Wednesday
Aug272014

Bespoke Premium -- Your Pre-Market News Source

While our end of summer special is going on, we thought we'd highlight a few of the key products included with our subscription packages.  One of them is our Bespoke Morning Lineup, delivered to your inbox each morning before the open.  

The Bespoke Morning Lineup is your pre-market source for up-to-date information concerning market events overnight and in the morning.  On a daily basis, we summarize major international market events, stock specific news of note, analyst actions, and economic indicators/events.  In addition, we also outline what major indicators, events, earnings reports, conferences, dividends, splits, and upcoming index changes are due the following day so that you can plan ahead and be ready.

On page two of the Morning Lineup, we provide graphic-rich charts and graphs of market internals, overbought/oversold levels, trading ranges, relative strength and lists of big winners and losers.  On page three, we highlight short and long-term charts of the S&P 500, Nasdaq, gold, oil, the long bond and the US Dollar.

Investors view our Morning Lineup religiously each morning to get prepared for the market’s open.  There’s simply no better way to start the trading day.

The Bespoke Morning Lineup is part of our Bespoke Premium and Bespoke Institutional services.  Click here to view today's report as a free sample.  We also provide commentary in the email that goes out with the Morning Lineup.  Below is today's commentary that was sent out to clients.

Snapshot: Equity index futures are flat this morning (spoos +6 bps, Dow futures +9, Nazz 100 +8 bps).  Asia is coming off a solid session and European equities are mixed with reasonable dispersion but trading at much healthier volume levels than recent sessions.  No European major market is up or down more than 30 bps as of this writing.  Global bonds continue to rally, led by the bund, down 2.6 bps to yield 91.1 bps in the ten year tenor.  Treasury yields are lower by about 2 bps across the curve with slightly better performance from the 7 year point out (curve flattening of 1 bp in fives-thirties).  Credit markets are basically flat.  The dollar is selling off this morning (-15 bps), retreating from 52-week highs put in yesterday, with selling starting as European traders began reaching their desks at about 2:00 AM EST.  The USD is down versus every major cross, performing worst versus the CAD and NZD.  Metals are up this morning (gold +35 bps, silver +42 bps) and energy is flat (Brent +10 bps, WTI +26 bps) except for natural gas (+1.2%).

European equities: Equities are subdued today with the CAC 40, DAX, and Euro Stoxx 50 trading in lock-step, all down about 10 bps on underperformance from Energy, Materials and Consumer Staples where breadth is extremely weak.  Financials are outperforming, but despite their heavy weighting in many EU indices they aren’t enough to drag markets positive.  Italy (+18 bps) and Spain (+29 bps) are outperforming, but not drastically.  We’re seeing a nice pop in Portugal (+90 bps), and Austria (+30 bps) is also outperforming which has been rare this year (trailing both the DAX and the Euro Stoxx 50 by about 6% and 11% respectively).  Russian equities are up 76 bps in USD terms on the Russian Cash Index, helped by seemingly productive talks with Ukraine yesterday and a stable ruble (RUBUSD stable around 36 all week). 

European bonds: The real story in Europe this morning continues to be the German government bond market where yields are now negative for the first three years of its yield curve.  Ten year bunds now yield 91.1 bps, trading at a seemingly inconceivable 146 bps spread to Treasuries.  EUR-denominated government paper is trading well across the board, as spreads to bunds fall even faster than the yields on the less-risky German debt does.  At the ten year point on the curve, bunds are down 2.6 bps in yield this morning, but compare that with yield declines of 3.4 bps in France, 4.6 bps in Italy, 8.5 bps in Spain, 3.6 bps in Portugal, 3.6 bps in the Netherlands and 10.5 bps in Greece.  One catalyst for the price action today is a pair of consumer confidence misses in Germany and Italy.  German GfK Consumer Confidence printing at 8.6 versus expectations of 8.9 and previous reading of 9.0 (revised down to 8.9), while Italian Consumer Confidence missed, 101.9 versus 104.0 expected and 104.6 previous, which was revised down to 104.4.  These misses are just the latest in a seemingly never-ending series of economic data declines and misses for the European area.

