It was a January to remember for investors (who went through one of the worst years in recent history in 2022).  Below is a look at the recent performance of various asset classes using our ETF matrix.  Performance in January (YTD 2023), over the last six months, and over the last year is shown for each ETF (or exchange traded product).

Looking specifically at January, the Nasdaq 100 (QQQ) was the best performing US index ETF with a gain of 10.6%.  The small-cap Russell 2,000 (IWM) wasn’t far behind with a gain of 9.8%.  The Dow 30 (DIA) — the index that held up the best in 2022 — was up the least in January with a gain of 2.95%.

At the sector level, Communication Services (XLC) was up the most with a gain of 15.1% followed closely by Consumer Discretionary (XLY) at 14.8%.  While these two sectors were up double-digit percentage points, three sectors actually fell in January: Consumer Staples (XLP), Health Care (XLV), and Utilities (XLU).

Outside of the US, the bulls were running with a number of country ETFs up 10%+, including Australia (EWA), China (ASHR), France (EWQ), Germany (EWG), Italy (EWI), Mexico (EWW), and Spain (EWP).  India (PIN) was the only country in our matrix that was down with a decline of just 5 basis points.

Commodity ETFs/ETNs were mostly flat with one exception — natural gas.  As shown, UNG was down 33.9% in January, and it’s now down 67.4% over the last six months.

Finally, Treasury ETFs continued to bounce back after a horrific 2022, with the longer the duration, the better the performance.  The 20+ year Treasury ETF (TLT) was up the most with a huge monthly gain of more than 7%.

Below is a look at the average performance of stocks in the large-cap Russell 1,000 by sector during this past January.  We also show the average distance from 52-week high and the average total return in 2022.  As you can see, the areas that got hit the hardest in 2022 are the ones that bounced back the most in January.  The average stock in the Communication Services sector gained 16% in January, but these stocks are still 32% below their 52-week highs after falling 32.6% in 2022.  Energy and Utilities stocks averaged minimal gains in January, but they’re also the only two sectors that averaged gains in 2022.

Finally, below is a list of the 35 best-performing individual stocks in the Russell 1,000 in January.  Topping the list is Carvana (CVNA) — which is still in the Russell 1,000 for now — with a gain of 114.6% during the month.  Even after more than doubling in January, CVNA remains 94% below its 52-week high.

Aside from National Instruments (NATI), this list of big winners in January is a who’s who of stocks that got crushed in 2022.  Not one stock was up last year, and they were down an average of 61.6% in 2022!  After averaging a gain of 49.6% this month, they’re still close to 50% below their 52-week highs.  The two biggest stocks on the list are Tesla (TSLA) and NVIDIA (NVDA).  Tesla ended up gaining 40.6% in January after falling 65% in 2022, while NVIDIA gained 33.7% after getting cut in half in 2022.  Some other recognizable names include Lucid (LCID), Peloton (PTON), Warner Bros Discovery (WBD), Lyft (LYFT), Spotify (SPOT), Roku (ROKU), Zillow (ZG), Paramount (PARA), and Carnival (CCL).

On the flip side, below are the 35 worst-performing stocks in the Russell 1,000 in January.  Whereas the best-performing stocks this month were the ones that got hit hardest last year, the worst-performing stocks this month were mostly names that actually posted gains in 2022.  On average, these 35 stocks fell 8.5% this month, but they were up 11.4% last year and are only 24% from 52-week highs.  The three worst-performing stocks in January were Northrop Grumman (NOC), Enphase Energy (ENPH), and Texas Pacific (TPL).  All three were up huge last year, with NOC up 43%, ENPH up 44.8%, and TPL up 91.2%.  Click here to learn more about Bespoke’s premium stock market research service.

As always, past performance is no guarantee of future results.

