100 pounds.

Riceprices

Wednesday
Apr092008

Dow Member Earnings Reports

All 30 Dow stocks will report earnings by May 20th, and below we highlight just a few of their earnings statistics that Bespoke Premium members have access to for all US stocks.  For each stock, we highlight its expected report date, its EPS estimate for the current quarter, the 4-week change in that estimate, the percentage of the time it has beaten EPS estimates since 2001, and the average 1-day percent change in response to earnings since 2001.  Premium subscribers arm themselves with this data for stocks they own in order to be prepared on report days.  Knowing how stocks typically report or how they react to good or bad reports gives users a one up on other investors. 

We highlighted in green those Dow stocks that have beaten quarterly estimates more than 80% of the time since 2001.  Stocks highlighted in red have beaten estimates less than 50% of the time.  GE and MCD have the lowest EPS "beat" rates, but they generally report right inline with estimates.  In the Dow, JNJ and UTX both have EPS "beat" rates above 90%, and they have also averaged gains on the first trading day following their reports.  UTX averages the best returns on report days, while INTC averages the biggest declines.

As we mentioned earlier, Bespoke Premium members have access to a full calendar of stocks expected to report in the coming weeks.  Along with this info, the calendar gives the percent of the time the stock beats revenues, the percent of the time it raises guidance, and the average gap and open to close changes on report days.  Members also have the ability to sort the calendar of more than 2,000 stocks to find ones that beat or miss estimates or go up or down the most on earnings.  Click here to subscribe and access our Earnings Season Calendar as well as our numerous other products.

Dowearnings

Wednesday
Apr092008

DCR (Inverse Oil) Down 26%

Dcroil1_2Oil is trading up more than $3 today to $111.68.  DCR is the MACROshares inverse oil note that trades on the AMEX.  When oil goes up, DCR goes down.  When oil goes down, DCR goes up.  Today, however, DCR is down more than 26% even though oil is up just 3.12%.  What gives?

When DCR began trading back in November 2006, oil was trading at around $60 per barrel.  DCR trades along with UCR, which is the MACROshares oil up note.  The net asset value (NAV) of UCR is the front-month oil contract price divided by three.  The NAV of DCR is $40 minus the NAV of UCR.

The reason DCR is down so much today is because there is an early termination clause in the structure of the notes.  If the front-month price of crude closes above $111 for three consecutive days, the termination clause takes place and the notes will stop trading at their NAVs on the 4th business day prior to the end of the quarter that the termination occurs.  Shareholders will receive distribution on the 3rd business day following the end of the quarter.

Going into today, DCR was trading at just over $9 per share, but its NAV was $3.82.  Remember, if oil closes above $111 for 3 consecutive days, the termination clause goes into affect and the shares are redeemable at NAV at the end of the quarter.  As oil trades above $111, the share price has moved lower and lower.  This trend should only accelerate as oil stays above $111.  Currently, DCR is down 26.33% to $6.76.

We sent our Premium subscribers a B.I.G. Tips report on this earlier today when oil was trading near $109, but there hasn't been much mention of this in the financial world.  It should garner more attention if the potential termination trigger becomes a reality.

The termination clause is mentioned many times in the prospectus for DCR, and MACROshares explicitly points out the risks involved in investing in the notes.  This should still remind investors to make sure they know exactly what they're investing in before they put money to work.

Wednesday
Apr092008

Economist Growth Estimates Down; CPI Up

Along with their recession odds estimates, Bloomberg released their monthly economist survey on GDP and CPI as well today.  As shown below, the median GDP growth estimate of the 62 economists surveyed is now 0.0% for both Q1 and Q2 of 2008 -- down from 0.10% and 0.50% in last month's survey.  Economists are still expecting a pickup in the last half of 2008 and Q1 '09. 

Medgdp1

Economists also raised their CPI estimates for all four quarters that they had estimates on last month.  GDP down and CPI up is not a good economic formula, but it should come as no surprise that these estimates have been lowered.

Medcpi

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