The fourth quarter is now off to the races and we thought it worthwhile to check in on the best and worst-performing S&P 500 stocks on a year-to-date basis.  As shown below, there are currently six members of the index that have rallied over 100% this year.  Apt for the year that its vaccine has rolled out, the biggest gainer of these has been Moderna (MRNA) with a 196.12% rally.  It now has a market cap of $124.87 billion versus a market cap of only $41 billion at the start of the year. Of the 20 best performers, MRNA is also the only one with a market cap above $100 billion. The next largest is ConocoPhillips (COP) with a $95.76 billion market cap.  COP is one of multiple Energy stocks on this list as well. Of the top 20 performers, Energy sector names dominate the list with 8 members.

Pivoting to the other end of the spectrum, Las Vegas Sands (LVS) is down the most this year having been cut by 36.18%.  IPG Photonics (IPGP), Lamb Weston Holdings (LW), Viatris (VTRS), MarketAxess (MKTX), and Global Payments (GPN) also have fallen by at least 25%.  Once again, there is only one member of this list with a market cap above $100 billion: Qualcomm (QCOM).  One other interesting factor to note of the worst performers is there are several stocks that were at some point plays on pandemic trends, whether those be reopening or stay at home. For example, in addition to LVS, another gaming/reopening name, Wynn Resorts (WYNN), ranks as the eighth-worst performer YTD.  Additionally, strong performers during the onset of the pandemic like Clorox (CLX), Activision Blizzard (ATVI), and Take-Two Interactive (TTWO) are all down double digits this year.  Click here to view Bespoke’s premium membership options.

Since the late spring, both silver and gold have been in steady downtrends spending much of that time below their 50-DMAs. Those downtrends remain in place, but both metals did find a short-term bottom on September 29th. While they have been rallying in the past week and a half, today each one has stalled out.  From the early morning leading up to the Nonfarm Payrolls report, precious metals ramped higher with a surge immediately following the weaker than expected report. Only a couple hours after the release, gold and silver had erased a large portion of their earlier gains. In fact, silver is now 2.15% below its intraday high and gold is 1.36% below its high.  For gold, in particular, that intraday reversal also marked a rejection of its 50-DMA which it—as well as silver—has struggled to stay above for most of the past several months.

Crude oil is yet another commodity that is currently down off of its intraday highs, and like gold, the reversal came at a pretty interesting level.  At its high Friday morning, front-month WTI futures rose above $80 for the first time since November 2014.  Click here to view Bespoke’s premium membership options.

Columbus Day is an interesting trading day for financial markets as it is one of the few trading days of the year when the equity market is open, but the bond market is closed. This may lead investors to think that equity markets should perform positively, as investors do not have credit markets to allocate capital to on that specific day. However, looking at the S&P 500’s historical performance on Columbus Day over the last 25 years doesn’t necessarily show a real positive bias.  Columbus Day tends to act just like any other trading day. Over the last 25 years, median performance on Columbus Day has been a gain of 10 basis points (bps) with positive returns 55.6% of the time.  While that’s slightly higher than the median one-day gain of 7 bps for all trading days over the last 25 years, the difference isn’t significant.  That’s not to say that Columbus Day hasn’t seen some outliers, though.  Who can forget in 2008, during the middle of the Financial Crisis, when the S&P 500 rallied more than 11% on Columbus Day!

For the week of Columbus Day, the S&P 500’s median gain has been 0.31% with positive returns 63% of the time which also isn’t extraordinary relative to average weekly returns for the S&P 500 over the last 25 years.  The worst Columbus Day weeks were in 1999 (-6.63%) and 2018 (-4.10%) while the best were in 1998 (+7.32%), 2002 (5.87%), and 2011 (+5.98%).  Interestingly enough, in 2008, even after rallying over 11% on Columbus Day, the S&P 500 finished the week up just 4.60% as it erased more than half of its gains from the holiday session.

The table below lists the S&P 500’s performance leading up to and after Columbus Day for each of the last 25 years.  With a decline of over 2.5% since the start of September, this year ranks as the weakest performance for the equity market since 2014. Click here to view Bespoke’s premium membership options.

The S&P 500 has found some support in the past week but sentiment readings from AAII have not shown a major shift toward bullish sentiment.  The percentage of respondents reporting as bullish this week fell for the second week in a row to 25.5%.  That is still above the low of 22.4% from the week of 9/15.

