The Closer 6/23/17 – End of Week Charts

Looking for deeper insight on global markets and economics?  In tonight’s Closer sent to Bespoke clients, we recap weekly price action in major asset classes, update economic surprise index data for major economies, chart the weekly Commitment of Traders report from the CFTC, and provide our normal nightly update on ETF performance, volume and price movers, and the Bespoke Market Timing Model. This week, we’ve added a section that helps break down momentum in developed market foreign exchange crosses.

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ETF Trends: Hedge – 6/23/17

Biotech continues to lead the charge, while oil and oil services gets pounded lower. Solar stocks have caught a bid this week, probably related to comments the President made about building a wall covered in solar panels. Metals and Mining recovered a bit on the week, while China, Tech stocks, and growth also performed well.

Bespoke provides Bespoke Premium and Bespoke Institutional members with a daily ETF Trends report that highlights proprietary trend and timing scores for more than 200 widely followed ETFs across all asset classes.  If you’re an ETF investor, this daily report is perfect.  Sign up below to access today’s ETF Trends report.

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Bespoke’s Sector Trading Range Charts — Health Care Explodes

Below is a look at our custom trading range charts for the ten main S&P 500 sectors (Real Estate not yet included).  In each chart, the white line represents the sector’s 50-day moving average, while the light blue shading represents its “normal” trading range.  This area represents between one standard deviation above and below the 50-day moving average.  More volatile sectors will have wider trading ranges, while less volatile sectors will have tighter trading ranges.  The red shading represents between one and two standard deviations above the 50-day, and moves into or above the red zone are considered “overbought.”  The green shading represents between one and two standard deviations below the 50-day, and moves into or below the green zone are considered “oversold.”

Where applicable, we’ve included trend lines to show uptrends, downtrends, sideways trends, breakouts, or breakdowns.

Going through the various sectors, you can see that Consumer Discretionary recently bumped up against the top of its uptrend channel and pulled back.  Consumer Staples recently broke above key resistance and has now pulled right back to that level which is acting as support.

The Energy sector has been trending down all year, and it just recently broke to a new 52-week low.

The Financial sector has been trending sideways for all of 2017.  We wouldn’t be aggressively long until it breaks out to a new 52-week high.  If it breaks below the bottom trend channel that we’ve drawn, look out below.

Health Care’s chart looks somewhat like a bullish cup and handle formation, and when it finally broke above resistance this week to make a new 52-week high, it broke out hard.  The chart for Industrials is about as slow and steady to the upside as it gets.  Both Materials and Technology look solid as well.  After a draw-down of a few percentage points from overbought levels, Tech pulled back to its 50-day and has thus far held support nicely.

Finally, Telecom remains in a downtrend channel and is approaching 52-week lows, while Utilities has been slowly trending higher all year.

The charts below are included in a section of our weekly Sector Snapshot report, which you can view when you start a 14-day free trial to our premium research platform.

 

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Bespoke’s Asset Class Performance Matrix — 6/23/17

Each week we typically provide an update on asset class performance, and below is a look at how various areas of financial markets have performed recently.  In the matrix below, we use ETFs traded on US exchanges to track performance, which we look at on a total return basis over the last week, quarter-to-date, and year-to-date.

After hitting a rough patch in early June, the Tech-heavy Nasdaq 100 (QQQ) was the top performing US index ETF this week.  Year-to-date, QQQ is up more (+19.6%) than any other US equity related ETF in our matrix.  While QQQ was up 2.09% this week, we saw the S&P Midcap and Smallcap ETFs (IJH and IJR) pull back a bit.  The S&P 500 (SPY) and Dow 30 (DIA) are finishing the week just slightly higher.

While the broad market was marginally in the green this week, eight sectors actually declined while just two gained.  Telecom (IYZ), Energy (XLE), and Financials (XLF) struggled the most, while Health Care (XLV) and Technology (XLK) are the two sectors that finished higher.

Outside of the US, the Chinese equity market (ASHR) is the only area of the world that saw nice gains this week at +2.85% following the announcement that they will be included in the MSCI EM indices.  Brazil (EWZ), Australia (EWA), Spain (EWP), and the UK (EWU) all saw declines of more than 1%.

Energy commodities were deep in the red this week, and they’re deep in the red both QTD and YTD as well.  In fixed income, the 20+ Year Treasury ETF (TLT) saw a nice gain of 1.01% this week and is now up 6.39% in Q2.

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The Most Extended Stocks in the Russell 1,000

The average stock in the Russell 1,000 is currently 0.80% above its 50-day moving average.  That’s healthy because it’s in positive territory, but it’s far from an “overbought” number.  As shown in the chart below, however, there’s quite a bit of deviation between sectors.  The average Health Care stock is 6.24% above its 50-day (a very high number) while the average Energy stock is 9.31% below its 50-day (a very low number).

