The Closer 9/29/16 – Growth Updated, DB Mythbusting

Looking for deeper insight on global markets and economics?  In tonight’s Closer sent to Bespoke clients, we review today’s revised Q2 growth numbers from the BEA and also update our tracking of growth estimates from two regional Fed indices. Finally we discuss the Deutsche Bank situation.

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ETF Trends: US Sectors & Groups – 9/29/16

With the OPEC decision yesterday yielding a big boost for oil bulls, the top performing ETFs over the last week are littered with crude-related names. Long-term Treasuries have also performed very well, as have the Semis. Turkey, Biotech, Mortgage Real estate, and India top the list of the worst performers.

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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Jobless Claims: How Low Can You Go?

Although jobless claims saw a slight increase in the latest week, they continue to defy expectations with just how low they come in week after week.  In this week’s report, first-time claims increased from 251K up to 254K versus expectations of 260K.  This week’s print makes it 82 straight weeks that claims have been below 300K, which is the longest streak in nearly half a century.

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What really stood out about this week’s report is the four-week moving average, which fell to 256K, tying the cycle low reading from April, which was the lowest level since 1972.  Looking ahead to next week, provided there are no upward revisions, any reading below 259K will take the four-week moving average to a new cycle low.

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On a non-seasonally adjusted basis (NSA), jobless claims dropped back down below 200K to 198K.  For the current week of the year, that is more than 100K below the average of 300K dating back to 2000, and also the lowest reading for the current week of the year since 1972.

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Individual Investors Still Singing the Blues

We’re starting to run out of analogies and metaphors for the current state of sentiment on the part of individual investors.  In this week’s sentiment survey from AAII, bullish sentiment declined from 24.83% down to 24.00%, which is the lowest level since the week leading up to the Brexit vote.  With this week’s decline, bullish sentiment has now been below 40% for 48 straight weeks and 82 out of the last 83 weeks.  Perhaps the only thing that would be more depressing than the current investor funk would be if it was occurring in an environment where stock prices were also reflective of the bearish attitude.  Thankfully, reality and sentiment are portraying two completely different environments.

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Bearish sentiment actually also declined slightly this week, but at a level of 37.11%, it’s still near its highest levels of 2016.

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Bespoke Morning Lineup

Highlights

  • S&P 500 futures unch’d
  • Oil moves quietly off OPEC highs (Overview)
  • Kuroda and Abe comments boost USDJPY (Asia)
  • A look at the Deutsche Bank situation (DB)
  • Confidence indices up, curves steepen (Europe)
  • Final GDP revisions, Fedspeak (US)

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 9/28/16 – Crude Agreement

Looking for deeper insight on global markets and economics?  In tonight’s Closer sent to Bespoke clients, we discuss oil inventories, OPEC, and the longer-term signals being sent by the crude oil term structure.

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The Closer is one of our most popular reports, and you can sign up for a trial below to see it and everything else Bespoke publishes free for the next two weeks!

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S&P 500 Re-Takes 50-DMA

A late-day rally into the close left the S&P 500 back above its 50-day moving average.  As shown in the six-month candle chart of the index below, the S&P traded down to support at its highs from early June a couple of weeks ago, and it held that support very nicely.  Now let’s see if the bulls can push it back up to new highs in the coming days and weeks.

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One stock that helped propel the S&P (and Dow) today was Caterpillar (CAT).  With a gain of 27% this year, CAT is currently the top performing Dow stock of 2016.  As shown below, the stock experienced a massive upside breakout today.

CAT was added to the Bespoke Model Portfolio back in April at $79.73.  Today’s move gives us a gain of 10% on the trade.  If you would like to see the rest of Bespoke’s Model Portfolio, please choose a monthly or annual membership option now.

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Nasdaq Trying for 10% Gain in Q3 2016

The Nasdaq 100 is currently up just under 10% so far in the third quarter (up 9.92% as of this morning).  The current gain would be the best Q3 for the index since 2013, and if it eclipses +10.63%, it will be the best Q3 since 2010.

Below is a table showing the performance of the Nasdaq 100 in Q3 since the index’s inception in 1986.  For each year, we also include the index’s YTD change at the end of Q3 as well as its change in Q4.  Of the 31 years since 1986, the Nasdaq 100 has been up in the third quarter 21 times for a median change of +5.19%.  In Q4, however, its median change has been even stronger at +6.35%.

We’ve shaded years based on performance in Q3 and YTD through Q3 to see how the index performed in Q4.  Years shaded in dark green were up in the third quarter and also up YTD through the third quarter.  In these years (which includes 2016), the Nasdaq 100 has seen a median gain of 6.21% in Q4.  That’s pretty much right where the median for all Q4s has been.  Light green shaded years saw gains in Q3, but the index was still down YTD through Q3.  In these years, the median Q4 change has been low at just +2.72%.  Light red shaded years saw declines in Q3 but were up YTD through Q3.  Only two years (1986 and 1988) fit this criteria, and in both years Q4 was relatively flat.  Finally, dark red shaded years saw declines in Q3 and were down YTD through Q3.  Surprisingly, in these years where the Nasdaq has had a rough time through the first three quarters of the year, the index has posted the biggest median gains in Q4 at +11.56%.

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ETF Trends: Hedge – 9/28/16

Mexico continues to be pounded lower as market participants use it as a proxy for a Trump Presidency. Homebuilders, Italy, GBP, and EUR have also underperformed over the last few days. On the green side of the slate, Indonesia, Taiwan, and Biotech continue to rally while steel and iron ore-related names get something of a bounce. Natural gas has also broken out and is trending higher.

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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Fixed Income Weekly – 9/28/16

Searching for ways to better understand the fixed income space or looking for actionable ideals in this asset class?  Bespoke’s Fixed Income Weekly provides an update on rates and credit every Wednesday.  We start off with a fresh piece of analysis driven by what’s in the headlines or driving the market in a given week.  We then provide charts of how US Treasury futures and rates are trading, before moving on to a summary of recent fixed income ETF performance, short-term interest rates including money market funds, and a trade idea.  We summarize changes and recent developments for a variety of yield curves (UST, bund, Eurodollar, US breakeven inflation and Bespoke’s Global Yield Curve) before finishing with a review of recent UST yield curve changes, spread changes for major credit products and international bonds, and 1 year return profiles for a cross section of the fixed income world.

This week, we focus on the history of global bond defaults. We also discuss rising prepayment rates for US mortgages.

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