Tuesday
Dec232014

Dogs of the Dow 2015 Firming Up

One popular investment strategy is to purchase stocks that have gotten "cheap" on a dividend basis: stocks that pay a higher dividend than their peers.  For the Dow Jones Industrial Average, this is known as buying the "Dogs of the Dow", or the ten stocks in the Dow that have the highest dividend yield as of year end, equally weighted.  The strategy is simple and easy to execute; it requires at most twenty trades per year, and operates on the theory that stocks that pay a high dividend will see higher total returns over the long run than stocks that don't. 

Below is a summary of the "Dogs of the Dow" strategy's total returns since 2001.  About half the time, the strategy outperforms both the Dow and the S&P 500, while it beat the Dow itself 12 of 14 times.  Average and median returns are higher for the "Dogs of the Dow" strategy than the Dow, and its average return beats the S&P 500 while trailing slightly on a median basis.

This year has been an interesting one for the strategy.  While total return has been about in-line with the Dow as a whole on average, the individual names within the list of Dogs have been all over the place.  Intel, Microsoft and Cisco have all exploded higher, with total returns of over 30%.  But GE and Chevron have both lagged the index badly, and McDonald's has also had a challenging year amidst a broader equity market rally.

Looking ahead to next year, three names will be removed from the current Dogs list; unsurprisingly, they're also the best performers.  Intel, Microsoft and Cisco will all step aside to make room for Exxon Mobil, Caterpillar and Coca-Cola should current prices hold roughly steady for the last few trading days of the year.  After seeing their dividend yields expand for years heading into 2014, strong stock performance for the three Tech dogs (INTC, MSFT, CSCO) has pushed their dividend yields lower this year.

Interested in index analysis, sector strategies or idea generation? Try out Bespoke Premium or Bespoke Newsletter today.  Both tiers receive our popular Annual Bespoke Report, fully recapping 2014 and giving an outlook for 2015 across asset classes, equity market sectors, and the global economy.  Subscriptions come with a five day free trial.

Tuesday
Dec232014

Most Countries Still Oversold; China and US Overbought

While the US is enjoying a stock market at new all-time highs, most countries around the world are still at oversold levels.  Below is a look at our trading range screen for the 30 largest country ETFs traded on US exchanges.  For each ETF, the dot represents where it is currently trading within its range, while the tail end represents where it was trading one week ago.  The black vertical "N" line represents its 50-day moving average, and moves into the red or green zones are considered overbought or oversold.  (Read more about the calculations for this screen at the bottom of this post.)

Of the 30 country ETFs in the screen below, 17 remain in oversold territory, while just 2 are overbought (China and the US).  Most countries have experienced big moves higher within their ranges over the last week, however.  Countries like Chile, India, Indonesia, Mexico, Russia and Thailand were trading more than three standard deviations below their 50-days last week at this time, but they have clawed their way back and are getting close to neutral territory.  

Here at Bespoke, we run these custom screens for many of our Institutional clients who like to track the trends of their portfolio holdings.  Give us a call at 914-315-1248 if you're interested in doing this for your portfolio.

Monday
Dec222014

Twitter vs. Instagram Search Trends; Amazon Hits a New High

There was quite a bit of chatter today about Dick Costolo's future as CEO of Twitter (TWTR).  The stock rallied today on the back of an analyst's call that "there's a good chance he's not there within a year".  Recently, one of Twitter's competitors -- Instagram (Facebook-owned) -- made news for surpassing Twitter in the user column.  We've also identified this trend in our monthly Consumer Pulse reports available over at http://bespokeintel.com.  

Another thing you can look at when analyzing the social media space is Google Trends.  Running a search analysis of "Twitter" versus "Instagram" produces the chart below.  As you can see, Twitter (TWTR) has been trending downward since peaking in 2013, while Instagram has been straight up.  Twitter still holds a small lead in terms of Google search, but the two are converging quickly.  Can a new CEO stop this downtrend for Twitter?