Global bonds: The action in Europe is vacuuming other global yields lower as well.  While not down as much as benchmark bunds, we’re also seeing yield declines in UK gilts (yield -3.2 bps), Swiss government bonds (yield -1.8 bps), Australian government bonds (yield -2.4 bps) and New Zealand debt (yield -3.0 bps).  The only major global bond market that is not trading lower in yield this morning for its ten year tenor is Canada, where yields are less than half a bp higher as of this writing.  The tractor beam of EU yields is by far the single largest factor in this pattern, in our view.

Asia: Overnight trading was solid in Asia with the best performance going to New Zealand (+93 bps) and Taiwan (+98 bps).  Volumes were average or higher than recent levels for most markets, China being one exception where shares traded were three-quarters of the average for the last two weeks.  Japanese equities traded up, barely, with the Nikkei 225 eking out a 9 bps gain after reversing off mid-day lows; volume edged higher than extremely depressed two-week averages but remains very light.  China was mixed with A-shares outperforming (Shanghai Composite +11 bps) while Hong Kong and H-shares had the worst day in the region (Hang Seng -62 bps, Hang Seng China Enterprises -45 bps).  India had a solid day (+46 bps), while other regional markets like Singapore (+55 bps), Korea (+33 bps), Philippines (+20 bps) and Indonesia (+36 bps) all put in decent gains.  Asian credit also outperformed versus US and European indices with the iTraxx Japan CDS and iTraxx Asia ex-Japan IG CDS indices both tightening a point.

Econ Data: Light day in data today after yesterday’s wave of releases.  The only release is weekly Mortgage Applications from the Mortgage Banker’s Association, which were out at 7:00 AM, showing mortgage activity moved slightly higher on lower rates week-over-week.  There are two Treasury auctions today, with an 11:00 AM issue of two year floating rate notes (a re-opening of an existing issue) and a 1:00 PM sale of five year notes, a new issue.

Tuesday
Aug262014

Analyst Ratings Cross the 12,000 Mark

As shown below, there are currently 12,052 analyst ratings for S&P 500 stocks, which equates to 24 ratings per stock in the index.  Of those 12,052 analyst ratings, 6,038 (50.1%) are Buy ratings, 747 are Sell ratings, and 5,267 are Hold ratings.  Clearly analysts are a bullish bunch, but the current Buy/Sell/Hold breakdown is pretty much inline with where it always is.

Over at Bespoke Premium, we just published a more in-depth report on analyst coverage for S&P 500 stocks, where we highlight the stocks most loved and hated by analysts and how they compare to our proprietary stock ratings.  To view the report, sign up for a 5-day free trial to Bespoke Premium today.  Be sure to enter "endofsummer" in the coupon code section of our Subscribe page to get 10% off your membership package.

Below is a breakdown of analyst ratings by sector in terms of coverage.  As shown, Technology is the most widely covered sector at 30.1 ratings per stock.  Energy ranks second at 28.3 ratings per stock, followed by Telecom at 26.6 and Consumer Discretionary at 25.2.  Utilities and Materials are the least covered sectors at 18.9 and 19.4 ratings per stock, respectively.

Finally, below we show the percentage of total ratings that are Buys by sector.  As shown, analysts are most bullish on Health Care with 58.3% Buy ratings.  Energy ranks second at 55.7% Buy ratings, followed by Technology at 54.5%, Industrials at 51.9% and Consumer Discretionary at 51.1%.  Analysts are least bullish on Utilities with just 35.3% Buy ratings.  Telecom, Materials, Consumer Staples and Financials all have a smaller percentage of Buy ratings than the S&P 500 as a whole as well.

Monday
Aug252014

S&P 500 Breadth

Below is a look at the percentage of stocks in the S&P 500 trading above their 50-day moving averages.  Right now, just two-thirds of the stocks in the index are trading above their 50-days, even though the index just hit a new all-time high.  

