Key ETF Performance Through President's Day 2015

Below is a look at the performance of various asset classes through President's Day 2015 using key ETFs from our daily ETF Trends report available to Bespoke Premium members.  For each ETF, we show its performance last week, so far in February, and so far in 2015.  US-related ETFs are generally on the left side of the matrix, while international, commodity and fixed income ETFs are on the right side of the matrix.

US equities are up sharply so far in February, which has allowed them to erase January losses and move into the green for the year.  The S&P 500 (SPY) and Dow 30 (DIA) ETFs are both up more than 5% in February, while the Nasdaq 100 (QQQ) is up 5.75%.  Largecaps and midcaps are outperforming smallcaps year-to-date, while growth is outperforming value.  

Looking at the ten sectors, Energy (XLE), Materials (XLB), Telecom (IYZ) and Consumer Discretionary (XLY) are all up 7%+ this month already.  On the flip side, the Utilities (XLU) sector has plummeted this month, leaving it down more than 4% on the year.

Outside of the US, most countries are in the green for the year, with the exception of Brazil (EWZ), Canada (EWC), Mexico (EWW) and Spain (EWP).  The Russia ETF (RSX) is up the most of any ETF in the matrix with a year-to-date gain of 23.38%.

Commodities have been all over the place this year.  Oil (USO) is up 10% in February, but it's still down 3.63% year-to-date.  Gold (GLD) is down 4.43% in February, but it's up 3.87% YTD.

Finally, fixed income ETFs have run into a rough patch over the last couple of weeks, especially the 20+Yr Treasury (TLT) with a decline of 7.3% on the month.  Even after the pullback, though, fixed income ETFs remain in the green on the year.

Check out this week's Bespoke Report newsletter for a more in-depth discussion of various asset classes. 

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Long Weekend? Check Out Our New Weekly Chart Book.

Over the years, we’ve found that one of the most helpful yet time-consuming tasks for investors is analyzing stock charts on a regular basis.  Whether you’re a market technician or not, simply browsing through price charts can give you a great feel for the underlying trend of the market.  Of course, chart browsing is also very useful for investors that do use technical analysis in their process, as it’s one of the best ways to find new long and short ideas.

While hard-copy chart books are still in print, we’ve yet to find a great online source that makes it easy to quickly look through a large number of stock charts.  To fill this void, we have created our own chart book that is laid out perfectly for fast analysis.  Bespoke’s Weekly Chart Book contains one-year price and volume charts for every stock and sector of the S&P 500, and it’s sorted alphabetically by sector so users can make quick relative strength comparisons.

Our Weekly Chart Book can be intensively studied, but it can also be read from start to finish in under five minutes if you need expediency in your research process.  So whether you want to do deep technical analysis to find the perfect long or short set-up, or do a quick thumb-through to get a better feel for the market, our Weekly Chart Book is the perfect tool.  You’ll have a tough time finding a report that allows you to look through this many charts in so little time!

Bespoke’s Weekly Chart Book is part of our Bespoke Premium and Bespoke Institutional services, and it is published towards the end of each trading week.  

Please click on the thumbnail image below to view Friday's version of the report with charts updated ahead of Tuesday's open.  To receive our Weekly Chart Book going forward, simply sign up for a Bespoke Premium orInstitutional membership today.  Use "chartbook" in the coupon code section of our Subscribe page to receive a 10% discount on your new membership!


S&P 500 Higher or Lower from Here?

The S&P 500 closed out the week at a new all-time high.  But which way will the market go from here?  Please take part in our Bespoke Market Poll below 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 Tuesday before the open.  Thanks for participating and have a great President's Day weekend!

Looking for some weekend reading?  Be sure to check out our just-published Bespoke Report newsletter.  This week we cover earnings season, retail sales, international markets, tax returns, market internals, the pullback in Utilities and much more.  Sign up for a 5-day free trial to any of our subscription services to view this week's report.

