The gains in the first half of the week lifted every sector but two—Utilities and Financials—above their 50-DMAs. Meanwhile, Health Care had even touched overbought territory (over 1 standard deviation above its 50-day) earlier in the week, making it the first sector to be overbought since late February.

When it comes to another measure we monitor, the 10-day advance/decline line, conditions are more broadly appearing overbought.  The 10-day advance/decline line measures the average number of daily advancers minus decliners in an index or sector over the last 10 trading days.  Very high readings suggest that things have gotten extended in the very near term and downside mean reversion can be expected.  Very low reading suggest the opposite.

The 10-day A/D lines for sectors have been pretty strong recently indicating broad participation in the rally, but this has led these readings to become elevated indicating conditions may be running a bit too hot in the near term.  Outside of the defensive sectors like Consumer Staples, Utilities, and Real Estate, every sector’s 10-day A/D line has been in overbought territory at some point over the past week. The same can also be said for the 10-day A/D line for the S&P 500.  We’d note, though, that while A/D lines are extended, they’re not at extreme levels seen at other points over the past year.  Start a two-week free trial to Bespoke Institutional to access our Sector Snapshot report and much more.

Initial jobless claims fell this week for the fourth week in a row since the record high print of 6.867 million back in the final week of March.  Claims came in at 3.839 million which was 588K less than last week but also above estimates of 3.5 million.  That brings the total number of initial jobless claims filed over the past six weeks (when there was the first print over 1 million) to over 30 million which is over 9% of the entire US population.

On a non-seasonally adjusted basis, this week was only the third consecutive decline off of the peak of 6.211 million which came one week later than the seasonally adjusted data’s peak.  This week’s decline brought jobless claims down to 3.489 million.

Since the huge spike in jobless claims began in late March, the 4-week moving average has risen every single week, except for today.  This week, the four week average fell 753.25K down to 5.033 million.  As with the other readings, while that is still lower, the moving average remains extremely high compared to the rest of history.  Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.

The volatile swings in crude oil last week sent investor sentiment sharply lower with only 24.86% of investors reporting as bullish which was the lowest level of bullish sentiment since the COVID-19 outbreak began..  With things calming down in the days since and with equities continuing to grind higher, sentiment has improved as the percentage of investors reporting as bullish rose to 30.6%.  While an improvement, that is still less than where bullish sentiment has been over the past several weeks. Since the sell-off began on 2/19, bullish sentiment has averaged 33.44%, around 3 percentage points above current levels.

Last week, we noted a strong bearish bias in which the percentage of bearish investors doubled those reporting as bullish.  That has subsided this week as bearish sentiment pulled back from 50% to 44.03%. With less than half of investors now negative, bearish sentiment is within one percentage point of its average since the 2/19 peak, 44.83%.

Most of the gains and losses to bulls and bears took from each other as neutral sentiment went little changed.  25.37% of investors reported as neutral which was only 0.23 percentage points more than last week’s reading of 25.14% Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.

Our popular Earnings Explorer tool has quarterly earnings results and share price reactions to those earnings reports for nearly every US stock going back to 2001.  The database is online, massive, and it’s interactive so that users can quickly look up historical results for individual companies.  One way to use the database is to see how stocks that are set to experience huge opens higher on earnings typically trade from the open to the close of trading after their initial moves higher.  Two stocks that are set to gap up sharply on earnings this morning are Facebook (FB) and Tesla (TSLA).  At the moment, both are set to open higher by more than 5%.

Below we have pulled all historical instances in which both Facebook and Tesla have gapped higher by at least 5% at the open of trading following quarterly earnings reports.  Coincidentally, each stock has had 11 prior gaps up of 5%+ on earnings in their history as public companies.  For Facebook (FB), when it has gapped up 5%+ in the past, it has actually traded lower from the open to the close 7 of 11 times for an average open to close change of -0.91%.  This tells us that at least in the past, investors have more often than not used these opportunities to lighten up on shares during the regular trading day.

For Tesla (TSLA), when it has gapped up 5%+ on earnings, the stock has also traded down from the open to the close more often than it has traded up from the open to the close, but its average open to close change on these 11 prior gaps higher has been positive at +0.46%.  We’d note that this will be the third quarter in a row that TSLA has opened higher by 5%+ on earnings, and the prior two quarters saw a slight positive move from the open to the close for the stock.  If you’d like to test out our Earnings Explorer tool to see how your stocks typically trade on earnings, start a two-week free trial to Bespoke Institutional.  You’ll also gain access to our entire platform that includes our most actionable research reports and our full suite of investor tools.