Not only did bullish sentiment fall but so too did bearish sentiment.  Whereas over 40% of respondents reported as bears last week, this week, the reading fell to 36.8%.  That remains elevated relative to the past year, but it also marks the lowest level of bearish sentiment since September 9th.

That means neutral sentiment saw a notable jump to 37.7% this week borrowing from the losses to the bullish and bearish camps.  Since the start of the pandemic, this week’s reading ranks as the fifth-highest and is 6.3 percentage points above the historical average. That makes for the first time since the end of July that neutral sentiment was the predominant sentiment reading.

Apart from the AAII survey, the National Association of Active Investment Managers’ (NAAIM) Exposure Index also showed a reversal in pessimism this week.  The index measures managers’ exposure to US equities. Readings of positive/negative 200 would indicate reporting managers are levered long/short, positive/negative 100 is fully long/short, and zero would be market neutral.  Last week, this index hit a low of 55 which was the weakest reading since the spring. This week, we saw a modest bounce to 68.6. While improved, that is still below the spring and summer’s range.  Click here to view Bespoke’s premium membership options.

After drifting higher throughout September, seasonally adjusted jobless claims finally saw an improvement this week.  Not only did claims drop for the first time since the beginning of September, but the 38K decline from last week’s 2K upwardly revised number exceeded expectations of a 16K decline.  Now at 326K, claims are at the second-lowest level of the pandemic behind the September 3rd reading of 312K.

On an unadjusted basis, claims were significantly lower.  The non-seasonally adjusted number fell 41.4K to 258.9K.  That set a new low for the pandemic and the week over week drop was the largest in ten weeks. With the expiration of pandemic era programs, PUA claims continue to account for an increasingly inconsequential share of initial claims.

We would also note that the large decline in regular state claims goes completely against the usual seasonal pattern for the current week of the year.  The 40th week of the year has historically seen claims rise WoW 87% of the time.  In fact, that ranks as fourth highest in terms of the week of the year that most consistently have seen claims move higher week over week. In other words, the decline this week was strong enough to totally outpace any seasonal headwind.

Continuing jobless claims also came in below expectations this week. Regular state continuing claims through the week of September 25th fell to 2.714 million from the prior week’s 9K upwardly revised reading of 2.811 million.  That makes for the lowest level of claims since March 2020 when claims were less than 1 million lower than current levels.

Including all other programs creates an additional week of lag making the most recent data through September 17th; the second week after the expiration of pandemic era programs’ expiration. Once again, the unwind in programs like PUA and PEUC drove the aggregate decline. Those two programs accounted for a combined 772.56K decline.  Since the last week of August, these two programs together have seen claims fall by over 8 million. Those declines on top of nearly every other program also shedding claims means total continuing claims fell to a new low of 4.18 million; roughly a third of the level at the end of August.  Click here to view Bespoke’s premium membership options.

Historically, the strongest part of the year for gas prices has been the summer. From the start of the year through the late spring, prices tend to rise, flattening out over the summer months, then declining from Labor Day into year’s end.  We’re now about a month beyond Labor Day and 2021 gas prices are bucking that seasonal trend a bit.  AAA’s national average for a gallon of regular gas just hit a new high for the year at $3.22. That is up 42.9% since the start of the year which compares to an average 14% YTD gain at this point of the year from 2005 through 2020.  The only two years with larger YTD gains were 2005 and 2009.

The recent move higher in gas prices again goes against the historical seasonal average since 2005, but it is not exactly unheard of for prices to rise slightly from the end of August to the first week of October, and that’s even more true in recent years.  As shown in the table below, gas prices consistently fell from August 31 to October 6th from the mid-2000s to 2015, but since then it has not been uncommon to see prices rise in that time frame.  In fact, this year’s 1.48% gain since the end of August is middling versus well over 2% gains in 2018 and 2019.

Regardless of seasonal patterns, the recent increases leave the national average for a gallon of regular at the highest level since October 2014 which hurts consumers where it matters most- the wallet.  Click here to view Bespoke’s premium membership options.