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Guidance Spread Still Negative

So far this earnings season, the spread between the percentage of companies raising guidance minus lowering guidance is -9.2 percentage points.  As shown below, that's the lowest reading seen since the two quarters that came right at the end of the financial crisis.  Pretty amazing that the only time this many companies have been this negative over the last 10 years was when the S&P was nearly 1,400 points lower than it is now.  

For more earnings season analysis, sign up for a 5-day free Bespoke Premium trial and check out our Bespoke Report newsletter set for publication this evening.


S&P 500 Approaching New Highs

After another rally today, the S&P 500 is now just 5 points below its prior all-time highs reached at the end of December.  As shown below, the index and six of ten sectors are now in overbought territory, with Consumer Discretionary leading the way higher.  The one sector that has not participated in the fun recently is Utilities.  In fact, the sector is now trading in oversold territory as the rest of the market rallies.  

You can see the sideways pattern the S&P 500 has been in over the last few months in the chart below.  Even more recently the S&P had been in an even tighter sideways range, but we managed to break convincingly above that today.  Should we manage to take out the December highs in the coming days, you'll hear a lot of bulls cheering on another big leg higher.

Earlier today we noted the weak relative strength of the Utilities sector.  Below we provide one-year relative strength charts (vs. the S&P 500) for all ten S&P 500 sectors.  In the charts below, rising lines mean the sector is outperforming the S&P 500, and vice versa for declining lines.  Levels above 0 mean the sector was outperforming the S&P 500 over the last year at that point in time, and vice versa for levels below 0.  Dots represent FOMC days.

Relative strength for the Utilities sector has fallen apart since the last FOMC meeting, which coincided with the short-term low in interest rates as well.  Taking its place on the positive side are sectors like Consumer Discretionary -- which is now outperforming the S&P 500 over the last year -- Materials, Financials, and Technology.  Other sectors that have seen relative strength pull in a bit recently include Consumer Staples (another defensive) and Health Care.

Every week at Bespoke Premium, we publish our Sector Snapshot, which provides commentary along with multiple pages of sector charts of things like trading ranges, advance/decline lines, valuations, relative strength and long-term breadth.  To check out this week's Sector Snapshot, sign up for a 5-day free Bespoke Premium trial today.



Utilities On the Elevator

There's an old saying on the Street that stocks take the stairs up and the elevator down.  In other words, gains typically occur over a period of weeks or months, but can be erased in days or even hours.  The recent performance of the Utilities is a prime example.  For months, investors have been amazed at how even in an up market one of the best performing sectors had been the Utilities sector.  

Take a look at the chart below, which is from our weekly Sector Snapshots report, though.  In the span of two weeks, the sector's fortunes have turned on a dime, and as of this afternoon, the sector has nearly given up all of its outperformance versus the S&P 500.  The fact that the peak of the sector's relative strength coincided with the trough in Treasury yields just illustrates how sensitive to interest rates the sector is.


Jobless Claims Back Above 300K

After two straight weeks with a two-handle, jobless claims rose back above 300K this week.  While economists were expecting first time claims to come in at 287K, the actual reading was 17K higher at 304K.  Even with the higher than expected reading, though, we would stress the fact that claims are still exceptionally low by historical standards.

Even after this week's increase in claims, the four-week moving average declined from 293K to 289.75K.  This is the lowest level for the four-week moving average since mid-November, but is still nearly 11K above the post-recession low of 279K from 15 weeks ago in late October.

On a non-seasonally adjusted (NSA) basis, initial claims rose by 17.1K to a level of 323.7K.  For the current week of the year, this is the lowest level since 2005, and more than 88K below the historical average of 412.1K for the current week dating back to 2000.


Bearish Sentiment Crashes

After a strong week for equities, bullish sentiment rebounded this week partly erasing last week's nine percentage point decline.  According to the weekly survey from the American Association of Individual Investors (AAII), bullish sentiment rose to 40% from last week's reading of 35.49%.

Along with an increase in bullish sentiment, we also saw a monster decline in bearish sentiment.  After rising ten percentage points last week, bearish sentiment erased all of that increase and then some by dropping 12.12 percentage points to 20.3%.  This is the lowest reading of bearish sentiment since the first week of 2015, and was also the largest one week decline in more than three years.  Based on this week's survey readings, investors appear to have breathed a huge sigh of relief after last week's rally in equities. 


