Market Breadth

Just as the S&P 500 has now staged two unsuccessful attempts to take out the highs reached in June, small cap stocks (S&P 600) have also ran into headway over the last several weeks.  Looking at the cumulative advance/decline line of both indices also shows that each successive rally has been accompanied by narrower breadth (less stocks going up).

While narrower breadth does not necessarily mean the overall market cannot keep rising, it does imply that stock picking will take on added significance going forward.

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AMEX SPY

Weekly Bespoke Stock Scores: Top 40 Breakdown

On a weekly basis, Bespoke rates the stocks in the S&P 1500 based on proprietary fundamental, technical and sentiment measures that combine to form a Bespoke Stock Score for each stock.  The Bespoke Stock Scores are published for Bespoke Premium subscribers in an interactive format so users can sort and filter the data as they wish and input specific stocks to pull up their scores as well.  We also publish the list of the Top 40 rated stocks from the database.  These stocks are the most attractive based on all of Bespoke's measures. 

Below we highlight the makeup of the Bespoke Top 40.  As shown, Large Cap stocks currently make up a majority of the list, while Consumer Discretionary and Industrials are the largest weighted sectors.  If you would like to learn more about Bespoke Stock Scores and other Bespoke Premium products, please visit www.BespokePremium.com.

Today's Analyst Actions; CPB, YUM, NYX Upgraded, CME and HAL Downgraded

Below we highlight today's upgrades, downgrades and other analyst actions.  The "street rank" we include is the overall opinion of all analysts covering the stock on a scale of 1 to 5 (worst to best).  NYX was upgraded at Lehman this morning, while CME was downgraded at Deutsche Bank.  Another stock that was upgraded this morning is YUM.  UBS upgraded the stock from Neutral to Buy.  We have included their historical calls on the stock at the bottom of this post.

 

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A Poor Start to Earnings Season

Today was the first trading day after the start of earnings season, and the market's performance wasn't pretty.  The unofficial earnings season runs from Alcoa's (AA) report date through Wal-Mart's (WMT) report date.  Today's decline of 1.42% on the S&P 500 is the worst start to earnings season since the bull market began in October 2002.  So what does this mean for the rest of earnings season?  Not much.  Since 10/02, the first day of earnings season has typically seen declines, with the S&P going down 15 out of 20 times (including today).  The scatter chart below compares the market's performance on the first day of earnings season with its performance over the rest of the period.  As shown, a negative first day has had no bearing on the performance of the market for the rest of earnings season.

Economic Forecasts for the Second Quarter

Over the next couple of weeks, second quarter GDP, Consumer Spending and CPI numbers will be released.  Bloomberg recently published its monthly survey of 70 economists that provides estimates on the above economic indicators as well as the employment rate and various interest rates.  Below we highlight the current median estimates for the major categories of the poll.  As shown, second quarter GDP and CPI estimates went up from the prior survey while Consumer Spending estimates went down.  Estimates for 10-Year and 2-Year Treasury yields went up in the last month as well, presumably to catch up after the recent spike in rates.

TheStreet.com Stock Ratings and The Kirk Report's Stock Screen Machine

Last Friday we posted TheStreet.com's top ranked ETFs using their free proprietary ratings tool.  While we were at it, we also found the ratings for each stock in the S&P 500.  Below we highlight the 27 stocks in the S&P 500 that currently have an A+ rating (TheStreet.com's top rating).

 

Here at Bespoke we are constantly scouring websites, newspapers, books, reports, interviews, studies, etc. to find stock ideas that we then filter through our own work in order to find just the right investments.  One of the tools that we have recently found useful is The Kirk Report's Stock Screen Machine.  The Kirk Report runs a number of proprietary screens that he has found to work best and publishes the results daily on his members only site.  Users can also type in a stock ticker to see which screens it has shown up on in the past.  One stock that we recently found from the Stock Screen Machine that also scored highly on our work is PCAR.  We recently added this stock to our Model Portfolio and it has been a strong performer for us thus far.

