Chart of the Day: Worst Performers
Bespoke’s Morning Lineup – 12/26/24 – Holiday Hangover
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“We’re developing a new citizenry. One that will be very selective about cereals and automobiles, but won’t be able to think.” – Rod Serling
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
The bulls may have enjoyed a little too much eggnog yesterday. US equity futures are firmly lower across the board indicating declines of 0.3%. Treasury yields, gold, and crude oil are all fractionally higher while Bitcoin is under the most selling pressure with a decline of 4% as its attempt to bounce back above $100 fails for now.
The only economic report on the calendar this morning was jobless claims. Initial claims came in modestly lower than expected, but continuing claims were higher than expected and bounced back above 1.9 million.
As we noted on Tuesday, the S&P 500’s 1.10% gain was the best Christmas Eve performance for the index since 1974. The Nasdaq’s 1.35% rally was the second-best gain on the last trading day before Christmas and the third time it rallied more than 1%. As shown in the table below, in 2000 the Nasdaq rallied over 7% on the last trading day before Christmas. However, that came well after the dot-com peak when the index was in a stupid phase of volatility that the drawn-out election results only exacerbated. The only other year the Nasdaq gained more than 1% on the last trading day before Christmas was in 1991. Overall, there have been nine years that the Nasdaq rallied more than 0.75% on the last trading day before Christmas. In those years, the median rest-of-year gain from Christmas through year-end was 1.6% with positive returns five out of eight times.
Daily Sector Snapshot — 12/24/24
Market Cap and Equal Weights By Sectors
Call it a Santa Claus rally, but breadth and price action have improved in the past few days following an extremely weak stint in breadth to start the month. At multiple points last week, we discussed the horrible breadth that kicked off this month which was evident through a record streak of declines in the equal weight S&P 500 (RSP). Of course, when looking at the market cap version of the index (SPY), declines were actually not too severe. As discussed in today’s Morning Lineup, whereas equal weight indices have broken uptrends, market cap versions of the S&P 500 and Nasdaq, bolstered by stronger performance in mega caps, still have intact uptrends.
Taking a look at sectors, as shown in the table below, whereas the market cap S&P 500 (SPY) has gained over 85% in the past five years, the equal weight version (RSP) has underperformed by more than 30 percentage points with a smaller gain of 52.7%. There are six of eleven sectors that have similarly seen their market cap weighted versions outperform the equal weight with the largest gap being the Tech sector. The best performer for both market cap and equal weight ETFs is Tech, with the market cap weighted Tech sector (XLK) up 160% in the past five years compared to a still great but much smaller 93% gain in the equal weight sector ETF (RSPT). Conversely, Energy, Industrials, Materials, Real Estate, and Utilities have all seen equal weight outperformance. Of those groups, Industrials have the largest performance gap between the two methodologies with the market cap ETF (XLI) underperforming the equal weight ETF (RSPN) by almost 24 percentage points.
In the charts below we show the long-term performance of the S&P 500 and its sector ETFs on market cap weighted and equal weight methodologies. While there are various sized gaps in performance between market cap and equal weight sectors, we would highlight that there are some sectors with notable divergences when looking at the chart. Since early 2023, Communication Services has seen the market cap version (XLC) take off whereas the equal weight (RSPC) has yet to even surpass mid-2021 highs. Consumer Discretionary is a similar story with a big ramp higher in the market cap (XLY) version especially in the past few months. Consumer Staples is the other sector with one of the most significant divergences as the equal weight ETF (RSPS) has actually been seeing lower lows and lower highs whereas the market cap weighted ETF (XLP) is in an uptrend (albeit roll ling over again in the past few months).
Bespoke Stock Scores — 12/24/24
Chart of the Day – Strategist Price Targets vs Market Performance
Bespoke’s Morning Lineup — 12/24/24
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“I’m not a paranoid deranged millionaire. Goddamit, I’m a billionaire.” – Howard Hughes
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Below is a quick look at price charts for major US index ETFs from large-caps down to small-caps. Things have really taken a turn lower in small-caps, mid-caps, and the equal-weight large-cap ETFs. Both the S&P 500 Equal Weight ETF (RSP) and the Nasdaq 100 Equal Weight ETF (QQQE) have broken below the bottom of their six-month uptrend channels. However, the regular cap-weighted S&P 500 (SPY) and Nasdaq 100 (QQQ) ETFs have managed to hold onto their uptrends so far and are above their 50-DMAs.
With the market up 25% this year and no 10%+ corrections, we noticed yesterday that the S&P 500 has managed to close solidly above its 200-day moving average for the entirety of 2024:
The Closer – Weighing Valuations, Consumers, Home Sales – 12/23/24
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we kick off with a look into S&P 500 valuations (page 1) in addition to year to date returns from around the globe (page 2). Next, we review the latest durable goods data (page 3) and new home sales (page 4). We then pivot into this week’s Treasury auctions (page 5) and close with a rundown of the latest positioning data (pages 6-9).
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