Another noteworthy trend we identified on Google Trends was "Amazon" searches.  As shown below, "Amazon" hit yet another high for searches on Google this holiday season, which bodes well for both the stock (AMZN) and retail sales as a whole.

Monday
Dec222014

S&P 500 Sector Trading Range Charts

Below is a good look at where the S&P 500 and its ten sectors stand heading into the new year.  These trading range charts help to identify both short and long-term trends, and they also give you an idea of how extended (to the upside or downside) a stock or index is at any given time.  The light blue interior band represents each sector's "normal" trading range, which we calculate as between one standard deviation above and below the 50-day moving average (white line).  The red zone represents between one and two standard deviations above the 50-day, and it is generally thought of as "overbought" territory.  The green zone represents between one and two standard deviations below the 50-day, and it is generally thought of as "oversold" territory.

Due to the pick-up in volatility that we have seen since October, the trading range for the S&P 500 has widened significantly.  As you can see in the chart, the distance between the upper and lower band for the S&P was minimal back in May.  In fact, the difference between the top of the red zone and the bottom of the green zone was just 3.5%.  As of the close today, the difference stands at 14%.  And even though the S&P 500 closed at a new all-time high today, it's just barely into overbought territory right now, whereas it has been much more extended to the upside when it has hit new highs in the past.

Three sectors hit new bull market highs today -- Financials, Technology and Utilities.  Two other sectors are just on the cusp of breakouts -- Industrials and Consumer Discretionary.

Interestingly, Health Care -- which has been a market leader throughout periods of tumult in the second half of 2014 -- looks to have failed to break out here.

As you can see in the charts below, some of the sectors that are at or near new highs have gotten pretty extended.  Keep that in mind when trading over these last few days of the year.

For more sector analysis, become a Bespoke Premium member today and receive our weekly Sector Snapshot report.

Monday
Dec222014

A Losing Streak for the Record Books

According to AAA, the national average price of gasoline dropped another 1.4% over the weekend taking prices at the pump to their lowest levels in more than five and a half years.  Even more noteworthy is the fact that the national average price hasn't seen a daily increase since 9/24/14.  That 88 day stretch without an increase now ranks as the longest streak without an increase on record (going back to 2004).  Prior to the current streak, the longest stretch without a one day increase in price was in late 2008 during the credit crisis.  In that period, gasoline prices fell 57% over a period of 87 days without an increase.   While the current streak hasn't been nearly as steep (-28%), consumers will take it nonetheless.

Monday
Dec222014

Bulls Back in Full Force

Bullish sentiment jumped 11 points in our weekend Bespoke Market Poll, rising from 54% up to 65%.  A gain of 4%+ over a three-day period will do that to market sentiment!

Friday
Dec192014

S&P 500 Higher or Lower from Here?

Talk about a crazy week.  After plunging to start the week, the S&P 500 surged over the last three days and is once again making a run at all-time highs.  So which way will the market head from here?  Is there more pain ahead or smooth sailing into January?  Please let us know by taking part in our weekly Bespoke Market Poll below.  Simply tell us whether you think the S&P 500 will be higher or lower one month from now.  We'll report back with the results on Monday before the open.  Thanks for participating and have a great weekend!

Be sure to sign up for a 5-day free trial to our Bespoke Premium service if you're looking for in-depth analysis of this market.  Become an annual member and you'll receive a hard copy of our awesome Bespoke Market Calendar for 2015.  Right now you can enter "endofyear" in the coupon code section of our Subscribe page to receive a 10% discount on the life of your membership!  Happy Holidays from Bespoke.

Will the S&P 500 be higher or lower than its current level one month from now?
Higher
Lower
  
Free polls from Pollhost.com

Friday
Dec192014

Bespoke CNBC Appearance (12/19)

Bespoke's Paul Hickey appeared on CNBC's Fast Money last night to talk about the divergence between the S&P 500 and the Energy sector over the last six months.  To view the segment, click on the image below.