Energy and Utilities Swap Places

As of this afternoon, 61% of stocks in the S&P 500 are trading above their 50-day moving averages.  Readings over 50% mean breadth is positive, and right now nine of ten sectors are above this level.

Interestingly, the one sector now without a reading over 50% is Utilities, which has been a market darling over the last year.  After the sector's recent pullback, just 13% of Utilities stocks are above their 50-days.  Taking its place on the positive side are Materials and Energy.  Right now 83% of Materials stocks and 72% of Energy stocks are above their 50-days.  While Energy stocks are still mostly in downtrends, their 50-days have finally caught up, setting up a base-building scenario.  

For more in-depth sector internals, check out our weekly Sector Snapshot available with a Bespoke Premium subscription.


Energy Sector Short Interest Going Parabolic

Short interest figures for the end of January were released after the close yesterday and earlier today we sent out our regular bi-weekly update to clients.  There were a number of noteworthy aspects to this month's report, but the one that sticks out the most has to do with the Energy sector.  As of the end of January, the average stock in the Energy sector had 9.88% of its floating shares sold short.  As the chart below illustrates, this is the highest level of short interest for the sector since at least 2008.  

The fact that average short interest levels in the Energy sector are approaching 10% is noteworthy to say the least.  It's safe to say that in the Energy sector, we haven't seen these levels in at least a decade, and for the market overall, the only time we saw double-digit levels of short interest for any sector was back during the Financial crisis.  Needless to say, a lot of investors are extremely bearish on Energy right now, and given the plunge in oil prices, the pessimism is understandable.  However, if oil prices do start to stabilize, or even rise, there will likely be a major rush to get out of these bearish bets. 


Michigan Confidence Pushing Towards 100

University of Michigan Consumer Sentiment is probably the top economic confidence measure used by Wall Street.  The index has a base value of 100 from December 1964, but as shown below, the measure has rarely been above 100.  The only prolonged period where Michigan Confidence was above 100 was from 1996 to early 2000.  

Why do we mention the 100 level?  Because Michigan Confidence is currently as close to 100 as it has been since 2003.  Throughout most of the current bull market, consumer confidence in the economy has been extremely weak, but 2014 marked a turning point for confidence, and it has recently spiked significantly as the jobs market has improved dramatically and oil prices have declined.

While the spike towards 100 could certainly be seen as a warning sign that consumers are getting ahead of themselves, the 1996-2000 period does provide precedent that the current spike doesn't have to mark a top.  

We're able to measure economic confidence in our monthly Consumer Pulse survey as well.  Whereas the Michigan Confidence reading is formed from a 50-question telephone interview of 500+ individuals, our Pulse confidence measures are formed from a 75-question survey of 1,500 American consumers.  Below are the recent results from our question asking survey participants to describe how confident they are towards the economy.  As shown, as recently as November, there were more negatives than positives, but that sentiment has completely flipped in our most recent survey conducted in January.  

Below we take track the percentage of negatives or very negatives and positives or very positives along with a net reading of the two (positives minus negatives) since we began conducting our Pulse survey last July.  As shown, the net reading has gone from -20 to +5.5 since last October, which is a dramatic improvement.  This spike began right when oil prices started to fall, so while the economic data we've gotten has yet to really show a positive impact from oil's drop, we think it has had a big impact on consumer sentiment.  

If recent sentiment levels have any kind of longevity, it may be the key to this market making the next big leg higher that bulls are hoping for.

To try out our Bespoke Consumer Pulse subscription service for free and see our most recent January report, visit the Pulse subscribe page today!


Bespoke's Countdown to Liftoff Indicator Suggests a September Hike

Please click on the image below for an enlarged view of our updated Countdown to Liftoff indicator, which predicts the number of months until the Fed hikes rates.  Last Friday, we saw a one month drop in our indicator from 9.5 months down to 8.3 months after the stronger than expected January jobs report.  So far this week we have seen a slight decline from 8.3 months down to 8.12 months, which projects out to October 2015.  Since the likely scenario is a Fed Funds rate increase at a meeting with a press conference (September or December), we interpret the current reading as the market expecting a hike in September.


