Oct 25, 2024
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“Wanting alone doesn’t get anything done.” – Bobby Knight
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
S&P 500 futures are indicated about 0.30% higher, but it’s going to take a gain of more than 1% for the market to extend its six-week streak to seven. It’s an especially painful morning for shares of Capri Holding (CPRI) where shares are down close to 50% after a judge blocked the proposed merger with Coach parent Tapestry (TPR), siding with the FTC’s argument that it would reduce competition in the ‘accessible luxury-handbag category’. Talk about a vital sector of the US economy!
Speaking of the US economy, Durable Goods Orders declined 0.8% while August’s report was also revised down to 0.8%. Ex Transportation, September’s report came in at 0.4% versus expectations for a decline of 0.1%. Last month’s report was also revised up to 0.6% from 0.5%.
In Europe, it’s been a mostly negative morning for stocks as major markets over there look on pace to finish the week off with gains of just over 1%. Various measures of business sentiment came in mixed relative to expectations, but PPI in Spain cratered 5.2% y/y compared to a decline of 1.3% in August.
In yesterday’s email, we noted the consistent strength in shares of T-Mobile during the trading day as the stock has closed higher than it opened on 24 of the last 25 trading days. We’ve seen a similar level of persistent buying for the US Dollar Index over the last four weeks.
On 10/17, the index had a streak of 14 straight trading days where it closed higher than it opened. Dating back to 1990, that was the longest streak on record. The next longest streak was 13 trading days ending in August 1997 just ahead of the Asian currency crisis.
Through yesterday, the Dollar Index had closed higher than it opened on 18 of the prior 20 trading days which was tied with the August 1997 period for the most in a 20 trading day period since at least 1990.
Despite the consistent strength in the Dollar Index, its performance over the last 20 trading days, while impressive, hasn’t been anywhere near a record. As shown in the chart below, there have been several periods since 1990 when the index rallied more than the current 3.7% over four weeks with the most recent occurrence just over two years ago near the lows of the bear market in September 2022.
When it comes to the dollar’s impact on the stock market, over the last 20 trading days, the S&P 500 has rallied just over 1.25%. Leading the way higher, Financials have rallied 4.3% which makes sense given the sector has a high level of domestic exposure. The next two best-performing sectors, however, Technology and Energy, both have high levels of international exposure, so all else equal, a strong dollar would be negative for those sectors.
At the other end of the spectrum, Health Care is another sector with a high share of domestic exposure, but it is still the worst-performing sector over the last four weeks. Materials and Consumer Staples, however, both have high levels of international exposure, so their weakness as the dollar has rallied makes sense.
Oct 24, 2024
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“If you want to increase your success rate, double your failure rate”. – Thomas Watson, IBM CEO 1914 – 1956
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
It’s a mixed morning for US equities as Dow futures trade slightly lower, the S&P 500 is up 0.5%, and the Nasdaq looks like it will open up nearly 1%. Jobless claims were just released and initial claims came in about 15K lower than expected at 227K while continuing claims were modestly higher. European stocks are also higher this morning as rates reverse some of the gains of recent days. There’s been a ton of earnings news since the close yesterday, and we go through the most high-profile ones in today’s report.
Yesterday, the S&P 500 opened modestly lower but then drifted lower throughout most of the trading day before a modest rally into the close which kept the damage contained to a decline of less than 1%. The weakness throughout the trading day was counter to the trend we have seen in recent weeks where the S&P 500 tended to trade higher throughout the trading day. As recently as last week, the S&P 500, measured by SPY, had traded higher from the open to close on 17 of the prior 25 trading days. The fact that the market has been rallying throughout the trading day signals healthy underlying demand.
While last week’s reading of 17 is not a historical extreme, it was tied for the highest frequency of days that SPY traded higher from the open to close in a 25-trading day period this year. In 2023, there were multiple periods when the 25-day rolling toll reached as high as 19 or 20. The best this reading has been able to get in 2024, though, has been 17.
Regarding individual stocks, T-Mobile (TMUS) reported after the close last night, and if you’re looking for an extreme example of stocks consistently rallying from the open to close, we can’t think of a better one. Heading into last night’s earnings report, shares of TMUS traded higher from the open to close on 24 of the last 25 trading days. Talk about a stock that investors can’t enough of!
Looking back over the stock’s history, the current rate of days where TMUS traded higher from the open to close over the last 25 trading days is easily the highest ever. Before the last five weeks, it never got above 21.
We can’t think of another example when a stock traded higher from the open to close with such consistency, and if we look back at the history of Apple (AAPL) and Nvidia (NVDA), the two largest and most successful companies in the US market, neither one ever experienced a run where the stock traded higher from the open to close on more than 21 out of 25 trading days.