Friday
Dec192014

Bullish Sentiment Declines

It looks as though all of this volatility is getting to investors' nerves and causing them to be a little more risk averse.  In the latest weekly survey of investor sentiment from the American Association of Individual Investors (AAII), bullish sentiment declined by 6.28 percentage points, falling from 45.02% down to 38.74%.  In spite of the large decline in bullish sentiment, though, bullish sentiment remained marginally above its bull market average of 38.31%.  This marked the 11th straight week of above average bullish sentiment, which is the longest streak since February 2013.  As you can see in the chart below, bullish sentiment has seen a big drop from its recent high of 57.93% from mid-November.  That being said, the trend of higher highs and higher lows remains intact.

Friday
Dec192014

A "Typical" December

After being down as much as four percent on the month earlier this week, and then having the best two-day rally in years on Wednesday and Thursday, the S&P 500's performance this month seems anything but typical.  However, when you compare the month to the average December pattern, the month has been relatively normal.  Regular readers of our site know we focus a lot on seasonality and historical trends in our analysis.  While these are by no means the only type of analysis you should use in your investment decisions, we feel it is important to know the historical trends.  History may not always repeat itself, but just as kids will share similar traits with their parents, market trends one year often look a lot like the trends that preceded them in the past.

A case in point is the month of December.  Earlier this month, we sent out a B.I.G. Tips report to clients discussing seasonal trends for the month of December.  In that report, we showed a chart that highlights the typical seasonal pattern for the S&P 500 during the month.  We noted that the month "typically gets off to a pretty strong start in the first few days, hitting a high on 12/6.  From there, however, the S&P 500 goes on to give up most of those gains as we approach mid month.  It isn't until the second half of the month when the typical seasonal December strength kicks into gear."  

The chart below shows the "typical" pattern for December (light blue line) and compares it to this year (dark blue).  As shown in the chart, while the magnitude of the move this month has been bigger than the average (which you would expect), the pattern has been nearly identical.  For the average December since 1989, the S&P 500 starts off the month on a positive note, peaks on 12/6, and then sells off.  After hitting a mid-month low on 12/15, though, the S&P 500 finishes the month on a positive note.  

This year, the highs and the lows haven't matched up exactly, but they have been very close.  After rallying to start out the month, the S&P 500 peaked on 12/5, then sold off by 5%.  That mid-month sell-off ended just one day later than average (12/16), and since then the S&P 500 has rallied by over 4%.  You can't get much closer than that!

This type of seasonal and historical trend analysis is just one of many facets of our Bespoke Premium service.  If you are not currently a subscriber and want to find out more about the service, click here for a detailed description.  Or better yet, why not try it out with a no obligation 5-day free trial.  If you decide to stick with it on an annual basis, you'll receive a free copy of our Bespoke Market Calendar as well!

Thursday
Dec182014

Two Day Crash Up

Stocks had their best two-day run in over three years today, gaining 4.49% on the S&P 500.  It was just the 86th time in the S&P 500's history that it had back-to-back 2%+ up days.  (For an analysis of how the market has historically performed following these huge two-day moves, become a Bespoke Premium member today.)  In terms of trading range, the broad market moved from firmly below its 50-DMA to almost a standard deviation above it in just two sessions (on firm volume, no less).  The run into the close today was extremely impressive, with further gains in futures after the cash market closed.  The chart below highlights the move today in the context of the trading range over the last six months.

US equities weren't the only asset class to go parabolic over the past 48 hours.  Below is a table showing a wide range of ETFs for US equities, global equity markets, currencies, commodities, and fixed income.  Equities have exploded in many markets, with Europe and some of the higher quality emerging markets keeping pace with the US, but tempered gains elsewhere.  Foreign exchange has also gotten hit as the USD appreciated versus EUR and JPY since the FOMC announcement yesterday.  Finally, fixed income has gotten hit hard: Treasury yields surged yesterday and today as the equity market took off.

