Housing activity has been somewhat muted given a dearth of inventories, but the lack of available existing supply has been positive for homebuilders.  The NAHB’s monthly survey of homebuilder sentiment moved higher in July for its seventh straight monthly gain. Even after the rebound, the current level of 56 represents just a 13-month high and is below the range of readings from the few years prior to the pandemic and historic readings in two years before the pandemic.

The improvement in the headline index was primarily driven by increases in present sales and traffic. Geographically, the Midwest and South saw some modest softening in sentiment whereas the West and Northeast were much more impressive.  The Northeast in particular saw an 8-point jump which ranks in the top decile of all monthly moves on record and brings the index into the top quartile of historical readings.

Although homebuilder sentiment has been rebounding solidly, it pales in comparison to the strength of homebuilder stocks.  Proxied by the iShares US Home Construction ETF (ITB), homebuilders have continued to set new 52-week highs on a near-daily basis.  The ETF has now risen 56% over the past year and has continuously traded in overbought territory (currently extremely overbought with a price more than 2 standard deviations above its 50-DMA).

Homebuilder earnings are also on deck in the next couple of weeks. Below, we show a screenshot from the Earnings Explorer function of our Custom Portfolios.  As shown, all but three S&P 1500 Homebuilders are due to report through the first week of August.  Of those, a vast majority have averaged positive moves on earnings.

Have you tried Bespoke All Access yet?

Bespoke’s All Access research package is quick-hitting, actionable, and easily digestible. Bespoke’s unique data points and analysis help investors better visualize underlying market trends to ultimately make more informed investment decisions.

Our daily research consists of a pre-market note, a post-market note, and our Chart of the Day. These three daily reports are supplemented with additional research pieces covering ETFs and asset allocation trends, global macro analysis, earnings and conference call analysis, market breadth and internals, economic indicator databases, growth and dividend income stock baskets, and unique interactive trading tools.

Click here to sign up for a one-month trial to Bespoke All Access, or you can read even more about Bespoke All Access here.

The economic calendar is having a quiet start to the week with only the Empire State Manufacturing Survey from the New York Fed released today. The headline reading was expected to fall from an expansionary reading of 6.6 back into contraction in July. Instead, the index remained in positive territory at 1.1 which implies the New York region’s manufacturing economy grew modestly in July.

Albeit growing, activity is weak with this month’s reading registering in the 28th percentile of all months in the survey’s history dating back to 2001.  The month over month decline was driven by broad weakness across categories. In fact, only three moved higher month over month: New Orders, Number of Employees, and Average Workweek.  Expectations indices similarly weakened with most categories at far more depressed levels by historical standards. Of the twelve categories, eight are in the bottom decline of readings.

As noted above, New Orders stood out as one of the only readings to move higher. At 3.3, that reading is far from elevated or at a new high by any stretch.  Meanwhile, Shipments indicated a major moderation compared to last month.  In June, Shipments registered a reading of 22, which was surprisingly elevated relative to other categories.  Falling 8.6 points month over month, now that index is more in line with other areas.

The two other notably strong readings were with regards to employment.  Since the end of the first quarter, Number of Employees and Average Workweek have both been making their way higher with the July readings tipping back into expansionary territory.  In other words, on a net basis, businesses are once again hiring and increasing hours worked.  However, businesses have also appeared to have slowed down their expected spending plans for technology and capex.

On the back of cooling inflation data last week that sent stocks higher in hopes of a more dovish monetary policy, the Empire Manufacturing survey also provided a cheery look into the region’s inflation picture. Both Prices Paid and Prices Received have continued to fall dropping over 5 points month over month resulting in new new lows for each one.  With regards to Prices Paid, the index is now at its lowest level since August 2020. Prices Received is similarly at the lowest reading in three years.

Have you tried Bespoke All Access yet?
Bespoke’s All Access research package is quick-hitting, actionable, and easily digestible. Bespoke’s unique data points and analysis help investors better visualize underlying market trends to ultimately make more informed investment decisions.

Our daily research consists of a pre-market note, a post-market note, and our Chart of the Day. These three daily reports are supplemented with additional research pieces covering ETFs and asset allocation trends, global macro analysis, earnings and conference call analysis, market breadth and internals, economic indicator databases, growth and dividend income stock baskets, and unique interactive trading tools.

Click here to sign up for a one-month trial to Bespoke All Access, or you can read even more about Bespoke All Access here.

After weaker-than-expected inflation data inflated the prices of just about every financial asset, there were some very big winners by the end of last week. The table below lists the 20 top-performing stocks in the S&P 500 last week, which includes eight stocks that rallied more than 10%.  Double-digit gains are typically considered very good for an entire year, so when large-cap stocks move that much in a week, it’s impressive. Topping the list, shares of Match (MTCH) gained nearly 14% followed by DR Horton (DHI), Domino’s (DPZ), and MGM Resorts (MGM).  Among these four top performers and the other stocks listed, it is a somewhat eclectic group of stocks.  One well-represented group on the list is the homebuilders.  Along with DHI, Lennar (LEN) and Pulte (PHM) both also made the list.  In terms of YTD returns, though, last week’s biggest winners weren’t solely the ones that have been rallying all along or the losers playing catch up; there was actually a little bit of everything.  Three of the stocks listed (Etsy, Newell, and Sealed Air) are still down by double-digit percentages YTD while four (Pulte, Align, salesforce, and Monolithic Power) are up over 50%!  Besides those extreme movers, there are also a few stocks that merely had single-digit YTD percentage gains before last week’s spikes higher. One thing that just about all of these stocks have in common now, though, is that they headed into this week at short-term overbought levels of a varying degree.

In total, there were just 88 stocks in the S&P 500 that declined last week, and only 53 of those fell more than 1%. Of those 53 stocks, the table below lists the 20 worst performers which all fell more than 3%.  This is also an eclectic group in terms of both their lines of business and their YTD performance heading into the week.  The only stock down by double-digit percentages was Progressive (PGR) which now makes it down on the year as well.  Right behind PGR, shares of Carnival (CCL) fell 9.5%, but unlike PGR, it’s still up by over 100% YTD.  Besides CCL, two other cruise operators (Norwegian Cruise Line and Royal Caribbean) also sank during last week’s rising tide, but they have also seen huge rallies on a YTD basis.  Financials are another sector that was well-represented on last week’s loser list. Besides PGR, State Street (STT), Allstate (ALL), Northern Trust (NTRS), Bank of NY Mellon (BK), and Travelers (TRV) all bucked last week’s bullish trend. Unlike just about all of last week’s winners which are now overbought, many of the week’s worst performers are still trading within normal ranges of their 50-day moving averages.

Become a Bespoke subscriber for a month for just $1.

Bespoke’s All Access research package is quick-hitting, actionable, and easily digestible. Bespoke’s unique data points and analysis help investors better visualize underlying market trends to ultimately make more informed investment decisions.

Our daily research consists of a pre-market note, a post-market note, and our Chart of the Day. These three daily reports are supplemented with additional research pieces covering ETFs and asset allocation trends, global macro analysis, earnings and conference call analysis, market breadth and internals, economic indicator databases, growth and dividend income stock baskets, and unique interactive trading tools.

Click here to sign up for a one-month $1 trial to Bespoke All Access, or you can read more about Bespoke All Access here.