A New Streak for Prices at the Pump

After a record losing streak of 123 consecutive days without a gain where the national average price of gasoline fell nearly 40%, gas prices have now started a mini-streak in the other direction.  According to AAA, the national average price for a gallon of gas has now gone 14 days without a daily decline.  Over that time period, prices at the pump have risen an average of 7%, which is the largest two-week increase in two years.  Even after that increase, though, prices are still down 35% from the levels they were when the record losing streak began.


Housing Data Cold in January

Our monthly Bespoke Consumer Pulse survey of 1,500 US consumers (a statistically significant sampling of the US population) has a big section on the housing sector.  In this section, we're able to track both present and projected home sales, trends in rent costs and mortgage payments/delinquencies, refis, new constructions, building permits, and even home improvement spending.  Below are a few stats from our recently-published January Pulse survey report to give you a better picture of the housing market.

We asked all respondents who own a home to select when they purchased their home.  As displayed below, more than a quarter of respondents purchased their home 16+ year ago, while two-thirds purchased their homes 6+ years ago.  6.0% of respondents purchased their home during the past year, continuing to trend lower.  Similar to home ownership rates, this series tends to vary around trend quite significantly.  In the second chart below, we track the percentage of home owners who purchased their home during the past three months and the past year.  Purchases within both the past month and past year are continuing to edge off recent highs.


lnterestingly, despite fresh lows in mortgage rates, refinancing as measured in our survey fell notably in January down to just 4.2% of respondents with a mortgage.

In the chart below, we track the percentage of respondents who are likely or very likely to purchase a house in the next year.  As you can see, home purchase expectations remain in the middle of their range after a disappointing decline in December persisted.  In January, 5.8% of respondents were likely or very likely to purchase a house in the next year.  After a pick-up in October and November that looked like it could be the start of something bigger, consumers appear to have backed off a bit.

We also ask respondents to select their favorite website/app for searching for real estate.  This allows us to track the usage of publicly traded companies like Zillow (Z) and (MOVE), and it's also another way to measure the strength of the housing market.  As you can see, in December and January, there was a big pick-up in the "Not Applicable" selection, while interest in Zillow (Z) and (MOVE) trended lower.  This downturn in use of real estate search tools is broadly consistent with the decline in intents to purchase over the last two months.

Along with our Housing section, our monthly Consumer Pulse report covers the labor market, consumer confidence, consumer spending, consumer finances, inflation expectations and stock market sentiment.  It also covers mutliple consumer related sectors, groups and individual stocks.  If you're interested in getting a real-time view of unique trends in the US economy that's outside of the box from the regularly released economic indicators, we urge you to try out a Pulse subscription today.  You can sign up for a 5-day free trial at the Pulse subscribe page to view the full 59-page January report.   


Back to Bullish

Last Monday we saw bullish sentiment in our weekly Bespoke Market Poll dip below 50% for the first time since the end of Q3 2014.  After the big bounce-back for the market that followed last Monday's poll, investors have switched back to bullish once again.  Last week bull/bear sentiment came in at 43%/57%.  This week the numbers completely flipped to 57%/43%.  


Starting the Week Neutral but Pointed Lower

As we start a new trading week, below is a look at where the 30 largest country ETFs (traded here on US exchanges) are currently trading within their normal ranges.  For each ETF, the dot represents where it is currently trading, while the tail end represents where it was trading one week ago.  The black vertical "N" line running from top to bottom represents each ETF's 50-day moving average.  Moves into the red zone are considered overbought, while moves into the green zone are considered oversold.  A green dot means the ETF has experienced upside momentum within its range over the last week, and vice versa for a red dot.

As you can see, global markets left off trading last week trending higher (most ETFs are back above their 50-DMAs) with upside momentum.  The world is pretty much in neutral territory as just 5 of 30 ETFs are overbought or oversold.  In fact, just two ETFs ended the week oversold -- Brazil (EWZ) and Turkey (TUR), while three ended up overbought -- Hong Kong (EWH), Phillipines (EPHE) and South Africa (EZA).