Oct 23, 2024
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“If you are first you are first. If you are second, you are nothing.” – Pele
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
We’re looking at another negative equity market open today, and once again, the Dow is leading the way lower. The E. coli outbreak tied to McDonald’s (MCD) has that stock down 7%, which works out to more than half of the Dow’s pre-market losses. Along with the negative news from MCD, Starbucks (SBUX) lowered guidance, so it’s not shaping up to be much of a good morning for companies tied to the fast food sector.
The only economic report on the calendar this morning is Existing Home Sales at 10 AM, but there have been plenty of earnings reports in the pre-market with more to come after the close.
The last week has been mixed for equities on a global scale. As shown in the snapshot from our Trend Analyzer, emerging market equities have been the top performer narrowly edging out US stocks with a gain of 0.69%. These are also the only two regions with positive returns as European, Latin American, and Asia Pacific stocks are all lower. With most regions trading lower, the Developed World ex-US ETF is also down 0.71%.
It hasn’t just been the last week where these regions have underperformed. On a YTD basis, the US has rallied 23.5% while emerging markets are up just under 14%. All four of the other ETFs, meanwhile, are up less than 10%, or in the case of Latin America (ILF) down over 10%.
Looking at the charts of all six ETFs over the last year, EEM and SPY have maintained their rallies and trade above their 50-day moving averages. The four other ETFs, however, look less promising from a technical perspective. ILF has been below both its 50 and 200 DMAs for several days now while SPDW, VGK, and VPL all broke below their 50-DMAs in the last few days.
Oct 22, 2024
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Oct 22, 2024
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“aggressive conduct, if allowed to go unchecked and unchallenged ultimately leads to war” – John F Kennedy, 10/22/1962
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Just when it seemed nothing could go wrong for the market, yesterday we had a weak day underneath the surface in terms of breadth. That weakness has continued into this morning as US futures are firmly lower following a decline of over 1% in the Nikkei. In Europe, despite positive earnings from SAP and Logitech, the STOXX 600 is down close to 1%.
Treasury yields remain the culprit as the relentless rise in longer-term interest rates continues since the Fed cut rates in September. The 10-year yield has risen above 4.2% for the first time since the summer as the market continues to experience one of the sharpest increases in yields following a rate cut in at least the last 30 years.
The S&P 500 was only down 0.18% yesterday, but breadth was terrible with a net advance/decline reading of negative 338. The weak breadth was also evident in the equal-weighted S&P 500 which was down 0.85%. The 4% rally in NVIDIA (NVDA), which is now within 2% of Apple’s (AAPL) market cap, was a big factor behind the big performance spread between the cap and equal-weighted indices. The scatter chart below compares the S&P 500’s daily percent change versus the net A/D reading, and the shaded area highlights days when the net A/D reading was between -350 and -300 (yesterday was -338). On those days, the S&P 500’s average decline has been 1.23%. To put yesterday into perspective (red dot in lower chart), it is one of just two days since 1997 that the net A/D reading was between -350 and -300 and the S&P 500 was down less than 0.25%!
Can you believe it? The day is almost here. Two weeks from today is the last day we can vote in the 2024 Presidential Election, and then we’ll finally get a break from all the politics. Right?
Like what we did two weeks ago, the chart below shows the performance of the S&P 500 in the two weeks leading up to Election Day for all years since 1948, and we have noted Presidential Election years in dark blue. While you might expect volatility leading up to Election Day, the S&P 500 has historically performed better in the two weeks leading up to Presidential elections (1.62%) than it has in non-presidential election years (0.87%), but it has been slightly less consistent to the upside at 68.4% during Presidential election years versus vs 73.3% in non-election years. The biggest gains and losses for the S&P 500 during these two weeks have also been during non-presidential election years (9.1% in 1962 and a decline of 4.4% in 1973). During Presidential election years, the largest gain was 5.4% in 1960 and the largest decline was 2.6% in 1988.
The table below lists the performance of the S&P 500 during the two weeks leading up to each Presidential election since 1948. Along with that, we have also included the number of days that had transpired between the last all-time closing high (ATH) and each Election Day, the number of ATHs in the 50 trading days leading up to Election Day, and whether the part of the incumbent or non-incumbent party won the election.
This year isn’t listed on the table since it’s not Election Day yet but with nine all-time highs already in the 50 trading day window (with ten to go) this year is already tied with 1964 and 1968 for the second most. With the most recent all-time high occurring last Friday, even if there isn’t another closing all-time high between now and then it will rank at least as the fourth fewest number of days between the last ATH and Election Day. The only ones with a shorter gap were 1996 (0 days), 1972 (1 day), and 1968 (8 days).
We also found it interesting that strong markets don’t necessarily help the incumbent party, but short-term weakness in the two weeks before may hurt the incumbent party. In the nine prior periods when the S&P 500 hit an all-time high within 100 trading days of Election Day, the incumbent party only won the Presidency four out of five times. There have been five prior periods when the S&P 500 was down in the two weeks leading up to the election, and in four of those periods, the non-incumbent party won. These are all small sample sizes, and there were other factors at play in each election, but any excuse to talk politics, right?