Find out our thoughts on this divergence in breadth over at Bespoke Premium.  We've just published a B.I.G. Tips report on this topic.  Sign up for a 5-day free trial using our end of summer special today!

Monday
Aug252014

Check-up on Biotech, Internet Groups

Earlier this year in late February and early March, the two groups that did best in 2013 -- Biotech and Internet -- threw hissy fits and went into their own bear markets.  Below is a check-up on their chart patterns now that six months have passed since they last hit all-time highs.

As shown, Biotech has nearly recovered all of its bear market declines, but it's not quite yet to new highs.  At the moment, traders are giving Biotech a bid, but it has key resistance coming up very soon.  With the group already overbought here, it may be take a couple of tests to finally break through.

While Biotech has gained back nearly all of its declines, the Internet group still has a ways to go.  As shown below, the Internet group pulled back 21.3% from late February through early May, and it has bounced 19.6% off its lows at this point.  The group just last week made it above near-term resistance, clearing the way for a run to its year-to-date highs if traders choose to continue taking it higher.

It appeared as if 2014 might be a total bust for Biotech and Internet back in May, but the two groups have really made a nice comeback after bottoming out.  As long as they don't break back below their 50-days in the near term, their directional trends will remain upward sloping.

Monday
Aug252014

S&P 2000

The S&P 500 hit 2000 intraday today for the first time in its history, and a close above that point could happen for the first time this evening.  2000 isn't a particularly important point from a technical perpective, and the move from 1999 to 2000 was no more important for the underlying valuation of the market than a move from 1998 to 1999.  But 2000 is a nice, round number, and it serves as a good point to take a retrospective on how far the market has come during the course of this bull market.

Below is a heatmap of returns for major indices, sectors, and asset classes since the S&P 500 first closed above 1000, 1500, 1900, and over recent weeks.  Because of the double tops we saw in the 2000s, it took a long time to get from 1000 to 2000, and the 1500 level also had to be put in twice.  Investors are hoping to avoid a similar performance from the most recent round number in the index.

One thing that's striking to look at is the wild swings in some asset classes relative to the S&P 500: WTI crude, for instance, has been relatively calm since the wild price swings higher and lower in 2008 and 2009 but versus prices in the late-1990s, oil is drastically higher.  That's not true for the broader universe of commodities in the CRB index though; that measure is actually down since we first hit 1500, while stocks other than Financials have all shown solid gains.  It's not surprising that Energy sector stocks have run up dramatically in the same period.  Consumer Discretionary and Midcap stocks have also performed well over the last decade and a half despite booms and busts in stock market prices during that period.  The three best sectors in the stock market to invest looking from one "big round number" to the next?  Health Care, Consumer Discretionary, and Tech have all outperformed the S&P 500 since 1000, 1500, and 1900. 

Monday
Aug252014

Bullish Sentiment Declines a Bit

There were still more bulls than bears in our weekend Bespoke Market Poll, but the percentage of bulls ticked down 5 points from 64% to 59%.  Bearish sentiment on the market over the next month came in at 41%.

Saturday
Aug232014

The Bespoke Report: 8/22/14

The weekly Bespoke Report is our widely read and renowned weekly publication that covers all of the major market news that occurred throughout the week as well as our analysis of how these events will impact markets in the weeks ahead.  No topics get overlooked in this in-depth report that features all of the unique charts and graphs that Bespoke readers have come to love.  

Some of the topics covered in this week's report include:

  • New Highs for the S&P 500 and Nasdaq, DJIA lagging behind.
  • Which stock characteristics have been powering the market?
  • A complete rundown of this week's economic data.
  • The dollar has surged.  What now?
  • Which sectors and stocks stand to benefit the most from falling gas prices?
  • Equity market mellows to Fed minutes.
  • After three straight up weeks, where does sentiment stand?
  • On Google's 10-year anniversary, Steve Jobs gets the last laugh.
  • Should we really be writing off the Russell 2000 and small cap stocks?
  • Longest streaks for the S&P 500 without a close below its 200-day moving average.
  • Breadth swings from extreme oversold to extreme overbought in under a month.