For more on today's price action, make sure to sign up for a five day free trial of Bespoke Premium.  In tonight's edition of The Closer, we'll be giving a full market recap of today's action and its implications for the remainder of the year.  Subscribers also get our weekly Sector Snapshot tonight, recapping price action and key trends for the S&P 500 and each of its ten sectors.  An annual Premium membership will also get you a hard copy of our Bespoke Market Calendar (shown below)!

Thursday
Dec182014

Energy Stocks Bounce

Below is an updated look at our trading range screen for the 30 largest stocks in the S&P 500 Energy sector.  For each stock, the dot represents where it's currently trading, while the tail end represents where it was trading one week ago.  The green shading represents oversold territory, and as you can see, pretty much all of them were oversold last week at this time.  Plenty are still oversold, but much less so than they were last week.  It looks like the "buy-the-dippers" have finally come out of the woodwork.  Let's see how big the rush to buy in "at the lows" gets over the next day or so.

Thursday
Dec182014

Jobless Claims Better Than Expected

Today's release of jobless claims for the latest week came in modestly better than expected dropping to the lowest level since Halloween.  While economists were expecting claims to come in at a level of 295K (unchanged from last week), the actual reading came in at 289K.

With this week's decline, the four-week moving average saw a modest decline, and stayed below 300K for the 14th straight week, which again is the longest streak since 2000.

The biggest move, however, was in the non-seasonally adjusted (NSA), which dropped 61.9K down to 326.9K.  For the current week of the year, this is the lowest level we have seen going back to 2000, and is more than 100K below the average of 435K going back to 2000.

Wednesday
Dec172014

Oil Volatility and Correlation with Equities

Oil's crash over the last few months has dominated the headlines, and over the last couple of weeks, its impact has been felt on stocks as well.  If you're wondering, below is a chart showing the correlation between the daily movements in oil and stocks.  The chart shows the rolling one-year correlation between the daily percentage changes of oil and the S&P 500.  A correlation of 1 would mean the two have moved hand in hand with each other over the past year, while a correlation of -1 would mean the two have mirrored each other over the past year.

As shown in the chart, up until 2009, there was not much correlation (positive or negative) between the two, but the financial crisis caused their correlation to increase dramatically (both fell sharply along with most other asset classes).  Throughout most of the current bull market coming out of the financial crisis, though, the correlation remained relatively elevated as well.  Over the last two years, you can see that the correlation has dropped dramatically, but it's still slightly above the range it had been in for decades prior to 2009.  Not until just recently when oil's drop began to really get noticed did the correlation stabilize and tick slightly higher.  

While oil has dominated the headlines recently, its volatility hasn't spiked dramatically.  For the most part, it has been a slow, steady drop.  Below is a chart showing the rolling 50-day average +/- daily percentage change for oil going back to 1983.  As shown, over the last 50 trading days, oil has seen an average daily change of +/-1.67%.  This is only 7 basis points above the average daily move of +/-1.60% seen for oil over the last 30 years.  If anything, the takeaway from the chart is that oil's volatility had gotten extremely low coming into the current bear market, and it's just now getting back to normal levels.

Wednesday
Dec172014

Junk Bond ETF Having Best Day Since August 2011

The high-yield (junk) bond ETF -- HYG -- has been tumbling lately due to oil's big price drop.  As oil has fallen into the $50s, worries that companies in the US Energy industry won't be able to meet their debt obligations have weighed on the junk bond market as a whole.  Below is a six-month chart of the HYG ETF.  After a big decline over the past month or so, HYG is finally seeing a bounce today.  In fact, its one-day gain of 2% is its biggest one-day move since August 2011.

Historically, movements in the junk bond market have tracked the stock market pretty closely.  Since April of this year, however, the two have diverged quite significantly.  At the surface, this divergence is a big deal, but we don't think it's as ominous as it would be if oil's price drop were not one of the primary reason's for the pressure in high yield.

Page 1 ... 3 4 5 6 7 ... 615 Next 15 Entries »