We’ve been tracking earnings “triple plays” for the last 15+ years.  A company registers an earnings triple play when it reports results that 1) beat consensus EPS estimates, 2) beat consensus revenue estimates, and 3) raise forward guidance.  You can read more about the term over at Investopedia where they’ve given Bespoke credit.

Historically about 5-10% of earnings reports have been triple plays, and below is a chart showing the rolling 3-month percentage of all earnings reports that have been triple plays.  You’ll notice that coming out of the COVID recession in the spring of 2020, the percentage of companies reporting triple plays began to spike, and the number kept on rising all the way through the spring/summer of 2021.  It’s now apparent that analysts were way too conservative with estimates in the 12-18 months after the initial COVID crash, which resulted in an extremely high percentage of companies beating both EPS and revenue estimates.  At the same time, companies themselves were getting more and more positive on the future of their businesses, and the result was a spike in the percentage of companies raising guidance.  At its peak earlier this year, nearly 20% of all earnings reports were triple plays over the prior three-month period, which was 50% higher than the prior highs around 12% seen in the mid-2000s.  That kind of rate was clearly unsustainable, and as you can see in the chart, the percentage of companies reporting triple plays is currently falling back down to more normal levels.

Using our Earnings Explorer tool, we can track how stocks that report triple plays have historically reacted to the news.  As shown in the snapshot below, over the last ten years, there have been just over 5,600 earnings triple plays, and these stocks have averaged a one-day gain of 5% on the first full trading day following the earnings release.  That one-day gain of 5% shows how positively investors typically view earnings triple plays.

Taking a closer look at one-day price reactions to triple plays, below we show the average one-day price change for stocks reporting triple plays on a rolling three-month basis.

As you can see, the average one-day gain for triple plays fell sharply after the Covid recession at the same time that the percentage of companies reporting triple plays was spiking.  This intuitively makes sense — the more common triple plays are, the less investors will reward the stocks that are reporting them.

Stocks reporting triple plays were barely posting gains of more than 1% on their earnings reaction days this past summer, but lately we’ve seen investors treat triple plays more positively.  As shown in the chart, the average one-day gain for stocks reporting triple plays has been rising sharply in recent months and is now back above 4%.  This comes as we’re seeing less companies report triple plays.

Over the last week, the 82 stocks that have reported earnings triple plays have averaged a one-day gain of 5.67%, and more than a quarter of them have gained more than 10%.

We love tracking the list of individual companies reporting earnings triple plays because it’s a great starting point for further research.  Companies reporting triple plays typically have fundamental momentum.

Bespoke subscribers can track both earnings trends more broadly and also see a continuously updated list of recent earnings triple plays.  If you’d like to see the list of this earnings season’s triple plays, simply click here to start a two-week trial to Bespoke Premium today.

With the Veteran’s Day holiday tomorrow, the weekly release of jobless claims was pushed up to today.  Initial claims missed expectations falling to only 267K rather than the anticipated drop to 260K.  Last week’s number was also revised higher by 2K to 271K.  The decline this week marked the sixth week in a row of declines as claims are once again at the lowest levels since March 2020. In fact, this week’s level is only 11K above the March 14, 2020, pre-COVID surge level.

On a non-seasonally adjusted basis, claims were actually higher as could be expected given the seasonal headwinds of this time of year.  For the current week of the year, initial claims have historically risen 85% of the time week over week; one of the highest readings of any week. PUA claims meanwhile fell below 2K as the program continues its unwind.

Continuing claims ticked higher this week rising from 2.10 million to 2.16 million on a seasonally adjusted basis.  That is the first increase in six weeks but it is a modest one, especially relative to the past few weeks’ declines.  Even after the increase, continuing claims are still 79K below levels from two weeks ago.

Delayed an extra week, the inclusion of all other programs showed yet another drop in continuing claims on an unadjusted basis. Total claims across all programs fell to 2.57 million, down roughly 100K from the previous week. Essentially that entire decline was on account of regular state claims with the moves in PUA and PEUC claims basically netting out. There continue to be some residual claims from pandemic era programs, but they now account for a significantly smaller share of claims than was the case only a few months ago, and generally, those claim counts have declined.

In the matrix below, we show a state-level breakdown of jobless claims.  For the most part, states currently have claims counts around new lows, but there are a handful of states that are trending higher like Iowa, Kentucky, Minnesota, Tennessee, and Vermont.  As mentioned previously, those reversals in trend are likely a result of seasonal headwinds. Click here to view Bespoke’s premium membership options.

Precious metals and industrial metals have been headed in opposite directions lately.  Throughout 2021, industrial metals have been in a steady uptrend with Bloomberg’s Industrial Metal Index up as much as 38% at its highs in mid-October.  Since then, the group of commodities has been pulling back and are now at the bottom of the past year’s uptrend. Currently, industrial metals are now down to a 22.4% gain on the year. Meanwhile, precious metals have been an underperformer all year, spending the vast majority of 2021 in the red year to date.  Since September 29th, though, precious metals put in a low and have rallied 7.7% whereas industrial metals are essentially flat in the same span of time.

