Apr 16, 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.
“Don’t hope. Hope is for people who aren’t prepared.” – Kareem Abdul-Jabbar
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Futures are higher this morning as positive earnings results lift the mood of investors even as interest rates are higher. Housing Starts and Building permits were just released, and both reports came in lower than expected. Housing Starts were a big miss coming in at 1.321 million compared to forecasts for 1.485. Building Permits were also weaker at 1.458 million versus consensus forecasts for 1.510 million. These reports should have been friendly to rates, but so far there has been very little movement in the 10-year yield. Besides these two reports, the only other items on the calendar are Industrial Production and Capacity Utilization at 9:15. We’ll also be hearing from Fed Chair Powel at 1:15 Eastern.
After the last two trading days, and all of April for that matter, there are probably a lot of overexposed traders and investors hoping for an up day or two. We don’t know where the market will go from here in the short term, but at this point, the S&P 500 is only down 3.66% from its closing all-time high at the end of March. That’s not even close to what most people would call a correction, let alone a pullback. While the current decline is the first of that magnitude since late last year, since 1953 there have been 455 declines of 3% or more on a closing basis without a 3% rally in between. That works out to one about every two months. In other words, the fact that we hadn’t had a pullback of 3% in over five months was more unusual than the fact that the S&P 500 is now down over 3% from its high. In fact, since 1953, there have only been ten other periods where the S&P 500 went longer than the just-ended streak without falling 3% from a local closing high.
Looking at the four major US indices across the market cap spectrum, the Russell 2000 is the only one not up YTD, although it was in the black just a week ago. What’s also notable is that a week ago all four indices were above their 50-day moving averages (DMA) and two (MDY and SPY) were overbought. As of yesterday’s close, all four indices are not below their 50-DMA, and two (QQQ and IWM) are oversold. Change tends to happen fast in the markets.
The fact that all four of the indices shown above closed below their 50-DMA yesterday was notable because it was the first time since November 2nd that all four of them closed below their 50-DMAs. Since 1990, that streak was on the extreme side, but it wasn’t unheard of as eleven streaks were longer and another six lasted longer than 100 trading days. The most recent ended in August of last year (106 trading days), and the longest was 262 trading days ending in January 1996.
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Apr 15, 2024
An earnings triple play is a stock that reports earnings and manages to 1) beat analyst EPS estimates, 2) beat analyst sales estimates, and 3) raise forward guidance. You can read more about “triple plays” at Investopedia.com where they’ve given Bespoke credit for popularizing the term. We like triple plays as an indication that a company’s business is firing on all cylinders, with better-than-expected results and an improving outlook. A triple play is indicative of positive “fundamental momentum” instead of pure fundamentals, and there are always plenty of names with both high and low valuations on our quarterly list.
Bespoke’s Triple Play Report highlights companies that have recently reported earnings triple plays, and it features commentary from management on triple-play conference calls, company descriptions and analysis, and price charts. Bespoke’s Triple Play Report is available at the Bespoke Institutional level only. You can sign up for Bespoke Institutional now and receive a 14-day trial to read this week’s Triple Play Report, which features 14 new stocks. To sign up, choose either the monthly or annual checkout link below:
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Cintas (CTAS), a workplace health and safety company, is an example of a company that reported an earnings triple play recently.
CTAS has been trending up for quite some time now and has traded above its 50 and 200-DMA consistently since last October.
Looking at the snapshot below from our Earnings Explorer, in its last 20 earnings reports, or five years of earnings, CTAS has beaten both EPS and revenue estimates 100% of the time. Its triple play on March 27th is just the company’s fourth over this stretch, however, which resulted in a one-day gain of 8.25%. Tallying five straight years of earnings beats is no easy task, especially when those five years include a global pandemic. Ultimately, CTAS was able to succeed through the pandemic as revenue for First Aid and Safety Services surged despite declines in Uniform Rental and Facility Services as many businesses suffered.