All this and a lot more is covered in this week's report, so head over to bespokepremium.com and download this week's edition to catch up on everything you need to know.  If you aren't currently a subscriber, sign up for our free trial today and receive instant access.  It's "simply one of the best bargains you'll find." 

B.I.G. Tips - Analyst Ratings 011714

Friday
Aug222014

S&P 500 Higher or Lower from Here?

Jackson Hole has come and gone, so which way will the market head from here?  Please take part in our Bespoke Market Poll by letting us know 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!

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
Aug222014

Dow 30 Trading Range Screen

Below is an updated snapshot of our Dow 30 trading range screen, which takes a look at where the 30 members of the Dow are trading relative to their 50-day moving averages.  For each stock, 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 each stock's 50-day moving average, so you get a graphical representation of each stock's recent price action in one nice table.  Moves into the red zone are considered overbought territory, and when a stock gets up into the dark red shading, it has extended well above its 50-day.  Moves into the green zone are considered oversold territory, with the dark green shading representing extreme levels.

Traders like to use our screen to see which stocks are leading and lagging in the index (or their own portfolios if we have created a custom screen for them).  It's also a useful tool when trying to decide the timing of an entry point for a buy or sell.

As shown below, there are currently 8 stocks in the Dow that are overbought, and 5 that are oversold.  Some of the most overbought names in the Dow right now are Disney (DIS), Home Depot (HD), Merck (MRK) and Procter & Gamble (PG).  The 5 oversold names are American Express (AXP), McDonald's (MCD), AT&T (T), Verizon (VZ) and Exxon Mobil (XOM).  

A green dot means the stock has moved up within its range over the last week, while a red dot means the stock has moved down.  Only 3 of 30 Dow stocks have moved lower within their trading ranges over the last week, so we have seen broad momentum higher since last Thursday's close.  Some key names have just crossed back above their 50-days as well, which means they're not nearly as extended to the upside as the overbought names, but they still have positive momentum on their side.  These include stocks like Boeing (BA), Caterpillar (CAT), General Electric (GE), JP Morgan (JPM), Coca-Cola (KO), 3M (MMM), UnitedHealth (UNH) and Visa (V).  

To run your own basket of stocks or portfolio through our trading range screen on a regular basis, try out our Bespoke Institutional service today.  You can learn more by visiting our Institutional page over at Bespoke Premium or calling 914-315-1248.

Thursday
Aug212014

Bespoke CNBC Appearance (8/21/14)

Bespoke's Paul Hickey appeared on CNBC's Squawk Box with Jim O'Shaughnessy on Wednesday morning to discuss the current market rally and more specifically the Consumer Discretionary sector. To view the interview, click on the image below.

Thursday
Aug212014

Jobless Claims Dip Back Below 300K

Jobless claims fell by 14K last week, falling back below 300K and below consensus forecasts for a level of 303K.  With claims alternating between above and below 300K for the last six weeks, it appears as though claims are clearly settling down at a new lower range.

Although claims declined this week, the four-week moving average actually increased by nearly 5K to 300.75K from last week's post-recession low of 296K.  This was due to the fact that we dropped a reading of 279K from the four-week total. Next week, we will be dropping a level of 303K, so if there is any decline in claims, the four-week moving average will also decline.

On a non-seasonally adjusted basis (NSA), today's claims report was strong.  At a level of 248.8K, NSA claims were the lowest they have been for the current weak of the year since 1999, and 63K below the average level of 312.2K going back to 2000.

Thursday
Aug212014

Philly Fed Hits Multi-Year High

Today's release of the Philly Fed report for the month of August not only came in stronger than expected, but the General Business Conditions index hit its highest level since March 2011.  While economists were forecasting a level of 19.7, the actual reading came in at 28.0, up from last month's reading of 23.9.

