The Closer: End of Week Charts — 2/21/20

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.

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Big Week But Bad Day For Triple Plays

Even though earnings season unofficially came to a close on Tuesday with Wal-Mart’s (WMT) report and despite a shortened week due to President’s Day on Monday, this week saw the highest number of Earnings Triple Plays of any week so far in 2020.  A stock reports a Triple Play when it beats EPS and revenue estimates and also raises guidance. Today alone there were five: Bandwidth (BAND), Diamondrock Hospitality (DRH), eHealth (EHTH), Gaming and Leisure Properties (GLPI), and Globant (GLOB).

Given the strong fundamental results, triple plays typically experience strong stock price reactions to earnings.  On average, Triple Plays this year have gapped up 5.57% but have sold off from open to close, falling just over 1% for a full day gain of 4.43%.  That compares to a full day loss of 6 bps for all stocks that have reported earnings this year. Of today’s Triple Plays, performance has been worse though only having risen 3.1% on average.  But that was not the case for the entire session.  The gaps up at the open were actually much stronger than normal with an average gap up of 9.9%, but broader market weakness has led these names to sell off intraday. The worst of these was Bandwidth (BAND) which is down over 11% from the open. EHTH and DRH were also notable decliners having fallen 9.13% and 5.18% since the open, respectively. Start a two-week free trial to Bespoke Institutional to access our Earnings Explorer, Triple Plays, and more.

Yet Another Corona Friday

The major indices decided it was five o’clock somewhere right off the bat today as they experience yet another “Corona Friday”. More concerns around the coronavirus have sent stocks lower with the S&P 500 down around 1.1% as of this writing and the Nasdaq down nearly 2% today. Declines on a Friday have become par for the course in 2020.  Fridays have been the weakest day of the week so far in 2020; the only one to average a decline.  On average, the S&P 500 has fallen 0.52% on Fridays while the next worst day has been Monday which has averaged a gain of 0.19%.  Fridays have also been the day that the S&P 500 has closed higher the least.  Only 28.6% of Fridays this year have seen the S&P 500 finish in the green. That compares to a positive close more than three-quarters of the time on Mondays, Wednesdays, and Thursdays. While it has averaged a gain of 0.24%, Tuesdays have also experienced a positive close less than half of the time.  Try Bespoke’s premium research package for free for two weeks.  Click here to start your free trial now.

Bespoke’s Morning Lineup – 2/21/20 – A Case of the Fridays

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 free trial to Bespoke Premium.  CLICK HERE to learn more and start your free trial.

It’s looking like another negative end to a week as investors don’t want to make any major moves heading into a weekend where there’s the potential for more negative headlines related to the coronavirus.  Gold is on pace for its 11th positive day in the last 12, while the 10-year yield drops below 1.5% to its lowest levels since last September.

Read today’s Bespoke Morning Lineup below for the latest on the impact of the coronavirus, the rare simultaneous rally in the dollar and gold, European economic data, and diverging performance of European equities from the perspectives of US and European investors.


US markets look set to continue their pullback from overbought levels as we close out the week.  Over the last five trading days, most sectors have pulled back within their trading ranges, and in the majority of cases, we’ve seen a move from overbought to less overbought levels.  Energy is the only sector below its 50-DMA (it is also the only sector that is oversold).  Meanwhile, the Consumer Discretionary sector remains at extreme overbought levels, while Real Estate isn’t far behind.

Despite the lackluster market performance this week, overall US stock market performance this year yeas been strong.  Energy and Materials are the only two sectors that are down YTD while five sectors are up over 5%, including Technology which is already in the double-digit percentage range, and Utilities which is up just over 9%.

The Closer – Weights Not Worrying, Five Fed, Slippery Inventories – 2/20/20

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Looking for deeper insight on markets?  In tonight’s Closer sent to Bespoke Institutional clients, we begin by showing why the weightings of the homebuilders and semis are not sending any worrying signals.  Next, we update out Five Fed Manufacturing composite with the releases of the Philadelphia and Empire State readings. We finish tonight with a look at EIA petroleum stockpiles.

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Philly Pops

After a strong report on manufacturing in the New York area earlier this week, the Philly Fed Manufacturing report one-upped its neighbor with a blowout report.  While economists were expecting a modest decline in the headline reading from 17.0 to 11.0, the actual reading came in at 36.7, more than triple expectations!  This was the strongest reading for the headline index since February 2017, but before that, you have to go all the way back to December 1993 to find a stronger reading.  Not only that, but relative to expectations, this month’s report was the biggest beat on record (going back to 1998).

Not only was this month’s report strong, but it also followed the January report which also increased 14.6 points on a m/m basis.  Combining the back to back increases together, it was the strongest two-month increase in the Philly Fed headline index since September 1995 and the third strongest two-month gain in the history of the report going back to 1980!

Breadth in this month’s report was also very positive as just two components — Prices Paid and Number of Employees — declined.  Meanwhile, a number of components saw double-digit increases including New Orders, Unfilled Orders, and Inventories.  When it comes to the Philly Fed Manufacturing report, they don’t get much stronger than this!  Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.