Fast forward to today, CTAS’s health and safety products remain in high demand in a post-pandemic world. Uniform Rental and Facility Services remains the core of CTAS’s business with steady growth while First Aid and Safety Services grew double-digits versus the prior year due to strong demand and higher margin products, like AED rentals, in that category. This quarter also highlighted the SmartTruck technology to aid efforts in optimizing its delivery and service routes to minimize costs and improve speed. Six Sigma was also mentioned as a benefit for improving manufacturing processes by eliminating defects and guaranteeing quality. You can read more about CTAS and the 13 other triple plays in our newest report by starting a Bespoke Institutional trial today.
Bespoke Investment Group, LLC believes all information contained in these reports to be accurate, but we do not guarantee its accuracy. None of the information in these reports or any opinions expressed constitutes a solicitation of the purchase or sale of any securities or commodities. This is not personalized advice. Investors should do their own research and/or work with an investment professional when making portfolio decisions. As always, past performance of any investment is not a guarantee of future results. Bespoke representatives or clients may have positions in securities discussed or mentioned in its published content.
Apr 15, 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.
“All taxes discourage something. Why not discourage bad things like pollution rather than good things like working?” – Lawrence Summers
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
The market is breathing a sigh of relief after Iran’s much-anticipated attack on Israel was well enough choreographed that it had minimal damage on Israel. While futures are higher, they’re still well below where they were as of the close on Thursday, so not all of the geopolitical risk has been priced out of the market. Going forward, earnings and the economy will take center stage as it’s a busy week ahead on both fronts. Starting things off this morning, Goldman Sachs (GS) reported better-than-expected EPS and revenues and the stock is trading up over 4%. Regarding the economy, there’s a busy calendar with Retail Sales and Empire Manufacturing at 8:30 followed by Business Inventories and Homebuilder Sentiment at 10 AM.
Happy Tax Day. If you haven’t already filed your taxes for 2023, you’re starting to run out of time. Based on the performance of stocks so far in April, it seems like people who owed money have been raising cash in the stock market as the S&P 500 is down 2.5%, the Nasdaq is down 1.3%, and the Russell 2000 is down 5.7%. While you could make a good argument that the weakness is tax-related, a counter to that argument would be that European stocks have also been weak to kick off the quarter, but April 15th isn’t a tax deadline on the other side of the Atlantic.
Whether it’s tax-related or not, there is some historical precedent for April to get off to a weak start, especially in years when the first quarter was positive. The chart below shows the intraday performance of the S&P 500 during April broken out by how the index performed YTD heading into the month. In the 28 years when the S&P 500 was up YTD heading into April, its average MTD performance heading into the start of trading on the 15th was a gain of just 0.2% with positive returns just 57% of the time. That compares to an average rally of 1.4% and gains 69% of the time in the years when the S&P 500 was down YTD heading into the month. Not only is the S&P 500’s average performance in the first half of April weaker in years when it was up YTD through the end of Q1, but in the seven years since 1983 when it was up 10%+ in the first quarter, the average MTD performance through the close on 4/14 was a decline of 0.2%.
On a positive note, while the first two weeks of April have historically been weaker in years when the S&P 500 was up in Q1 versus down, the rest of April has been more positive. In the 28 years when the S&P 500 was positive in Q1, April’s average performance from the close on 4/14 through month end was +1.4% compared to an average gain of 0.7% for all other years.
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Apr 12, 2024
This week’s Bespoke Report is an updated version of our “Pros and Cons” edition for Q2 2024.
With this report, you’re able to get a complete picture of the bull and bear case for US stocks right now. It’s heavy on graphics and light on text, but we let the charts and tables do the talking!
On page three of the report, you’ll see a full list of the pros and cons that we lay out. Slides for each topic are then provided on page four and beyond.
To read this report and access everything else Bespoke’s research platform has to offer, sign up for Bespoke’s 50/20 special today. Our 50/20 special gets you a full year of Premium for half off, then 20% off per month after the first year. SIGN UP HERE.
Apr 12, 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.
