The Closer: End of Week Charts — 5/18/18

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.  We also take a look at the trend in various developed market FX markets.

Below is a snapshot from today’s Closer highlighting weekly intraday price charts for major equity indices and other asset classes.  If you’d like to see more, start a free trial below.

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Top Performing Energy Sector Stocks Since March Low

Even when you look just at the market cap weighted performance of the Energy sector, its 18% rally off the late March closing low has been impressive.  However, when you consider that over 35% of the index is made up of Exxon Mobil (XOM) and Chevron (CVX), which are each up less than 15%, the sector has been even stronger.  In fact, within the S&P 1500 Energy sector (made up of large, mid, and small cap stocks), the average performance of the 88 stocks has been a gain of over 29% since 3/28!

The table below lists the best and worst performing stocks in the S&P 1500 Energy sector since 3/28.  During that span, a quarter of the stocks are up over 40%.  Leading the way higher, Pioneer Energy (PES) has more than doubled, while Carrizo (CRZO) is up over 70%.  Along with these two names, some of the more well-known names on the list of biggest winners include HollyFrontier (+53.5%), Andeavor (+47.1%), Chesapeake (+46.2%), and Marathon Oil (+40.4%).

While a lot of energy stocks are up big since the sector’s recent closing low in late March, just three stocks are down (listed at bottom of table).  Given the strength we have seen in the overall sector, things have to be pretty bad at Cabot, Cloud Peak, and World Fuel if they can’t even rally in this environment.

A High Energy Rally

Sentiment in the market has a way of changing on a dime.  A case in point is the Energy sector.  In addition to hitting a 52-week high on Thursday, a number of internal measures for the sector have been pointing higher.  For starters, check out the sector’s relative strength versus the S&P 500.  In the span of two months, the sector went from underperforming the S&P 500 by its widest margin in over a year to outperforming by its widest margin in a year.

Breadth in the sector has also been strong.  As highlighted in our Sector Snapshots report on Thursday, 97% of the stocks in the sector are currently above their 50-day moving averages.  That compares to a level of 57% for the entire S&P 500 and 76% for the next closest sector (Technology).  Not only are nearly all of the stocks in the sector above their 50-DMAs, but a good chunk of them are also hitting 52-week highs.  In yesterday’s session alone, over 40% of the stocks in the sector hit 52-week highs.  That was the highest one-day percentage for the sector since late 2016.  Suddenly, investors can’t get their hands on enough energy stocks.  Crude oil at over $70 a barrel as a way of doing that!

Bespoke Morning Lineup – Pre-Market News and Analysis

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The Closer — Consumer Lending, Thursday Potpourri — 5/17/18

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Looking for deeper insight on markets?  In tonight’s Closer sent to Bespoke Institutional clients, we chart the quarterly consumer credit data from the New York Fed. We also discuss EM, long bond yields, and the leading/coincident indicator ratio.

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B.I.G. Tips – Philly Fed Feeling Fine

As mentioned in a post earlier today, today’s headline reading in the Philadelphia Fed Manufacturing report came in stronger than expected and registered its 18th straight reading above +20 in the history of the survey.  While the current streak of +20 readings is unprecedented, there have been two other periods in the history of the survey (dating back to 1980) where it was above +10 for at least a year and a half (18 months).  In a just-published B.I.G. Tips report for Bespoke Premium and Bespoke Institutional clients, we analyzed the S&P 500’s performance during each of those periods to see if there were any parallels to today.

From a more shorter-term perspective, we also looked at how a key internal breadth indicator of the S&P 500 is currently at a critical juncture which could go a long way in determining the future path of the market.

If you are already a member, please log-in here to view the report.  If you’re not yet a Premium subscriber and would like to see the report, please start a two-week free trial to Bespoke Premium now.  Here’s a breakdown of the products you’ll receive.

Bespoke’s Sector Snapshot — 5/17/18

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 two-week free trial to Bespoke Premium now.

Below is one of the many charts included in this week’s Sector Snapshot, which highlights the percentage of stocks by sector trading above their 50-day moving averages.  As shown, five cyclical sectors now have stronger readings than the S&P 500 as a whole.  This is a healthy sign for bulls hoping for a return to new all-time highs soon.

To find out what this means and 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 two-week free trial to our Bespoke Premium package now.  Here’s a breakdown of the products you’ll receive.

Philly Feeling Fine

After a better than expected Empire Manufacturing report on Tuesday, today’s release of the Philly Fed Manufacturing report also came in better than expected (34.4 vs 21.0) and was up from last month’s reading of 23.2.  What makes this month impressive is that it now represents the 18th straight month that the headline index has come in above 20.  That hasn’t happened since – well, ever!  Prior to this month’s report, there had never been a streak of more than 17 months since the indicator’s inception where the headline index was above 20.

Looking at the chart below, the current level indicates that further upside momentum may be hard to come by.  Outside of the short-period in the early 1980s, the reading on General Business conditions has had a hard time staying above the 35-ish level.

The table below breaks down this month’s report by each category.  As shown, breadth was relatively strong as six categories showed m/m increases, and just three saw declines.  Of the gainers, New Orders saw the biggest increase, while the biggest decline came in Prices Paid, which fell from a seven-year high of 56.4 down to a still high level of 52.6.

As mentioned above, the New Orders component of this month’s report saw the largest increase, rising a staggering 22.2 points to a record 40.6.  The last time this component saw a larger monthly increase was in October 2005.

Bear Camp Getting Lonely

After breaking its downtrend heading into last weekend, individual investor sentiment surely has improved.  In this week’s sentiment survey from AAII, bullish sentiment ticked up to 36.68% from last week’s level of 33.51%.  Beleive it or not, that’s actually back above the average of 36.62% for the current bull market.

The big move this week, however, was in bearish sentiment which declined for the second straight week, falling from 25.5% down to 20.6%.  Since its recent high in early April, bearish sentiment has now been more than cut in half.  It’s also at the lowest level since the first week of the year, when the market was in party mode.  As we all remember now, that party was broken up shortly thereafter.

Finally, neutral sentiment has also been on the rise recently and remains above 40% for the third straight week.

Continuing Claims Falling Out of Bed

Not to be left out of the party with initial jobless claims, continuing jobless claims have really started to pick up steam to the downside in the last few weeks.  In this week’s report, continuing claims fell to 1.707 million.  That’s the lowest reading in this series since November 1973.  Almost as impressive as the actual levels of continuing claims has been the speed at which they have declined recently.  Over the last three months, continuing claims have dropped by over 10%, which is a pace not seen since early 2011.

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