Tuesday
Aug122008

Gold Down Eight Days in a Row

For the eighth day in a row, gold finished the day down.  Since 1975, this is the sixth time that the commodity has had an eight-day losing streak.  Just as eight hasn't been a lucky number for Chinese investors, eight-day losing streaks for gold haven't a turnaround point either.  Looking at the five prior eight-day declines, gold has finished the ninth day with a gain three out of five times, but the average return has been a decline of 0.2%.  Looking out over the next week, gold has finished lower three out of five times for an average decline of 0.8%.

8_day_losing_streaks_2 

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Tuesday
Aug122008

Tech Sector Seasonal Patterns

With nearly a six percent gain over the last week and a half, Technology has been one of the market's best performing sectors recently.  Based on its seasonal trading patterns, strength in tech stocks may continue.  As shown below, over the last five years, the sector has averaged its low for the second half in early August.  While the sector usually rallies towards the end of the year, if we expand our focus to the last ten years, the end of year rally typically doesn't arrive until October.  While fundamentals will always trump seasonality, at least it's nice to know that these trends are supportive of the market.

Tech_sector_seasonal_patterns

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Tuesday
Aug122008

Bespoke's Paul Hickey on CNBC Street Signs Today at 2:15 PM ET

Street_signs_4Bespoke's Paul Hickey will appear on CNBC's Street Signs today at 2:15 PM ET to discuss the impact of the SEC's naked short selling crackdown on levels of short interest.

Tuesday
Aug122008

Sector and Stock Performance Since Oil's Peak

Since oil peaked (using closing prices) on July 3rd, the commodity is down about 21%.  Over the same time period, the average stock in the S&P 500 is up 6.11%.  Below we highlight the average performance of stocks in each sector since oil's peak.  As one would expect, Consumer Discretionary stocks have performed the best, while Energy stocks have performed the worst.  Health Care, Financials, Consumer Staples and Industrials have also been outperforming sectors.  For those expecting the oil downtrend to continue, these sectors should continue to show relative strength. 

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Below we highlight the 25 best and worst performing stocks in the S&P 500 since July 3rd.

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Worststocks812   

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Tuesday
Aug122008

Dollar Overbought

The sharp rally in the US Dollar index over the last few weeks has put it 4.43% above its 50-day moving average.  As shown in the chart below, the spread between the Dollar and its 50-day is at its highest level since mid-2000.  While we believe the currency will remain in an uptrend over the next few months, it is probably due for a short-term pullback.

Dollar50day

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Tuesday
Aug122008

Want to See a Bursting Bubble?

With Chinese growth and prosperity displayed on our TV sets each night throughout the Olympics, it's hard to imagine that China's stock market could be doing so poorly.  But in a classic bubble pattern, China's Shanghai Composite is now down 60% since just last October.  It is now just 9% above its highs from 2001, and it is on the verge of giving up nearly all of its parabolic gains following its breakout in 2006.  Anyone hoping that the Olympics would give ailing Chinese stocks a boost have gotten a rude awakening.  Since the opening ceremony on lucky 8/8/08, the Shanghai Composite has had three straight daily declines of 4.47%, 5.21% and 0.52%.

Shanghaibubble

 

Monday
Aug112008

Investor Presidential Survey: 8/11

Below is this week's Investor Presidential Survey.  We'll conduct the poll each week leading up to the November election.  Please take part in the survey below and help us get a read on who investors want in office.  We'll report back with the results on Friday.


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

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Monday
Aug112008

All That Glitters Isn't Gold

Following seven straight days of declines (opposite of the dollar) capped off with a 3.8% drop today, Gold closed at its lowest levels of 2008 ($825.00).  The yellow metal is now down 17.9% from its March 18th closing high, and less than $22 above the 20% threshold for a bear market.

Gold081108

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Monday
Aug112008

Dollar 7-Day Winning Streaks

The US Dollar index has now been up for 7 days in a row.  This has now happened 24 times since 1970, and as shown below, the median return on day 8 and over the next week have been minimal.  Recently, the numbers have been more negative, however.  Six out of the last seven similar winning streaks have seen the Dollar fall on day 8 and over the next week.