“The difference between fiction and reality? Fiction has to make sense.” – Tom Clancy
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Another earnings season has arrived as the big banks kicked off the reporting period this morning, and the results have been stronger across the board. All six companies reporting beat expectations on both the top and bottom lines. While JP Morgan (JPM) is down nearly 3% and Wells Fargo is down fractionally, the other four stocks are all up by at least 1%.
Despite what have been positive results, futures are lower this morning as the market digests yesterday’s gains and headlines that Israel is gearing up for an imminent direct strike from Iran. That would have major implications in the energy space, but there have been similar Friday headlines in recent weeks that never amounted to anything.
As for the economic calendar, Import Prices were just released, and they increased by 0.4% m/m which was higher than the 0.3% forecast. Ex petroleum, though, they were unchanged which was less than the 0.1% forecast. The only other report on the calendar for the week is Michigan Confidence, and the specific area of focus will be inflation expectations. For the next year, economists are expecting one-year expectations to remain unchanged at 2.9%.
Gold prices have continued their blistering rally this morning, notching their eighth consecutive daily gain in the past ten days. The yellow metal has surged 17% since the start of March, pushing it more than 20% above its 200-day moving average (DMA) and 12% above its 50-DMA. Both spreads rank in the top 3% historically, a clear signal of gold’s recent strength.
This surge in gold has fueled a similar rally in gold mining stocks. The NYSE Arca Gold Miners Index (GDX) has spiked 30% since late February, even outpacing gold itself. However, unlike the commodity, the miners remain in negative territory year-over-year. That being said, the GDX did experience a bullish “golden cross” yesterday, where the 50-DMA crossed above the rising 200-DMA. While technicians often view these patterns as a positive sign, they have a mixed historical record.
In the case of the GDX, not only have golden crosses had a mixed historical record, they’ve been more of a bearish indicator than anything else. Since the inception of the index back in 1994, there have been 13 prior golden crosses, and in the table below we summarize the median performance of the index following each one along with the frequency of positive returns. While the GDX’s median performance over the following week was a gain of 1.7% which is well above the average 0.2% gain for all periods since 1994, median performance over the following one, three, six, and twelve months was not only weaker than the average for all periods, it was flat out negative! One year later, for example, the GDX’s median performance was a decline of 12.3% with positive returns less than 40% of the time.
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Apr 11, 2024
The “Bespoke 50” is a basket of noteworthy growth stocks in the Russell 3,000. To make the list, a stock must have strong earnings growth prospects along with an attractive price chart based on Bespoke’s analysis. There were 7 changes to the list this week.
The Bespoke 50 is available with a Bespoke Premium subscription or a Bespoke Institutional subscription. With Bespoke Premium, you’ll receive a number of daily market updates from us along with our weekly newsletter and a portion of our investor tools. With Bespoke Institutional, you’ll receive everything that’s included with Premium plus additional daily macro analysis and more stock-specific research.
To see all 50 stocks that currently make up the Bespoke 50, simply start a two-week trial to Bespoke Premium or Bespoke Institutional.
The Bespoke 50 performance chart shown does not represent actual investment results. The Bespoke 50 is updated monthly on Thursdays unless otherwise noted. Performance is based on equally weighting each of the 50 stocks (2% each) and is calculated using each stock’s opening price as of Friday morning after publication. Entry prices and exit prices used for stocks that are added or removed from the Bespoke 50 are based on Friday’s opening price. Any potential commissions, brokerage fees, or dividends are not included in the Bespoke 50 performance calculation, but the performance shown is net of a hypothetical annual advisory fee of 0.85%. Performance tracking for the Bespoke 50 and the Russell 3,000 total return index begins on March 5th, 2012 when the Bespoke 50 was first published. Past performance is not a guarantee of future results. The Bespoke 50 is meant to be an idea generator for investors and not a recommendation to buy or sell any specific securities. It is not personalized advice because it in no way takes into account an investor’s individual needs. As always, investors should conduct their own research when buying or selling individual securities. Click here to read our full disclosure on hypothetical performance tracking. Bespoke representatives or wealth management clients may have positions in securities discussed or mentioned in its published content.
