Thursday
Sep042008

Theoretical Declines of a Bursting Oil Bubble

We've compared the rallies of the tech and homebuilder bubbles with the rally in oil plenty of times here.  Below we highlight the returns from trough to peak of the three asset classes during their respective bubbles.  As shown, the Nasdaq went up 640% during its 1990s bubble, while the homebuilder stocks went up 839% during their 2000s bubble.  From oil's bottom of $16.70 in November 2001 to its recent peak of $145.29 on July 3rd, the commodity rallied 770% -- right in between the rallies of the Nasdaq and homebuilder bubbles.

Bubblegains

While it's pretty much unfathomable and also unlikely, we charted what the declines in oil would look like if the commodity took the same path as the Nasdaq and homebuilders on the way down.  From peak to trough for the Nasdaq, it went down 77.93% over 647 trading days.  From peak to trough for the homebuilders, the S&P 1500 Homebuilder index went down 78.38% over 750 trading days.  For oil to match the Nasdaq crash, it would get all the way down to $32.06 by February 1st, 2011.  For it to match the homebuilder crash, oil would fall to $31.40 by June 27th, 2011.

Again, odds are that oil has no shot of getting back to the $30s anytime soon, but since the rise in oil was very comparable to the tech and housing bubbles, it's interesting to see what a comparable decline would look like.

Theoretdeclines

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Thursday
Sep042008

Energy Less Liked Than Financials

If there was one over-riding theme of the first half of this year, it was to go long energy and commodities and short financials.  As we all know, however, the trade has completely unraveled since July, as oil and other commodities have been decimated.  Now that the CRB index is in a bear market, analysts are coming to grips with the fact that earnings in the stocks in the energy sector may not be as robust as previously thought.  In fact, for the first time this year, negative revisions in the energy sector have actually exceeded the pace of negative revisions in the financial sector.

Eps_revisions_energy_and_financia_2

Wednesday
Sep032008

International Revenues Playing a Role in the Rally

With the Dollar up sharply since the S&P 500 made its recent low on July 15th, we wanted to see how much the move might be impacting equities.  As the Dollar has declined over the last few years, US exports have risen sharply, and US companies with large international revenue exposure have benefited.  But as the Dollar has bounced off its lows recently, the international revenues play has reversed.  Below we highlight the average performance since July 15th of stocks with no international revenues and stocks with more than 50% international revenues.  As shown, S&P 500 stocks with no overseas exposure (148 stocks) are up an average of 20%, while those with more than 50% (106 stocks) are up 2.84%.  The S&P 500 as a whole is up 4.94%.  If the Dollar continues to rally, this trend should stay in place.   

Intlrevs

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Wednesday
Sep032008

Nasdaq 100 Struggles

The tech-heavy Nasdaq 100 is currently set to have its third straight -1% decline.  Below we highlight the 25 (out of 100) worst performing stocks in the index since last Thursday's close.  As shown, Dell has lost nearly a fifth of its value over the last three days, topping the list of losers.  DELL is followed by Joy Global (-17.9%), Steel Dynamics (-14%), Foster Wheeler (-13%), Marvell Technology (-11%), and Akamai Tech (-10%).  The majority of the list is made up of stocks in the Semiconductor sector, which is getting hit extremely hard again today.

Worstndx

Wednesday
Sep032008

Most Overbought and Oversold US ETFs

We recently analyzed the 800+ US ETFs to see which ones were the most overbought and oversold relative to their 50-day moving averages.  As shown below, four double short commodity ETFs top the most overbought list, with the homebuilder ETF (XHB) ranking fifth.  Other notables on the overbought list include KRE and IAT (regional banks), DUG (inverse oil & gas stocks), XRT (retailers), KBE and PJB (banks), and DGZ (inverse gold).

Overboughtetf_3

On the flip side, all of the long and double long commodity ETFs are trading the furthest below their 50-day moving averages.  Coal and mining ETFs such as KOL and XME are also very oversold, along with Russia (RSX) and South Korea (EWY).

Investors looking for a continuation of current market trends may want to look at the overbought list for buys, while investors expecting a reversion to the mean in the coming days may want to sell the overbought list and buy the oversold list.   

Oversoldetf_2

Wednesday
Sep032008

Dollar Golden Cross

The US Dollar index has made a "golden cross" today, as its 50-day moving average has crossed above its 200-day moving average as both are rising.  The "golden cross" is viewed as a positive by market technicians, as it is thought to signal a significant favorable turning point.  Regardless of your thoughts on technical analysis, the chart below highlights a clear shift in the Dollar over the last few weeks.

We recently highlighted how the Dollar has performed following all prior "golden crosses" at Bespoke Premium.  Click here to subscribe and view the report.

Dollarcross

Wednesday
Sep032008

Investor Presidential Survey

Along with the general public polls, Obama got a bounce last week in our Investor Presidential Survey as well.  As shown below, Obama currently leads McCain by 3 points in our weekly poll.  Please let us know who you would vote for if the Presidential election were held today by taking part in our survey below. 