ATI AIZ T CSX CMI CVS EIX EXC BEN HES LNC LMT MET PLL PCP PLD PRU STR RTN RRD SLB SIAL SII TROW ETN NUE PCAR

Update: Bespoke's Second Quarter Earnings Calendar

We have just updated earnings estimates and report dates on Think B.I.G.'s Earnings Calendar.  The calendar now highlights expected report dates through 7/24 and gives detailed information on past reports so you're prepared when companies report this quarter.

General Motors Corp (GM) and Ford Motor (F) Upgraded at JP Morgan

JP Morgan upgraded two American car makers this morning.  They moved General Motors (GM) from Neutral to Overweight and Ford Motor (F) from Underweight to Overweight.  Below we highlight JP Morgan's historical calls on both stocks.  As shown, their GM calls have been mixed while their Ford calls have not done so well.  They had a Buy on Ford from February 2004 to March 2006 as the stock price got cut in half, and the price has gone from $7.93 to $9.08 since their downgrade on 3/16/06.

 

Sector ETFs and S&P 500 Stocks Trading Furthest from 50-days

Below we highlight ETFs that track the ten major US sectors.  As shown, all have been up over the past five days, and Financials, Health Care and Utilities are the only ones currently trading below their 50-day moving averages.

Looking at S&P 500 stocks trading furthest above and below their 50-day moving averages, we see that 3 of the 4 stocks trading furthest below are homebuilders (LEN, KBH, PHM).  Hilton (HLT) leads the list of stocks currently trading furthest above due to the Blackstone buyout.  Cummins (CMI), Apollo (APOL) and Nvidia (NVDA) are the other 3 trading more than 20% above their 50-days.

   

HLT CMI APOL NVDA VRSN FCX CIEN SNDK NOV GM TEX AAPL FLR RDC RIG UIS EMC COP TEK PCP LEN KBH NTAP PHM PNW LXK KIM CTX DHI MYL ODP OMX FPL XEL XLY XLP XLE XLF XLV XLI XLB XLK IYZ TTH XLU NI DDR TEG MCO SPG PGN

Taser International (TASR) Comeback Revisited

A couple of weeks ago we highlighted the comeback in the share price of Taser (TASR) this year.  Since then, the stock has kept on ticking, rising another 25%.  Recent gains have put the year to date return for Taser at 118.4%.

Bespoke Market Poll

The Bespoke Market Poll currently stands at 57% Bullish and 43% Bearish -- slightly more neutral than last week's 61% Bullish reading.  Please take a moment to take part in the poll.  Have a good trading day!

My current view on the S&P 500 is:
	Bullish
	Bearish
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Current Winning and Losing Streaks; Boeing (BA), Altria Group (MO) Up the Most

As part of our Stock Odds report released daily at Bespoke Premium, we highlight the current winning and losing streaks of the Dow, S&P 500 and Nasdaq, as well as the ten major sectors and the 30 stocks that make up the Dow.  The Nasdaq and S&P have both been up 5 days in a row now, and the Materials sector has been up 8 consecutive days.  This has only happened one other time in the last 4 years for the Materials sector and it finally went down on the 9th day.

Looking at the 30 Dow stocks, Boeing (BA) has been up 7 days in a row followed by Altria (MO) at 6.  MO has been up 6 days in a row 8 other times in the past 4 years and it has gone up on the 7th day all 8 times!  On the flip side, iPhone carrier AT&T (T) has been down 4 days in a row.

BA MO T IBM INTC GE AA XOM PG CAT AXP WMT AIG GM KO VZ DD MMM HON JPM UTX C MCD HPQ HD PFE DIS MSFT MRK

Historical and Current PE Ratio Charts by Country

Below we have updated our trading area charts of 10 major country indices.  We also include the historical trailing 12-month p/e ratios for each index.  When the indices trade near the top of the green shaded area, they are seen as overbought (and oversold when trading at the bottom).  Italy's MIB 30 and China's Shanghai Composite are the only indices currently trading near the bottom of their trading areas.  Brazil and Hong Kong are the most overbought.