For those interested, below is a list of the Russell 1,000 stocks currently trading the farthest above their 50-day moving averages.  The list is littered with Technology and Biotech/Health Care stocks.  Alnylam Pharma (ALNY) is the farthest above its 50-day at +29.57% (also up 121% YTD), followed by SunPower (SPWR) at 24.73%, and NVIDIA (NVDA) at 21.78%.  Whole Foods (WFM) and Zillow rank 4th and 5th.  Other notables on the list of most extended stocks include First Solar (FSLR), Tesla (TSLA), Square (SQ), Palo Alto Networks (PANW), Oracle (ORCL), and Tableau Software (DATA).

 

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Check-Up on Bespoke’s “Trump Stock Portfolio”

At the end of 2016 we put together a list of stocks that stood to benefit the most from the new “Trump Economy.”  With the first half of the year coming to an end next week, our list of stocks is performing nearly exactly in-line with the S&P 500 on a year-to-date basis.  We didn’t construct this list as a “Buy” portfolio, but rather as a way for clients to generate ideas based on which of Trump’s proposals they thought had the best chance of actually getting done.

Of the stocks in the Trump Portfolio, it’s the Technology stocks that have done the best this year — AAPL, CHKP, GOOGL, TWTR, and V.  Other big winners have been Tesla (TSLA), McDonald’s (MCD), Anthem (ANTM), Elbit Systems (ESLT), Cemex (CX), SQM de Chile (SQM), CyrusOne (CONE), and the Geo Group (GEO).  Health Care stocks like HCA, Ligand (LGND), and Zoetis (ZTS) have all done well too.

The biggest losers have been names like the Andersons (ANDE), Cal-Maine (CALM), Chesapeake (CHK), Diamondback (FANG), Endo (ENDP), Granite Construction (GVA), and Freeport (FCX).

We’ll check back in to see how performance looks at the end of the third quarter in September.

 

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Oracle’s Most Overbought Close Ever

Who said Tech was dead?  While concerns towards the Technology sector have increased following the late afternoon swoon in tech stocks two weeks ago, shares of Oracle surged over 8% on Thursday following a strong earnings report after the close on Wednesday.  That rally in reaction to earnings was the stock’s best earnings reaction day since March 2009 and the fourth biggest one-day gain following earnings since the dot-com crash.  With Thursday’s rally, shares of ORCL also traded to all-time highs well above the levels it reached during the 2000 bubble.

Just as impressive as ORCL’s performance yesterday, the stock also traded at the most extreme short-term overbought level it has traded in its history.  ORCL closed 5.6 standard deviations above its 50-day moving average yesterday, which exceeded its previous most extreme levels by a mile.  When looking at stocks relative to their 50-day moving averages, three standard deviations typically counts as pretty stretched.  Occurrences where a stock trades four standard deviations above its 50-day don’t come by very often, but five is practically unheard of!  Now, just because a stock reaches extreme overbought or oversold levels doesn’t mean it has to reverse course.  Instead, it just serves as an indication of how far the stock’s current price has deviated from its typical range.  In the case of ORCL, what also sticks out is the fact that less than a year ago, the stock traded at its most oversold level since just after its IPO in 1986.

 

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Bespoke Morning Lineup – Pre-Market News and Analysis

Highlights

  • S&P 500 futures -1 bps
  • Another quiet day pre-open (Dashboard)
  • We see reasons for caution (Global Activity)
  • Singapore IP + Japan Flash PMI misses (Asia)
  • Manufacturing activity remains strong (Europe)
  • Busy North America data slate (Americas)
  • Russell 1000 New 52-Week Highs
  • Russell 1000 New 52-Week Lows

Bespoke’s Morning Lineup is the top pre-market report on Wall Street.  We cover everything you need to know to get your trading day started, including international market moves and events, post-market and pre-market earnings news, upgrades and downgrades, dividends and splits, economic indicators and estimates, big stock movers, market internals and much more.  It’s all presented in the original and concise format that Bespoke is known for so you can digest lots of information quickly and efficiently.

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The Closer — Banxico Dovish Hike, Canadian Retail Roundup — 6/22/17

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Looking for deeper insight on global markets and economics?  In tonight’s Closer sent to Bespoke Institutional clients, we recap the Banxico’s decision to hike interest rates to 7% today, break down Canadian retail sales and update our GDP tracking model, and discuss two minor data points from the US today.

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Bespoke’s Sector Snapshot — 6/22/17

We’ve just released our weekly Sector Snapshot report (see a sample here) for Bespoke Premium and Bespoke Institutional members.  Please log-in here to view the report if you’re already a member.  If you’re not yet a subscriber and would like to see the report, please start a 14-day trial to Bespoke Premium now.

Below is one of the many charts included in this week’s Sector Snapshot, which highlights our trading range chart for the S&P 500 Health Care sector.  The red zone in the chart is considered “overbought” territory, and as you can see, the Health Care sector has blown out to extreme overbought levels this week.

To see our full Sector Snapshot with additional commentary plus six pages of charts that include analysis of valuations, breadth, technicals, and relative strength, start a 14-day free trial to our Bespoke Premium package now.  Here’s a breakdown of the products you’ll receive.

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