Looking at year-to-date performance, Russia (RSX) is leading the way at +11.69%.  South Africa (EZA), Thailand (THD) and India (PIN) are other countries up nicely so far in 2015.  Countries that have started the year negatively include Brazil (EWZ), Canada (EWC), Spain (EWP) and Turkey (TUR).

Greece is impacting global markets negatively this morning, with European indices down sharply and US futures off about half a percent.  Let's see what the week brings.  


500 Charts in Under 5 Minutes

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 in 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 your 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 tomorrow's open.  To receive our Weekly Chart Book going forward, simply sign up for a Bespoke Premium or Institutional membership today.


S&P 500 Higher or Lower from Here?

The S&P 500 had a strong week even with Friday's pullback.  So which way will the market go from here?  Please take part in our weekly 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 Monday before the open.  Thanks for participating, and have a great weekend!

Bespoke's weekly Bespoke Report newsletter was just published Friday after the close.  Among other things, this week's report takes a deep look into earnings season and the state of the jobs market in the US.  Sign up for a 5-day free trial to Bespoke Premium to view this week's report.  You'll also have access to the Bespoke Model Stock Portfolio, which is up 5% year-to-date versus a flat S&P 500. 

Will the S&P 500 be higher or lower than its current level one month from now?
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Labor Market Positives

Today's jobs report surprised slightly to the upside, but it was upward revisions to November and December that really surprised people.  Our Consumer Pulse survey report (available for purchase by subscription) has shown extremely positive labor market conditions for months now.  Below is a snapshot of data from a few of our labor market questions in our January Pulse survey.  Note the trends in employment versus confidence.  

To view our entire January Pulse report, sign up for a 5-day free Pulse trial today.  Enter "pulseblog" in the coupon code section of the Pulse subscribe page to receive a 10% discount on your subscription!

Excerpt from our January Pulse report:

While spending measures are negative, other indicators are looking very strong.  Based on government data, December tends to represent a peak in non-seasonally adjusted initial jobless claims.  Therefore we aren’t surprised to see a major drop (chart, right) month-over-month in new unemployment filings from our consumer cohort.  That said, we were not expecting a new low (which we got) or a 2.8 percentage point decline month-over-month.  Weekly initial jobless claims reinforce this reading as data on January 29th showed initial claims falling to the second lowest level in four decades.  This is consistent with our view that slack in the labor market is declining rapidly; it also suggests that estimates of slack from 2014 were probably too small given the massive demand for labor evidenced by low unemployment filings and high job creation.

While gas prices have been a huge benefit to confidence, it’s not the only factor at work.  At right we graph net confidence (please see pages 6 and 12) versus expectations for US Unemployment Level One Year From Now, in the form of our tracker.  As shown, both broke out notably from their ranges starting with the November report, and that breakout has continued.  As perceptions of the labor market improve, consumers are feeling more optimistic about the economy as a whole.


Health Care Leading, Energy Lagging

So far this earnings season, the average stock that has reported has gained 0.48% on its report day.  (For companies that report in the morning, we use that day's change.  For companies that report after the close, we use the next day's change.)  Below is a breakdown of one-day performance on earnings by sector.  As shown, Health Care and Telecom stocks that have reported have reacted the most positively, averaging one-day gains of more than 1%.  Four other sectors are beating the broad market's 0.48% average one-day gain -- Consumer Discretionary, Materials, Technology and Industrials.  

Four sectors are underperforming the broad market as well.  Energy stocks are performing the worst on earnings, with an average one-day decline of 0.14%.  Consumer Staples, Utilities and Financials are all averaging gains on earnings, but the gains are just not very strong.

Interested in more earnings season analysis?  Sign up for a 5-day free Bespoke Premium trial and check out our Bespoke Report newsletter when it's published this evening.  We'll have a multi-page section on earnings in this week's report.


Best and Worst Performing Stocks on Earnings This Season

The average stock that has reported earnings this season has gained on the first trading day following its report.  We've seen a lot of huge moves higher this season, though.  Below is a list of the 40 stocks that have reacted the most positively to their earnings reports this season.  As shown, Glu Mobile (GLUU) has posted the biggest one-day gain at +30.73%, followed closely by K12 (LRN) at +30.32%.  