Dollarstreak_3

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Monday
Aug112008

More on the Dollar

The US Dollar index is now up 6.33% since bottoming on April 22nd, making this the first rally of more than 5% since the 14% rally that ended in November 2005.  The previous decline of 22.75% without a 5% rally was the second longest for the currency since daily pricing began in 1971.  As shown below, the average 5%+ rally for the Dollar lasts 186 calendar days and sees a gain of 12.95%.  The current rally of 6.33% has lasted 108 days.

Dollardeclines_2

Dollarrallies

   

Monday
Aug112008

Stronger Dollar and The Stock Market

Given the dollar's recent strength, there has been some concern that exports, the one bright spot still underpinning the economy, will get hurt.  While a stronger dollar certainly makes US goods less attractive relative to foreign products, you would need to see a much bigger and longer rally in the dollar before the positive benefits start to reverse themselves.  Additionally, while exports would get hurt, the US imports more than its exports, therefore on a net basis the portion of the economy that benefits is greater than the portion that gets hurt. 

A look at the historical record also shows that a strong dollar is much better for stocks than a weak one.  Below, we highlight a chart from prior reports we have sent out to Bespoke Premium subscribers.  Since rallies and declines in the dollar are typically measured in years rather than weeks or months, the S&P 500 has averaged positive returns during both dollar bull and bear markets.  However, equity gains during dollar bull markets (20% rally preceded by a 20% decline) are much greater than dollar bears (20% decline preceded by a 20% rally).  As shown, the average return of the S&P 500 during dollar bull markets is over 80%.  During dollar declines, the average return is less than 20%.

Sp_during_dollar_rallies_and_declin

   

Monday
Aug112008

Global Market Snapshot

Below we highlight our trading range charts for 22 key equity markets around the world.  The light blue shading represents one standard deviation above and below each index's 50-day moving average.  The green shading represents between one and two standard deviations below the 50-day, and vice versa for the red shading.  Most countries continue to trade into oversold territory, but some have been getting hit extra hard while others have rallied off of their lows.  Some countries that failed to bounce off the July lows include Brazil, China, Hong Kong, Malaysia, Mexico, Russia and South Africa.  On the other hand, India, most of Europe, and the US have come off their lows and are testing their 50-day moving averages.

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Intl7      

Friday
Aug082008

Bullish or Bearish?

Where do you think the Dow Jones Industrial Average will close on August 15th?  Please enter your prediction by taking part in the poll below. The index is currently trading at 11,734.32.  Predictions must be in by this Sunday at midnight.  The person with the closest answer will receive one free month of the $40/month Bespoke Premium service. Thanks for participating!









Where will the DJIA close on Friday, August 15th?
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Friday
Aug082008

Up Big Since the Fed

The S&P 500 is now up 3.67% since the 8/4 close prior to Tuesday's Fed Day.  Below we highlight sector performance since then as well.  As shown, Consumer Discretionary is up the most at 7.07%, followed by Tech (6.35%), Industrials (5.08%) and Health Care (3.79%).  Energy, Utilities, Materials and Financials are up the least.

Sectorchangefed

Looking at S&P 1500 stocks above $10/share, ROCK is up the most since Monday's close at 33.5%.  ROCK is followed LYV, LNY, INSP and THO.  VTIV, UTR, PRX and WFMI lead the list of losers.

Bestfed

Worstfed

   

Friday
Aug082008

International Revenues and the Dollar

Stocks with a large percentage of international revenues benefited significantly from the Dollar's declines over the past few years.  Because the Dollar was cheap, foreign companies and governments bought more goods from the US.  If the Dollar continues to rally, however, this trade will reverse, and companies that generate more sales domestically will benefit. 

We've posted on the international revenues topic numerous times, and we even have a database that breaks out international and domestic revenues for all stocks in the Russell 1,000.  From the database, we calculated the average percentage of international revenues for stocks in each sector.  As shown, Technology has the highest at just over 50%, followed by Materials, Industrials, Consumer Staples and Energy.  Financials, Utilities and Telecom have the lowest foreign revenue exposure.  If the Dollar continues to rally, sectors with low foreign revenues could outperform, although it will be more pronounced on a stock by stock basis. 

To access our database of international revenues, you have to be a yearly subscriber to our Bespoke Premium service.  Click here to subscribe today.

Sectorintlrevs