Stocks have continued to rally this week and for many individual names, these gains have lifted them above their 50-DMAs.  As shown in the chart below,  over three quarters of stocks in the S&P 500 have now moved back above their 50-DMAs.  Three sectors—Technology, Communication Services, and Health Care—have more than 90% of their stocks above their 50-DMAs with Health Care leading the way at 96.7%.  Readings above 90% are very rare — just as rare as the sub-10% readings we saw in March.  As for the other sectors, similar to the S&P 500, Consumer Staples, Consumer Discretionary, and Materials all have over three-quarters of their stocks above their 50-DMAs. Meanwhile, Financials, Industrials, and Energy are lagging somewhat but still have more than half of their stocks above.  The only two sectors that are truly lagging with just 32.1% and 38.7% above, respectively, are Utilities and Real Estate — two defensives.

Health Care and to a lesser degree Consumer Staples were the first sectors to see a large number of stocks trade above their 50-DMAs. This reading for both sectors saw a more gradual build throughout April.  As for the rest, the percentage of stocks trading above their 50-DMAs has exploded higher and in a much more rapid fashion, especially within the past week. In fact, as recently as last Thursday, excluding Health Care and Consumer Staples, the highest reading across sectors was only 40.85% (Technology). The big pickup in the number of stocks moving above their 50-DMAs means two things. For starters, many stocks are clearing resistance at their averages which is a positive technical development. Second, many stocks are roughly around the same areas of their trading ranges and are moving higher together (strong breadth). Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.

As we noted yesterday, more and more sectors have begun to cross back above their 50-DMAs in the last couple of weeks. With the outperformance of recent underperformers in yesterday’s session, the most beaten-down sector, Energy (XLE), finally managed to move back above its 50-DMA. Yesterday marked the first time that XLE had closed above its 50-DMA since January 10th. As for today, XLE is poised to gap up over 3% at the open bringing it further above its 50-DMA.

With XLE being under its 50-DMA for nearly four full months, that streak ending at 74 trading days was the fifth-longest in the ETF’s history.  The last time XLE experienced a similar streak was in 2017 which was actually the longest streak on record ending at 119 days. The other longer streaks came in 2015, 2008, and in 2001.

As for performance after these long streaks below the 50-DMA come to an end, XLE has typically been pretty weak.  In the table below, we look at all prior streaks below the 50-DMA that lasted for at least 60 trading days (roughly three months).  One week after such streaks come to an end has only seen XLE higher around a quarter of the time with an average decline of 0.47%.  Returns have also been positive less than half of the time one, three, and six months later. Fortunately, one year later XLE has been higher 71.4% of the time with an average gain of 2.8% (median 6.17%), although even here, those returns are nothing to get overly excited about.  Start a two-week free trial to Bespoke Institutional to access our full range of research and interactive tools.

This morning the BEA released one of the worst GDP numbers in the modern history of the US economy. Total output fell 4.79% at annual rates, worse than the 4.0% decline (again, at annual rates) that economists had forecasted. That’s not as bad as the worst numbers from the financial crisis, but the details under the hood were qualitatively different. Instead of being led down by falling capital expenditures and gradually decelerating consumption, Q1 saw an outright collapse in services and durable goods spending with large but historically less remarkable declines in business spending. Services spending has been the steady Eddie of US growth for the better part of a century now: it’s never contributed more than an 82 bps headwind to total QoQ SAAR growth since World War 2. But in Q1 it was a 5% headwind, almost an order of magnitude more than its worst quarter in the global financial crisis. We outline the sobering numbers in more detail below.  Start a two-week free trial to Bespoke Institutional to access our Chart Scanner, custom screens, and much more.

This morning, we highlighted the recent performance of sector ETFs noting how Health Care has led the way higher rising the furthest above its 50-DMA.  Consumer Discretionary (XLY), Technology (XLK), Materials (XLB), Communication Services (XLC), and Consumer Staples (XLP) each had also risen above their 50-DMAs.  Given their outperformance, as shown in the table below, headed into today these were the sectors closest to their levels on the S&P 500’s last all time high on February 19th.  The Health Care ETF (XLV) actually headed into today less than 2% away from its 2/19 levels and XLP was also under 10% away.