   

FTSE CAC DAX MIB SPX S&P Japan Germany France Spain MIB 30 Italy Brazil Bovespa IBEX Sensex India

When Executives Hit the Links: Does Golf Affect Stock Prices?

Below is a fun but slightly off-topic post for this beautiful Sunday here in Westchester, New York.

An article in today's New York Times titled "Meltdown Didn't Hurt His Golf Game" highlights Bear Stearns CEO James Cayne's avid love for golf.  The story noted that he was able to play a number of rounds at the Hollywood Golf Club during the month of June, even while the company was making front-page headlines for the "near-meltdown" of one of its hedge funds due to the struggling subprime markets. 

We're golf fans here at Bespoke and were intrigued by the fact that the Times was able to find Mr. Cayne's recent rounds and scores.  Most CEOs and other corporate bigwigs keep their country club memberships fairly private. The Times, however, found the info on the handicap tracking website, GHIN.com.

So we went to GHIN.com and did some research for ourselves to try and find the handicaps of other Wall Street CEOs.  We were happy to find that most of them do in fact post their scores on the website.

Of the CEOs that we found, Merrill Lynch's Stanley O'Neal currently has the best handicap at 9.9.  Mr. O'Neal is able to play quite a bit, and he is listed as a member at four clubs -- Purchase Golf Club, Vineyard Golf Club, Waccabuc Country Club and Deepdale Golf Club.  He seems to be playing worse than his handicap shows lately, shooting a 90 at Deepdale on June 20th and a 90 again at Purchase on June 17th.

Lehman CEO Richard Fuld has the second best handicap at 10.3, although he hasn't posted a score since August of last year.  He's also listed as a member of four clubs -- Quaker Ridge Golf Club, Blind Brook Club, Purchase Golf Club and McArthur.

   

Bear's CEO James Cayne, the man who the Times wrote the article about, ranks third on the list with a handicap of 15.9.  Mr. Cayne definitely plays the most of the CEOs, booking 13 rounds in June.  The Times highlighted that his scores stayed consistent during his company's recent problems, but a look at his longer-term handicap stats shows that his recent scores have suffered.

Ranked second to last on our Wall Street CEO handicap list is Morgan Stanley's John Mack.  Also a member of Purchase Golf Club (as well as Blind Brook Club), Mr. Mack has a posted handicap of 17.  He recently posted scores of 97 and 96 on June 24th at Purchase.

 

The Wall Street CEO with the highest handicap (based on posted scores of the people we found) is Goldman's Lloyd Blankfein, although it is based on scores from 2001 to 2006 (we'll just assume his golf game has gotten better as the stock has risen).  His last posted round was on May 30, 2006 at East Hampton Golf Club where he shot a 109.

We're definitely not poking fun at their scores, as most of them seem like pretty good golfers.  It was just interesting searching on GHIN.com, so check out the site and let us know in the comments section if you find anymore handicaps.  We'll be back later with some posts to get you ready for the trading week.

Update: Should the Donald join the Senior Tour?  We just did a search for Donald Trump's handicap and found that he is a solid 3.4.  Listed as a member of the well-known Winged Foot Golf Club and Trump National (of course), Trump's last posted scores were on May 21st where it looks like he posted scores from his previous five rounds.  Do you think their are any mulligans involved in Trump's rounds?

US Strategists' S&P 500 2007 Price Target

From Bloomberg's weekly survey of US strategists, below we highlight the current price targets for the S&P 500.  With the exception of JP Morgan, all of the firms polled expect further gains for the S&P 500.  UBS currently has the highest year-end 2007 expectations at 1,650.  The average price target is 1,581.7, which is 3.24% above the index's current price of 1,532.