Obmc_2


Who would you vote for if the US Presidential election were held today?
McCain
Obama
Other
Neither
  
Free polls from Pollhost.com

Tuesday
Sep022008

Sector Impact on Today's Market Move

Every sector saw pullbacks today after the market traded higher in the morning, but the Energy sector was unsurprisingly the weakest link.  With oil off more than $5, the S&P 500 Energy sector closed down 4.62% today and accounted for -155% of the S&P 500's point move.  Technology was the second biggest negative impactor at -55%, followed by Materials at -23%.  Financials, Consumer Discretionary, Consumer Staples and Telecom all managed to hold onto gains of more than 1%.  With "domestic" sectors trading higher and "international" sectors trading lower today, the positive Dollar trade seems to be peaking its head into the equity market.

Sectormove

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Tuesday
Sep022008

Crazy 2008

A couple of months ago, it would have been crazy to think that by the start of September, the homebuilders and the dollar would be up on the year, while the energy sector, natural gas and gold would be down on the year.  But the tape today shows that just that has happened.  The homebuilder ETF (XHB) is currently up 6% year to date, the US Dollar index is up 1.84%, natural gas is down 1.87%, gold is down 4.5%, and the S&P 500 energy sector ETF (XLE) is down 10%.

Assetclass902

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Tuesday
Sep022008

Year to Date Performance of Dow 30 Members

Below we highlight the year to date performance of the 30 DJIA members with four months remaining in 2008.  As shown, Wal-Mart (WMT) tops the list with a gain of 27.5% year to date.  WMT is trailed by IBM (14%), McDonald's (8.2%), Johnson&Johnson (7.8%), and Home Depot (6.1%).  DuPont (DD) and Disney (DIS) are the other two Dow members that are up on the year.  AIG is down the most this year with a decline of 62%, followed by General Motors (-57%), Merck (-38.5%), Citigroup (-33.9%), and Boeing (-23%).  Twenty-three stocks out of 30 are down for the year, while 7 are up.  And with a decline of 16.07% year to date, Exxon Mobil ranks 19th out of the 30 Dow stocks in terms of performance.  After losing a sixth of its value this year, that windfall profit tax is not something XOM is looking forward to dealing with.

Dow30ytd

Tuesday
Sep022008

Inflation Fears Subside

The Lehman US Treasury Inflation Protected Securities ETF (TIP) is having one of its worst days of the year today, down a little more than 1.5%.  As shown in the first chart below, the ETF has been in a downtrend since topping out in mid March.  In the bottom chart, we compare the TIP ETF with the CRB Commodity index.  The two are relatively correlated, since TIPS "protect" against inflation, while the CRB index measures commodity prices. 

Interestingly, the TIP ETF has led the CRB index in their most recent rallies and declines.  The TIP made a short-term bottom last June and rallied sharply through this March.  The CRB index didn't really begin its spike until last August, and it didn't top out until early July.  Both are currently declining, which means inflation concerns are subsiding.  Based on recent trading patterns in the two, it may be worthwhile to look for a bottom in TIP before looking for a rally in commodities.

Tips 

Crytip

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Tuesday
Sep022008

Bespoke's Commodity Snapshot

With oil trading down $8, we thought we'd update our trading range charts of major commodities.  Oil is currently making another leg down after breaking below $110 support.  The next level of support for oil is at the $100 level.  Commodities are down across the board today, but along with oil, natural gas, copper, and wheat are the only ones making lower lows.  Gold, platinum and silver still remain above their August lows, along with corn, orange juice and coffee.

Oilnatgas

Gldsilver

Platcopper

Crnwht

Ojcof

    

Friday
Aug292008

Key ETF Performance

Below we highlight the performance of key ETFs across all asset classes over the last day, week, and month.  Have a look, and have a great Labor Day weekend.

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Etfperfaugust

Friday
Aug292008

Oil Goes Limp

One would think that oil would have had a great week since many are predicting a smaller scale replay of Hurricane Katrina in the Gulf early next week.  While oil did finish the week up nearly a dollar, the action in crude can hardly be considered healthy.  As shown in the intraday chart below, in four of the five trading days this week, crude oil gapped higher in the morning but failed to hold its early gains every time.

Oil_intraday

Friday
Aug292008

Percentage of Stocks Above 50-Day Moving Averages

Currently, 64% of stocks in the S&P 500 are trading above their 50-day moving averages.  As shown in the chart below, the reading has been creeping higher and higher since mid-July, and looks to be on its way to the 80%-85% levels seen twice over the last year.  Readings above 50% are signs of a healthy market, and it hasn't been above 50% for much of 2008. 

From a sector perspective, all of them except for Energy and Utilities have more than 50% of stocks trading above their 50-days.  While Utilities are just under 50% at 48%, Energy is extremely weak with a reading of 5%.  Telecom and Health Care are currently the most robust sectors at 89% and 85% respectively, followed by Consumer Discretionary (77%) and Industrials (75%).

Spx50day

Finlindu50day

Inftenrs50day

Condcons50day

Hlthmatr50day

Utiltels50day