The Bespoke 50 Growth Stocks — 12/28/23
The “Bespoke 50” is a basket of noteworthy growth stocks in the Russell 3,000. To make the list, a stock must have strong earnings growth prospects along with an attractive price chart based on Bespoke’s analysis. There were no changes to the list this week.
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The Bespoke 50 performance chart shown does not represent actual investment results. The Bespoke 50 is updated weekly on Thursday unless otherwise noted. Performance is based on equally weighting each of the 50 stocks (2% each) and is calculated using each stock’s opening price as of Friday morning each week. Entry prices and exit prices used for stocks that are added or removed from the Bespoke 50 are based on Friday’s opening price. Any potential commissions, brokerage fees, or dividends are not included in the Bespoke 50 performance calculation, but the performance shown is net of a hypothetical annual advisory fee of 0.85%. Performance tracking for the Bespoke 50 and the Russell 3,000 total return index begins on March 5th, 2012 when the Bespoke 50 was first published. Past performance is not a guarantee of future results. The Bespoke 50 is meant to be an idea generator for investors and not a recommendation to buy or sell any specific securities. It is not personalized advice because it in no way takes into account an investor’s individual needs. As always, investors should conduct their own research when buying or selling individual securities. Click here to read our full disclosure on hypothetical performance tracking. Bespoke representatives or wealth management clients may have positions in securities discussed or mentioned in its published content.
Bespoke’s Weekly Sector Snapshot — 12/28/23
Chart of the Day – Big Moves In Small Stocks
Claims Characteristics Check Up
This morning’s release of initial jobless claims disappointed relative to expectations as they climbed up to 218K versus expectations for an increase to only 210K from last week’s reading of 206K. At current levels, jobless claims are rounding out 2023 in the middle of the past couple of years’ range: not as strong as the late 2022 low of 182K, but not as high as the peak earlier this year.
Before the seasonal adjustment, claims are trending higher as could be expected given the time of year. Claims jumped this week to 272.6K which is the highest level for the comparable week of the year since 2019. Based on seasonal patterns, claims tend to peak right around New Year or the first couple of weeks in January meaning that the headwinds are likely to fade soon.
Continuing claims have risen significantly since late Q3, but more recently that increase has begun to plateau right around levels from the spring peak. Currently, continuing claims stand at 1.875K, a 14K increase week over week.
In addition to weekly claims, below we show the latest data on unemployment claimant characteristics through November. As shown below, some industries that received a lot of attention for layoffs earlier this year and observed actual increases in claims, like tech, real estate, and finance, have more recently seen pivots lower in claims. Although that marks some improvements (potentially as a result of expirations of benefits), overall those industries do not account for the largest shares of claims. Instead, industries like construction or manufacturing account for greater burdens on claims.
Our Bespoke Report – 2024 Outlook is now available for Bespoke subscribers. This report covers everything you need to know about the set-up for financial markets and the economy heading into 2024. If there’s ever a “must-read” Bespoke report, this is it!
You can read our 2024 Outlook by signing up for any of our three membership levels. Enter the coupon code “OUTLOOK” at checkout for a 20% discount on your first charge. You can review our membership levels here to help make your decision.
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Bespoke’s Morning Lineup – 12/28/03 – Looking to Make a Record Run
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“There are no traffic jams along the extra mile.” – Roger Staubach
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
It’s another slow morning in the markets as the pace of data has been slow. The only reports of note on the calendar this morning were Wholesale Inventories, which fell 0.2% on a m/m (right in line with forecasts), and jobless claims. Initial claims were slightly higher than expected (218K versus 210K) while continuing claims increased modestly to 1.875 million which was in line with consensus forecasts. Equity futures are modestly higher for the S&P 500 while the Nasdaq is indicated to open up 0.26%. There’s a small positive bias to yields, but nothing indicating conviction. One other item worth noting is that while the S&P 500 is within spitting distance of a record high, individual investor bullish sentiment declined this week falling to 46.3% from 52.9% and the lowest level since 11/23.