On this last trading day of January, below is a snapshot of how the major US sector ETFs have performed so far this year.  Over these last few weeks as the broad market has rallied, we’ve definitely seen some sector divergence.  Defensive sectors like Consumer Staples (XLP) and Utilities (XLU) have come under selling pressure, while cyclical sectors more tied to the business cycle have surged.  Communication Services (XLC) and Consumer Discretionary (XLY) are both up more than 12% YTD already, while Technology (XLK), Materials (XLB), Real Estate (XLRE), and Financials (XLF) are up more than 5%.  The only sectors down on the year are Consumer Staples, Utilities, and Health Care (XLV).  At the moment, four sectors are overbought (more than one standard deviation above their 50-DMAs) versus three that are oversold (more than one standard deviation below their 50-DMAs).  Click here to learn more about Bespoke’s premium stock market research service.

Below is a snapshot of price charts for six sector ETFs pulled from our Chart Scanner tool.  These are the three sectors up the most YTD (XLC, XLRE, XLY) and down the most YTD (XLP, XLU, XLV).

As we get set to enter a new month, last week we published a report for subscribers looking at historical market seasonality in February and for the remainder of the year based on how the market performs in January.  Does a positive January typically mean positive returns going forward or does it not matter?  To find out the answer to this question and see everything else Bespoke is publishing for subscribers, sign up for a one-month trial to Bespoke All Access today.

Welcome to Bespoke Brunch Reads — a linkfest of the favorite things we read over the past week. The links are mostly economy/market related, but there are some other interesting subjects covered as well. We hope you enjoy the food for thought as a supplement to the research we provide you during the week.

While you’re here, join Bespoke Premium with a 30-day trial!

Economy

Big Tech Is Really Bad at Firing People by Chris Stokel-Walker (Wired)
Thousands of tech workers have been laid off over the last few weeks, and they aren’t happy with the way their firings have been handled. [Link]

Corporate Layoffs Spread Beyond High-Growth Tech Giants by Chip Cutter and Theo Francis
It’s not just high-growth tech companies laying off workers, companies like IBM and Dow have also started to announce layoffs.  There’s always dog walking. [Link]

How These Dog Walkers Make Over $100,000 a Year by Alyson Krueger (NYT)
Charging upwards of $35 per walk (more than the hourly rate for babysitters), some dog walkers in New York are making six-figure salaries. [Link]

You Quit Your Job, but You’re Still Miserable. Now What? By Eilene Zimmerman (NYT)
Overworked Americans who have quit their jobs have found that the absence of work and structure leaves them unmotivated and unable to move forward. [Link]

CVS, Walmart to Cut Pharmacy Hours as Staffing Squeeze Continues by Sharon Terlep and Sarah Nassauer (WSJ)
Both chains will curtail the operating hours of their pharmacies citing a lack of available pharmacists. Pharmacists were already in short supply before the pandemic, and consumer demand for Covid-19 shots and tests put additional strains on pharmacy operations. [Link]

Chase Locking Up Some ATMs at 5 P.M. Due to NYC Crime by Luke Funk (Fox5NY)
Citing higher crime risk at night and increased vagrancy, the bank will curtail the availability of 24-hour ATMs. [Link]

Smartphone Shipments Suffer the Largest-Ever Decline with 18.3% Drop in the Holiday Quarter by IDC
The drop marks the largest-ever decline in a single quarter and contributed to a steep 11.3% decline for the year. [Link]

Americans Fall Behind on Car Payments at Higher Rate Than in 2009 by Claire Ballentine (Bloomberg)
Higher interest rates and depleted savings have resulted in car repossessions surging to the highest rate since 2009. [Link]

Science

Earth’s Inner Core May Be Reversing Its Rotation, Study Finds by Eric Niier (WSJ)
Researchers believe the Earth’s inner core has reversed its rotation after they analyzed earthquake-driven seismic waves as they pass through the Earth. The result is that the length of a day has been shaved by fractions of a millisecond [Link]

The Food Expiration Dates You Should Actually Follow by J. Kenji López-Alt (NYT)
Believe it or not, most of those expiration dates are meaningless.  “Vinegars, honey, vanilla or other extracts, sugar, salt, corn syrup, and molasses will last virtually forever,” and even eggs last much longer than their sell-by dates.  [Link]