Strangely enough, while the headline reading of the Philly Fed report showed strength, the business indicators within the report were practically all weak.  As shown in the table to the right, seven of the nine indicators declined this month, reversing last month's gains.  The biggest declines of the general business indicators came in New Orders and Shipments.  In fact, while the headline reading of this month's report was the best since March 2011, the New Orders component saw its largest monthly decline since August of that same year.   Net net, on the surface there was a lot to like about the report, but after digging into the internals a lot of the bloom came off the rose.

Thursday
Aug212014

Commodity Trading Range Charts

Below is an updated look at our trading range charts for ten major commodities.  For each commodity, the green area represents between two standard deviations above and below the 50-day moving average.  Moves to the top of or above the green zone are considered overbought, while moves to the bottom of or below the green zone are considered oversold.  

As you can tell by the charts, commodities have had a rough go of it lately.  Nearly all of them are currently at the bottom of their trading ranges or worse.  Oil has really broken down here after a brief attempt to break out above $105 in June.  Right now it is in a steep downtrend and has yet to find support.  If oil can't hold the $90 level on a test in the near term, it will be entering price levels that it hasn't seen in quite some time.  Like oil, the precious metals have also been trending lower.  Gold, silver and platinum have all moved to the bottom of their trading ranges recently, so we'll have to see if they can bounce off of these oversold levels.  

Corn and wheat are two more commodities that have had brutal summers.  Since peaking in May, they have been on a straight path lower with hardly any attempts to bounce.  The only commodity that has yet to break down is coffee, but even it has been range bound since the price spike it saw at the start of the year.

Those looking for signs of a pick-up in inflation won't find it in commodity prices, that's for sure. 

Thursday
Aug212014

The Bulls Are Back!

With the S&P 500 on pace for its third straight week of gains, investors are getting hopping on the bullish bandwagon - in a big way.  According to this week's survey of individual investors from the American Association of Individual Investors (AAII), bullish sentiment rose by 6.3 percentage points to 46.11%.  Adding this week's increase to last week's jump of 8.92 percentage points, the two-week increase in bullish sentiment (15.2) is the largest two-week increase since last July.  This week's level of bullish sentiment is also the first reading above 40% since early June and actually represents the highest reading of bullish sentiment so far this year.  While less than half of individual investors are bullish, we are getting close to that 50% threshold that has spelled short-term trouble in the past.

As bullish sentiment surges, bears are moving to the sidelines.  This week's level of bearish sentiment declined from 26.96% last week down to 23.65%, which is the lowest weekly reading since early July.  The last time bearish sentiment saw as big a two-week decline as it has the last two weeks (14.58 percentage points) was back in late October of last year.

Tuesday
Aug192014

S&P 500 Just 10 Points Away

A couple of weeks ago, the bears were out in full force, but a 4% rally off of the August 7th lows has certainly quieted things down.  

As shown below, the S&P 500 is now back in overbought territory (>1 standard deviation above 50-DMA) after trading in oversold territory as recently as last week.  As of the close today, the S&P is just 10 points away from its July all-time high.  Is another break-out near?  (Sign up for a 5-day free trial to the Bespoke Premium service for our thoughts.) 

One area that has already broken out is the tech-heavy Nasdaq, which has blown out to new bull market highs this week.  For further reference, below is a look at the performance of various asset classes since the market made its short-term low on the 7th of this month.  Performance in the US has been pretty even based on market caps, with small, mid and large caps performing roughly inline.  From a sector perspective, Health Care, Industrials and Consumer Discretionary have outperformed during this run higher, while Telecom and Energy have lagged.  

Things have really quieted down in Ukraine/Russia, and Russia's stock market has benefited the most from this.  As shown below, the RSX Russia ETF is up 8.7% since August 7th, which is the biggest gainer of any ETF in the entire matrix.  As stocks have rallied during this geo-political "quiet period," commodity prices have gone lower, led by oil (USO) with a decline of 4%.  Both gold (GLD) and silver (SLV) are down as well, though.

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