A number of Tech companies that were pretty down in the dumps heading into this earnings season have seen huge gains following their reports.  A few on the list below include Netflix (NFLX), Tableau Software (DATA), Twitter (TWTR) and (AMZN).  Another Tech stock on the list that we've been positive on based on our Pulse survey work is LinkedIn (LNKD) -- See page 49 of our December report.  Following its report last night, LNKD is up 14% today -- trading to a new all-time high.

There are 61 stocks that have traded up more than 10% on their earnings reports this season, but there are 50 that have traded down more than 10% as well.  Below is a list of the companies that have gotten hit the hardest on earnings this season.  Topping the list is Rentrak (RENT) with a one-day decline of 36.93%.  Hawaiian Holdings (HA) ranks second worst at -26.97%, followed by QuickLogic (QUIK) in third with a loss of 25.26%.  Other notables on the list of losers include Deckers Outdoors (DECK), YELP, Ralph Lauren (RL), KB Home (KBH), Travelzoo (TZOO), and Expedia (EXPE).

Interested in more earnings season analysis?  Sign up for a 5-day free Bespoke Premium trial and check out our Bespoke Report newsletter when it's published this evening.  We'll have a multi-page section on earnings in this week's report.


Strong Jobs Move Forward Rate Hike Expectations

This morning the Employment Situation Report showed one of the strongest months for the jobs market in the United States in over a decade.  While headline jobs created (Nonfarm Payrolls) beat expectations but weren't a blowout, there were strong upward revisions to prior months, showing that payroll growth continues to accelerate.  The unemployment rate jumped, but did so because the labor force participation rate jumped by 0.2% as Americans surged into the labor force, seeking out higher paying jobs.  To that end, average hourly earnings jumped 0.5% month-over-month, coming in at 2.2% year-over-year versus 1.9% expected and a paltry 1.7% year-over-year last month; there were also upward revisions to the prior month's disappointing wages data.

Overall, the strong report and continued labor market momentum suggest that the Fed's indicated plan to raise rates some time this year is not only on-course, but may in fact have to be pushed up from the baseline assumptions in the market of Q4.  As of yesterday, our Countdown To Liftoff estimate of a likely rate hike date based on the Fed Funds futures market suggested as it had for several weeks that the FOMC would raise rates late in the year, in either September or December, with a slant towards December.  Our index now suggests a rate hike one month earlier, reading October as the month most likely for a hike, declining 1 month day-over-day.  Since the likely scenario is a Fed Funds rate increase at a meeting with a press conference (September or December) we interperate this as the market expecting an increased likelihood of a hike in September.


Countdown To Liftoff Stable Ahead of NFP

Ahead of the BLS's release of the Employment Situation Report at 8:30 AM tomorrow morning (featuring the critical Nonfarm Payrolls reading), Bespoke's Countdown To Liftoff measure of the months remaining until a Fed hike is showing a very stable reading.  With a large selloff in bonds taking place over the last week (ten year yields have moved higher in yield by 18 bps in four sessions, while long bonds have seen yields rise 21 bps in the same period) the Fed Funds futures market is roughly unchanged, still predicting a hike some time in November.  For practical purposes, that means December, as there is no Fed meeting in November.


A January Fast Food Slowdown

With our monthly Consumer Pulse report, we survey a statistically significant sampling of 1,500 US consumers on a range of financial and economic topics.  One question looks at the fast food space -- asking survey participants if they have visited a variety of chains over the past month.  This gives us a good idea of month-to-month traffic trends for the space.

Below are the results for fast-food store visits from our January Pulse report.  As shown, McDonald's (MCD) is unsurprisingly in the top spot with 47.1% of respondents.  However, that's down from a reading above 50% in November.  Starbucks (SBUX) ranks second with 31.2% of participants visiting the store within the past month.  Taco Bell, Wendy's and Burger King round out the top five.