Humanity May Reach Singularity Within Just 7 Years, Trend Shows by Darren Orf (Popular Mechanics)
“On average, it takes a human translator roughly one second to edit each word of another human translator, according to Translated. In 2015, it took professional editors approximately 3.5 seconds per word to check a machine-translated (MT) suggestion — today that number is just 2 seconds. If the trend continues, Translated’s AI will be as good as a human-produced translation by the end of the decade (or even sooner).” [Link]

ChatGPT Is Coming for Classrooms. Don’t Panic by Pia Ceres (Wired)
ChatGPT has caused fears of rampant cheating in American education, but many educators say that the potential disruption is just what the US educational system needs. [Link]

Google, Not OpenAI, Has the Most to Gain From Generative AI by Mark Sullivan (Fast Company)
Alphabet has been criticized for ‘missing the boat’ on AI, but this article reminds readers that the company has been calling itself “AI-First” since 2017 and has invested heavily in the space. [Link]

Meta Embraces AI as Facebook, Instagram Help Drive a Rebound by Jeff Horwitz and Salvador Rodriguez (WSJ)
Fueled by heavy investment in AI, Meta is starting to see a path to recovery after the toughest year in the company’s history [Link]

Sports

MSG Owner James Dolan Threatens Alcohol Ban at MSG Over Facial Recognition Controversy by Fox 5 Staff (Fox5NY)
Madison Square Garden owner James Dolan has banned lawyers who are suing any of his companies from entering the Garden. The New York State Alcohol board has threatened to pull the Garden’s liquor license, so Dolan has suggested he may stop serving beer at one Rangers game and tell anyone who is upset about it to call the head of the state authority. [Link]

Quality Control Fiasco: George Brett Autograph Ends up on a Babe Ruth Baseball Card by Tyson Shushkevich (Just Baseball)
Can you imagine pulling an autographed Babe Ruth but then realizing that the actual signature was George Brett? You’d be mad. Think George Brett pine tar too high mad. [Link]

Ranking the top five Royal Rumble winners in WWE history: Is Steve Austin or Ric Flair No. 1? By Daniel Yanofsky (Sporting News)
With this weekend’s Royal Rumble, check out this list of the top five Royal Rumble Winners.  Who will win the right to face Roman Reigns at WrestleMania 39?  Will The Rock make a comeback? [Link]

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Have a great weekend!

If you think the clobbering of growth stocks in 2022 was harsh, check out the performance of natural gas.  Towards the end of last summer when there were real worries that many Europeans were going to freeze to death in the winter cold without gas to heat their homes, the price of natural gas in the US traded to the highest levels in over a decade and approached double-digits.  As steep as the runup last year was, the downfall has been even steeper.  Suffice it to say, the price of the front month futures contract is nowhere near $10 anymore, and just this week dropped below $3 to its lowest level in more than a year.  More recently, the slide has been pretty relentless with 14 declines over the last 20 trading days.

The chart below shows the 100-trading day rate of change in natural gas futures going back to 1991.  Through Thursday’s close, the price of the front month contract was down by more than two-thirds (68.21%), which, believe it or not, is the steepest drop over a 100-trading day period in the history of the futures contract (since 1991).  It’s interesting to note that the current decline comes just eight months after what was the second-strongest 100-trading day rally in the history of the futures contract (+147%).  The strongest 100-day rally was all the way back in December 2000 when prices surged 160%.  Like the rally last May, that strong rally was followed eight months later by what is now the second-largest 100-day decline in natural gas prices.

The lesson here may be that if natural gas rallies 100% in 100 days, you probably want to avoid it.  In the eight prior periods when the commodity rallied 100% in 100 days, its median performance over the following year was a decline of 30.1% with declines 75% of the time.  Conversely, the performance of natural gas following 50%+ declines in 100 days hasn’t been as consistent.  In the five prior periods that fit that criteria, natural gas was up by a median of just 1.4% with gains three out of five times.  Click here to learn more about Bespoke’s premium stock market research service.