Peering across the ETFs tracking the stock markets of the 23 global economies tracked in our Global Macro Dashboard, the US is far from alone in having declined recently.  As shown in our matrix below, the US (SPY) hit its 52-week high back on September 2nd and only a handful of other countries hit their own 52-week highs after that date: Russia (RSX), Norway (ENOR), Japan (EW), and Taiwan (EWT). Russia is perhaps the most notable of these countries. Not only was it the ETF to have most recently hit a 52-week high, but it is also the only one that is currently above its levels from 9/2 and the only one that is trading over one standard deviation above its 50-DMA. In fact, RSX is teetering on extreme overbought territory.  As for the other ETFs, Norway (ENOR), India (INDA), and Malaysia (EWM) are the only ones that are even above their 50-DMAs at the moment.

Again, Russia has experienced notable outperformance relative to most other country ETFs, but that is especially the case relative to other BRIC countries.  Brazil (EWZ) and China (MCHI) have been in steady multi-month downtrends since their 52-week highs back in the first couple of months of the year. As a result of those downtrends, these two also have the worst YTD performance of all these country ETFs whereas RSX is the top performer followed by India (INDA). Additionally, since the US high on 9/2, Brazil has fallen 12.82% which ranks as the worst performance of any of these countries in that time frame.  Only South Korea (EWY) has also fallen double digits in that same span of time.  While it has also pulled back from its highs, the other BRIC country, India (INDA), is perhaps more similar to RSX with a steady uptrend over the past year. Currently, INDA is within 1% of its highs as well.

Pivoting away from EM markets, the G7 countries have broadly traded sideways over the past few months and are currently at the lower end of those ranges. There are exceptions to this though. Separating the downdraft over the past month, the US has actually trended higher since the spring.  Germany (EWG) meanwhile is the only one that has totally broken down. In fact, it is currently the most oversold of all the 23 country ETFs highlighted above. With respect to its own history, the z-score readings (how many standard deviations from its 50-DMA the current price is) this month have all ranked in the bottom few percentiles of all periods since EWG began trading in 1996. Although EWG has broken down and is at the lowest level in months, Japan (EWJ) has experienced an even sharper short-term decline.  In the past five days, EWJ has been the worst performer shedding 5.44%. EWJ has now erased all of the spike-up that occurred at the end of August through last month. If there is any silver lining to be found with regards to that decline, unlike EWG, Japan is for the time being above support at the summer lows.  Click here to view Bespoke’s premium membership options.

Facebook (FB) remains in the news today as former employee Frances Haugen testifies before a Senate panel.  The stock is bouncing back a bit after steep declines yesterday that came on the same day that most of the company’s websites and apps went dark for hours on end.  That goes for the rest of the FANG cohort as well.  As shown below, the NYSE FANG+ Index closed below its 200-DMA for the first time in 378 trading days yesterday. While it has not recovered all of yesterday’s losses with an inside day, the group is bouncing back significantly. In the process, the FANG+ Index has moved back above its 200-DMA.

Amazon (AMZN) and Facebook (FB) are similarly seeing inside days today recovering some of yesterday’s declines.  For AMZN, the bounce comes around support at the low end of the past year’s range. Meanwhile, for FB, the bounce comes in a bit of no man’s land in the middle of the range between its 50 and 200-DMAs. Similarly, Apple (AAPL) and Alphabet (GOOGL) are also now trading in between their 50 and 200-DMAs. Click here to view Bespoke’s premium membership options.

In an earlier post, we noted the long-term breakout of cotton futures in the context of what has been a historic short-term run. Elsewhere in the commodities space, there are other breakouts occurring today.  As shown in the first chart below, crude oil took out its July intraday high of $76.98 yesterday and it has continued to move above those levels today. While crude oil is now within one dollar of $80, natural gas is also hitting a new high as the commodity continues to surge on supply concerns as we discussed in today’s Morning Lineup.

As both commodities rapidly trend higher, comparing the two, natural gas comes out as the clear winner recently.  In the chart below we show the ratio of front-month crude oil futures to natural gas futures.  When the line is rising, oil is outperforming natural gas.  When the line is falling (as it is now), natural gas is outperforming oil.  Since this past March, the ratio of the two has been in a steady decline and it is now at the lowest levels in a little under one year.  Prior to that, the only lower readings in the ratio of the past five years was when crude prices went negative in April 2020 and in November 2018.  Click here to view Bespoke’s premium membership options.