With just two trading days left in the year, the market is on the verge of history. After being written off for dead in the last year, the traditional 60/40 portfolio of 60% stocks and 40% bonds is within a whisker of its best two-month rally since at least 1990. The chart below shows the rolling two-month performance of a 60/40 portfolio using the S&P 500 total return as the stock portion and the Bloomberg Aggregate Bond Index total return as the bond portion. With a gain of 12.16% over the last two months, the current period just surpassed the two-month rally coming out of Covid (May 2020), and the only other period that was better for the strategy was the two months ending in April 2009. Back then, the strategy rallied 12.25%, so if the next two trading days even see marginal gains, the current rally will set the record.
What makes the current period so much different than the other two cited above is where the gains have come from. Let’s start with the stock portion of the strategy. In the current period, the S&P 500 is up 14.35% over the last two months, which is certainly strong relative to history but not anywhere close to a record. In May 2020, the two-month gain was 18.19% and in April 2009 it was 19.17%.
What has stood out in the last two months is how strong the bond portion of the strategy has been. Back in 2009, the bond leg was up just 1.87% while in May 2020 it was up 2.25%. During this current period, bonds have rallied an unprecedented 8.87% which far exceeds any other two-month period since at least 1990. Since they are meant to act as the ‘insurance’ leg in times of market weakness (although it wasn’t the case in 2022), bonds tend to always underperform stocks during periods when the equity market rallies. While they still underperformed stocks in the last two months, they have never acted as a smaller drag on the strategy during a period of strength.
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The Closer – A Dozen Double, 5 Fed Finale, 5 Year Auction – 12/27/23
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we begin tonight with a look at the number of S&P 500 stocks that have doubled this year and how few have outperformed the S&P 500 (page 1). We then update our Five Fed Composite (page 2-4) before closing with a recap of today’s 5 year note auction (page 5).
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Daily Sector Snapshot — 12/27/23
JP Morgan [Performance] Chase
Just about every price chart lately looks like a one-way move higher, but in scanning through various charts earlier, we were struck by how steep and one-directional the move in JP Morgan Chase (JPM) has been over the last two months. Besides a handful of days with red bars, the stock has seemingly done nothing but go higher each day.
Just how impressive has the move over the last two months been? In the last 40 trading days, JPM has finished the day higher 30 times. While we don’t have price data going back to the days of J.P. Morgan himself, going back to 1980, the current frequency of positive days over a 40 trading day period has never been seen.
Our Bespoke Report – 2024 Outlook is now available for Bespoke subscribers. This report covers everything you need to know about the set-up for financial markets and the economy heading into 2024. If there’s ever a “must-read” Bespoke report, this is it!
You can read our 2024 Outlook by signing up for any of our three membership levels. Enter the coupon code “OUTLOOK” at checkout for a 20% discount on your first charge. You can review our membership levels here to help make your decision.
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Chart of the Day: Financial Tightening Easy Come, Easy Go
Bespoke’s Morning Lineup – 12/27/23 – Overbought Everywhere
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“Chance favours the prepared mind.” – Louis Pasteur
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
While the US was open for trading yesterday, most international markets are only reopening from the Christmas holiday today, and the overall tone has been positive as several major Asian markets were up 1% or more overnight. The tone in Europe is also positive, although it has been more subdued. Here in the US equity futures are about as close to unchanged as possible. Treasury yields are lower across the curve and around the world while crude oil is lower and gold and copper are trading higher.
It’s been a great rally for US stocks over the last two months, and more recently over the last week, stocks around the world have been performing just as good if not better than here. While the S&P 500 tracking ETF is up 0.76% over the last week, all but two of the eighteen regional ETFs we track in our Trend Analyzer have performed even better, and more than half of them are further extended relative to the 50-day moving average (DMA) than SPY which is 6.83% above that level. As shown in the image below, all of the 18 ETFs are also uniformly situated relative to their trading range at ‘Overbought’ levels (1+ standard deviation above their 50-DMAs). It’s hard to get more uniform than that!
Regarding each ETF, most of the regional ETFs are also trading right at 52-week highs (charts with green borders) while just four are shy of their one-year highs. It’s been somewhat of a can’t lose environment for equity investors over the last couple of months, and while it won’t last forever, enjoy it while it lasts.
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