Given the inverse moves in industrial and precious metals, the relative strength line between the two has seen its trend falter.  As shown below, since late summer 2020, industrial metals continuously outperformed precious metals as seen through the uptrend in the relative strength line.  Last month, the line even broke out above the prior high set in June 2018.  The sharp decline since then has resulted in a break of the aforementioned uptrend.  Click here to view Bespoke’s premium membership options.

As we noted in an earlier post, the NFIB’s monthly survey of small businesses showed overall strong labor market conditions with some signs of improving labor market tightness in October.  As shown below, a combined 34% of respondents reported either costs or quality of labor as their biggest issue.  That was down 6 percentage points from the record high last month.

In the table below, we show the full range of problems that the NFIB surveys small businesses on.  While both labor-related problems fell, there was a bigger decline in quality of labor which is now back below a quarter of all respondents.

Concerns appear to have moved away from labor and toward inflation.  The percentage of businesses seeing inflation as their biggest problem has been elevated at levels unseen since the Financial Crisis over the past several months, but there was an improvement in September.  In October, it gained back all that decline and then some as 16% of businesses reported inflation as their biggest issue. That leaves it at the same level as November 2008.

Perhaps one of the most interesting findings of the October report concerned the battle of small vs big business.  In fact, there no longer appears to be any battle.  For the first time on record, zero percent of respondents reported competition from big business as their biggest problem.

On a combined basis, the percentage of respondents reporting government requirements or taxes as their biggest problems remains the most pressing issue behind labor concerns. Businesses did report improved uncertainty regarding economic policy.  As shown below, that index fell sharply to 67 in October, which is now the lowest reading since the start of 2016.  Click here to view Bespoke’s premium membership options.

This morning the NFIB released the results of their October survey of small business sentiment.  The report saw small business sentiment fall for the second month in a row.  At 98.2, the index is now back to the same level it was at this past March.

With the decline in the headline reading, breadth was terrible with only one index that is an input to the optimism index—Plans to Make Capital Outlays—moving higher month over month.  The various indices are now all over the place with regards to their own historical ranges.  For example, Higher Prices, Compensation, and Compensation Plans all hit a record high while Expectations for the Economy to Improve and Credit Conditions for Regular Borrowers are just off of record lows.

Sales and earnings-related topics weighed on optimism in October. A net negative percentage of responding firms reported weaker actual and earnings changes.  Meanwhile, the weakest percentage of respondents reported now as a good time to expand since February.  Alongside that weaker reading, Outlook for General Business Conditions continues to collapse and is now at the second-lowest level on record; only slightly above the low from nine years ago. One potential factor playing into that weak sentiment is higher prices as that index hit another record.

While the headline Small Business Optimism index has declined, it has held up considerably well relative to the massive drop in the Outlook for General Business Conditions.  As shown below, the spread between the two is now at a record high dating back to 1986.

While there were some signs of cooling in October, overall the employment metrics in the report continue to be historically strong. Hiring Plans were unchanged at 26 which is off the late summer peak but still above any pre-pandemic level.  While firms do not plan to take on as many workers as they had planned a few months ago, they are at least paying them better.  Both Compensation and Compensation Plans continue to surge to new record highs. That has appeared to have some effect as the number of firms reporting Job Openings as Hard to Fill fell modestly. Additionally, as we noted in today’s Morning Lineup, fewer businesses are reporting labor problems as their biggest concern.  Click here to view Bespoke’s premium membership options.

Across major US equity indices, regardless of market cap, the picture is the same: extreme overbought. As shown in the snapshot of our Trend Analyzer below, the Russell Mid-Cap ETF (IWR) was the only major index ETF that did not finish last Friday at least two standard deviations above its 50-DMA. With that said, IWR still finished the week at very overbought levels and only slightly below extreme overbought levels.  For the most part, other mid-cap ETFs were some of the most overbought last week like the Core S&P Mid-Cap ETF (IJH) and S&P MidCap 400 ETF (MDY).  Small-caps are even more extended with the Core S&P Small-Cap ETF (IJR), Russell 2,000 ETF (IWM), and Micro-Cap ETF (IWC) all off the chart overbought.

Again, looking across the four major US indices, each one is at ‘extreme’ overbought levels with a z-score reading at the high end of the past decade’s range.  In the charts below, we show charts of how far the S&P 500, NASDAQ Composite, Dow Jones Industrial Average, and Russell 2,000 are trading from their 50-DMAs as measured in standard deviations.  For large caps and the NASDAQ, the current readings are some of the highest since the summer. For the Russell 2,000, no point in the past decade has seen a more elevated reading. In fact, Friday’s close saw the Russell 2,000 finish 3.23 standard deviations above its 50-DMA; the most elevated reading since February 1991. Click here to view Bespoke’s premium membership options.