Today, that performance was turned on its head as some of the sectors that have been playing catch up outperformed while those that have been the outperformers recently underperformed. Whereas it has typically been the strongest sector, Health Care (XLV) actually fell the most dropping ~2%.  On the other hand, Energy (XLE) rose over 2.1% and it even finally rose above its 50-DMA.  Other areas of strength today included Financials, Industrials, and Materials which all finished up over 1%.  Recent winners were the losers today while the recent laggards were today’s winners.  Start a two-week free trial to Bespoke Institutional to access our full range or research and interactive tools.

Over the past couple of weeks, as equities have mean reverted, the vast majority of S&P 500 stocks have moved out of oversold territory. In fact, today there are just two stocks that are oversold: Everest (RE) and Southwest Airlines (LUV).  Meanwhile, more and more stocks have gotten extended above their 50-DMAs.  At the moment, there are around 16% of stocks in the S&P 500 that are overbought.  That is certainly not a large amount of the index, but it is the most we have seen in some time now.

Taking a look across the stocks that are currently overbought, very few of them were those that had gotten hit the hardest from the February 19th peak to the March 23rd low.  In fact, of the 100 worst performing S&P 500 stocks in that period, there is only one that is overbought, Truist Financial (TFC), and there are only twelve (including TFC) that have retaken their 50-DMAs. Currently, the median distance from the 50-DMA of those 100 worst performers from 2/19 through 3/23 is 9.31% below their 50-DMA. In other words, the hardest hit stocks during the worst of the sell off have still yet to completely mean revert (more specifically, move back to their 50-day average).

As for the stocks that have mean reverted and are now looking a bit extended (at least 1 standard deviation above their 50-DMAs), most were of the better performing half of the S&P 500.  In the table below, we show the 40 names that were hit the hardest during the sell off from 2/19 through 3/23 out of the 77 S&P 500 stocks that are currently overbought.  While these are the worst hit of the currently overbought stocks, most of these were actually some of the strongest performers of the broader S&P 500 during the sell off though that does not mean they were totally immune from massive declines. For example, 17 of these stocks were in the top 100 best performers during the sell off. On the other hand, only three stocks, Truist Financial (TFC), Hologic (HOLX), and Humana (HUM) were in the bottom performing half of the index during the sell off.  The massive rebounds that these names have staged has led them to their current overbought levels.  Overall, due to the size of the massive declines in February and March, the hardest hit stocks in the S&P 500 have rallied considerably but have not yet reached overbought territory so much as even retaken their 50-DMAs.  That means that many of the least hard hit stocks are the ones that have first reached and are currently sitting in overbought territory. Start a two-week free trial to Bespoke Institutional to access our full range of research and much more.

It hasn’t been talked about much but the Nasdaq 100 (QQQ) remains up on a year-to-date basis with a 2020 gain so far of 1.62%.  Below is a snapshot of QQQ and other major US index ETFs run through our Trend Analyzer tool that’s available to Bespoke Premium and Bespoke Institutional members.  Note that all but two of these index ETFs have now moved back above their 50-day moving averages, which often acts as a key support/resistance level.  The Nasdaq 100 (QQQ) is the farthest above its 50-DMA at +6.81%, followed by the S&P 100 (OEF) and the three main S&P 500 ETFs (IVV, SPY, VOO).  The Total Stock Market ETF (VTI) is 2.8% above its 50-DMA, while the mid-cap ETFs like IWR, IJH, and MDY are all just slightly above their 50-DMAs.  While the Micro-Cap ETF (IWC) is above its 50-DMA, the two main small-cap ETFs (IWM, IJR) are the ones that remain slightly below.  Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.

Below is a snapshot of the main S&P 500 sector ETFs from our Trend Analyzer tool.  While almost all of the broad US index ETFs are back above their 50-DMAs, only six of eleven of the sector ETFs have re-taken them.  The Health Care sector (XLV) is the farthest above its 50-DMA at +9.42%, and Health Care is the only sector that is now trading in overbought territory.  It’s also the only sector that’s up year-to-date, similar to QQQ.  Consumer Discretionary (XLY), Technology (XLK), Materials (XLB), Communication Services (XLC), and Consumer Staples (XLP) are the other five sectors above their 50-DMAs.

On the downside, the Energy sector (XLE) is no longer the farthest below its 50-DMA; that title now belongs to Financials (XLF) which is 3.73% below.  The Industrials sector (XLI) is 2.9% below its 50-DMA, followed by Energy (XLE) at -1.38% and Utilities (XLU) at -0.80%.

While Health Care is up on the year, three sectors — Energy, Industrials, and Financials — are still down more than 20% year-to-date.  Gain access to our Trend Analyzer tool and our daily investment research with a two-week free trial to Bespoke Premium.