At 15.3%, Dunkin Donuts (DNKN) gets about half the visits that Starbucks gets.  Chipotle (CMG) is right up there with Dunkin Donuts, and it's ahead of Pizza Hut, KFC, Sonic, Jack in the Box, Popeye's and Denny's.  Also, Chipotle is one of the only chains that saw a month-over-month increase in foot traffic from December to January.  We know Chipotle just got hit hard yesterday following earnings, but the company continues to grow its brand nicely.

Along with survey analysis on specific companies and areas of the market, our monthly Consumer Pulse report also monitors trends in the broad US economy including the state of employment.  In this regard, our just-published January Pulse report is a great read ahead of Friday’s non-farm payrolls number.  To view the full survey report, sign up for a 5-day free trial to Pulse today.  Enter “pulseblog” in the coupon code section of the Pulse subscribe page to receive a 10% discount on your new membership!


Bulls Retreat; Stocks Rally

Well, it looks like the market's recent volatility may be finally making its presence felt in the sentiment of individual investors.  According to the weekly survey from the American Association of Individual Investors (AAII), bullish sentiment dropped to 35.5% this week from last week's reading of 44.17%.  This week's reading is the lowest level of bullish sentiment that we have seen since early October.  Given the drop in bullish sentiment, it's ironic that the S&P 500 is having one of its best weeks of the year.

While bullish sentiment fell this week, bearish sentiment spiked ten percentage points from 22.4% up to 32.4%.  This was the largest one-week increase for bearish sentiment in thirteen months, and is the highest weekly reading since 10/16.


Jobless Claims Better Than Expected Again

Jobless claims for the latest week came in better than expected for the second straight week, partly reversing the recent trend of four straight weeks where weekly claims were higher than expected.  While economists were forecasting claims to come in at a level of 290K, the actual reading came in at 278K.  This week's reading was an uptick of 11K from last week, but considering the fact that last week's reading was the lowest reading of the expansion, that is not a very big deal.

Even after this week's increase in claims, the four-week moving average dropped by 6.5K down to 292.75K.  This is because last week's weekly reading was such a large decline, so we are still dropping much larger numbers from the four-week count.  In fact, unless weekly claims rise above 317K next week, the four-week moving average will drop once again.

On a non-seasonally adjusted basis (NSA), weekly claims rose by 23.8K.  While this is a larger increase than the seasonally adjusted increase, we would still note that for the current week of the year NSA claims are well below their historical average (since 2000) of 413.8K.  It was also the lowest reading for the current week of the year since at least 2000.


Weak Guidance, But Investors Are Buying on Earnings

Last Friday we noted that forward guidance so far this earnings season has been as bad we've seen since the depths of the financial crisis.  Don't tell that to investors, though, because they've been bidding stocks higher on their earnings report days.  Since the start of earnings season, the average one-day change in reaction to earnings (for companies that report after hours, we use the next day's change) for the 750+ stocks that have reported has been +0.43%.  That's a solid reading, especially with the S&P 500 flat since earnings season began.  As shown below, if the gains continue through the end of earnings season in mid-February, it will be back-to-back quarters where stocks have gone higher in reaction to earnings.  Prior to last earnings season, we'd had two earnings seasons where stocks reacted very negatively to their reports.  

So how has the +0.43% average gain on earnings this season been achieved?  Well, typically you see a stock make the majority of its earnings move in after hours or pre-market trading right after the earnings report has been released.  This means that if you didn't own the stock heading into its earnings report, you likely won't be able to take part in the big gain (or loss) that occurs due to the earnings news.  This earnings season, however, the average stock has moved more during regular trading hours than it has outside of trading hours.  As shown below, the average stock that has reported has opened higher by 0.09% following its earnings report, then it has averaged an additional gain of 0.34% from the open to the close of trading for a full day's change of +0.43%.  It looks as if investors are in more of a "wait and see" mode this season, waiting to buy until after earnings are released if the results are to their liking.

Looking for more earnings season analysis?  Sign up for a 5-day free Bespoke Premium trial today.

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