Can Homebuilders Break Out?

The S&P 1500 Homebuilder Group has had a strong start to the year, even as our housing survey data had a rough January.  Below is a chart of the S&P 1500 Homebuilder Group going back to 1994.  As shown, after ramping up significantly in the early part of the current bull market, the group has traded sideways since the end of 2012.  After its run over the last couple of months, the group is now 2.5% away from breaking out of its current sideways range.  If it can convincingly clear this level, it can attempt to make another leg higher as it tries to work its way back to prior highs reached during the housing bubble of the mid-2000s.  It has a loooooong way to go to reach those levels, though.

One of the main trackers of the homebuilder group is the NAHB Homebuilder Sentiment survey.  We've plotted this reading on the chart below so you can see the way the two move alongside each other.  Interestingly, in recent years, the NAHB reading has made a nice move higher even as the homebuilder group remained in a sideways pattern.  But NAHB Sentiment is also at another key breakout level right now, and if it's able to, it would likely help the homebuilder stocks break out as well.  The next NAHB Sentiment reading comes out next Monday, and economists are currently expecting it to tick up one point month-over-month from 57 to 58.


NFI Big Disappointment

Today's report of the NFIB Small Business Optimism Index was a big disappointment relative to expectations.  After breaking the triple digit level for the first time since October 2006 in December, economists were predicting further improvement in January.  The actual reading, however, was significantly weaker at 97.9.  That 3.1 point miss relative to expectations was the biggest miss since November 2012.  While this morning's report was a disappointment, the headline index still remains above its average of 96.1 dating back to 2000.

As we do each month, the table to the right lists what issues are being cited as the single most important problem faced by small businesses.  Topping the list this month is Government Requirements/Red Tape, which was cited by 22% of small businesses.  Taxes, which had been cited by 27% of small businesses in December, dropped to 21% this month.  With less businesses citing taxes as their number one problem, both Poor Sales and Cost/Availability of Insurance saw two point increases.

The chart below compares the percentage of businesses citing 'Government' problems versus the percentage citing Poor Sales.  In last month's report, we saw 'Government' jump to an all-time high, while Poor Sales dropped to its lowest level since 2007.  This month, we saw a partial reversal of that trend, but 'Government' still remains elevated, while Poor Sales is low.

Labor is an issue that is creeping back up towards its post-recession highs.  The chart below combines the percentage of small businesses citing Cost of Labor and Quality of Labor as their number one problem.  At its current level of 16%, the combined reading has been at this level two other times in the last year, but hasn't been higher since February 2008.


Oil Charts

Oil has bounced close to 20% off its recent lows, but one look at its longer-term chart shows that it still has a long way to go to get back to levels it was at just six months ago.

At its lows, oil got down to 50% below its 200-day moving average.  While extreme, remember that it was close to 70% below its 200-day during its 2008 crash!

While the 2008 drop for oil was extreme, it came at a time when the global economy was in a steep recession and the stock market was also collapsing.  Below is a look at the ratio of the S&P 500 to the price of oil.  While oil's collapse in 2008 was more extreme than this one, the period hardly registers on the chart below because the S&P 500 was falling sharply as well.  This time around, the S&P 500 hasn't missed a beat (so far at least), causing the ratio to spike to levels that haven't been seen since the early 2000s.  While the ratio has increased significantly over the last few months, look how high it was back in the late 90s when stocks were soaring and oil was in the $10s and $20s. 

Finally, it's important to remember that it's tough for individual investors that only use ETNs or ETFs to play moves in the price of oil.  Check out the performance of the "USO" ETF that's meant to track the price of oil that you see on the ticker every day.  Back in April 2006, USO was introduced on exchanges at very nearly the same price that oil was trading at the time (right around $68).  Today USO shares trade at $19.77, while oil -- the commodity -- is around the $50/barrel mark.  You can see the price movements of the two in the chart below: 

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