Bespoke’s Morning Lineup — 8/9/24
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.
“There are three things in the world that deserve no mercy; hypocrisy, fraud, and tyranny.” – Frederick William Robertson
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Since the start of 2022 (when the last bear market began), there have been 26 one-day gains of 2%+, and 23 of those came in 2022 when markets were struggling. Yesterday was just the 2nd 2%+ gain of 2024 and there was only one 2%+ gain in all of 2023. As shown below, the S&P has averaged a small decline of 0.14% on the day after 2%+ up days since 2022 and a bigger drop of -0.39% in the week after 2%+ gains. Over the next month, though, the S&P has averaged a gain of 1.10%.
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The Triple Play Report — 8/8/24
An earnings triple play is a stock that reports earnings and manages to 1) beat analyst EPS estimates, 2) beat analyst sales estimates, and 3) raise forward guidance. You can read more about “triple plays” at Investopedia.com where they’ve given Bespoke credit for popularizing the term. We like triple plays as an indication that a company’s business is firing on all cylinders, with better-than-expected results and an improving outlook. A triple play is indicative of positive “fundamental momentum” instead of pure fundamentals, and there are always plenty of names with both high and low valuations on our quarterly list.
Bespoke’s Triple Play Report highlights companies that have recently reported earnings triple plays, and it features commentary from management on triple-play conference calls, company descriptions and analysis, and price charts. Bespoke’s Triple Play Report is available at the Bespoke Institutional level only. You can sign up for Bespoke Institutional now and receive a 14-day trial to read this week’s Triple Play Report, which features 20 new stocks. To sign up, choose either the monthly or annual checkout link below:
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CareDx (CDNA), a healthcare name that specializes in transplant patient care, is an example of a company that recently reported an earnings triple play. The stock started the year off slow but has flown higher by more than 250% since April lows. CDNA has put together back-to-back triple plays, garnering one-day earnings reaction gains of 34.1% and 18%.
Looking at the snapshot below from our Earnings Explorer, CDNA has started a bit of a run on the earnings front after some weaker reports in 2022 and 2023. The past year of earnings has painted a much rosier picture of the company, as the stock has moved at least 9.5% higher on each of its post-earnings trading days. In the three years prior to the last four earnings reports, the average one-day move for the stock was a decline of 5.1% post earnings. On its last four reports, it has seen an average swing higher of 18.9%.
The company’s core offerings include AlloSure Kidney and AlloMap Heart, non-invasive blood tests designed to monitor the health of organ transplant recipients. AlloSure measures donor-derived cell-free DNA (dd-cfDNA) to detect signs of organ rejection, while AlloMap assesses gene expression profiles to evaluate heart transplant rejection risk. AlloSeq is a suite of next-generation sequencing (NGS) solutions that are essential for matching donors and recipients and monitoring engraftment success in transplant patients. These tests are obviously important, and they are performing quite well for CDNA. You can read more about CDNA and the 19 other triple plays in our newest report by starting a Bespoke Institutional trial today.
Bespoke Investment Group, LLC believes all information contained in these reports to be accurate, but we do not guarantee its accuracy. None of the information in these reports or any opinions expressed constitutes a solicitation of the purchase or sale of any securities or commodities. This is not personalized advice. Investors should do their own research and/or work with an investment professional when making portfolio decisions. As always, past performance of any investment is not a guarantee of future results. Bespoke representatives or clients may have positions in securities discussed or mentioned in its published content.
Chart of the Day – Weekly VIX Spikes
Bespoke’s Morning Lineup – 8/8/24 – Follow the Odds
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.
“If you have someone equal in ability to me I will beat him every time because I will try harder.” – Pete Rose
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Along with NVIDIA (NVDA), Super Micro Computer (SMCI) has been one of the poster-childs of the AI Boom. As shown below, though, the bloom appears to be off the rose. Earlier this year, SMCI shot up to $1,200/share, but since then it has now fallen 60%. Shares are currently trading around $480 in the pre-market this morning.
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The Closer – Reversal, Consumer Credit, Terrible 10y – 8/7/24
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we lead off with a look at the intraday reversal (page 1) followed by a checkup on investor sentiment (page 2). We then take a look into the latest consumer credit figures (pages 3 and 4). We then turn over to the latest petroleum stockpile data (page 5) and close out with a recap of the horrendous 10-year note auction (page 6).
See today’s full post-market Closer and everything else Bespoke publishes by starting a 14-day trial to Bespoke Institutional today!
Chart of the Day – Nasdaq Corrections
Bespoke’s Morning Lineup — 8/7/24
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 tired of hearing about money, money, money, money, money. I just want to play the game, drink Pepsi, wear Reebok.” – Shaquille O’Neal, who signed with the Orlando Magic on this day in 1992 after being selected first in that year’s NBA Draft
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 an updated look at our 50-DMA spread chart for the S&P that’s featured in our Morning Lineup each day. As shown, yesterday’s bounce barely moved the index higher within its trading range, so we’re still quite oversold here with plenty of upside room to run.
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Chart of the Day – Historic Tumble in Global Equities
Bespoke’s Morning Lineup – 8/6/24 – Calming Down
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.
“Fear is the most contagious disease you can imagine. It makes the virus look like a piker.” – Warren Buffett
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
After falling 12% on Monday, Japan’s Nikkei bounced back 10% on Tuesday, and US equity futures are currently set to open higher by about 0.75% as of 8 AM ET. As shown below, the carnage from the past few weeks has now left the S&P 500 in extreme oversold territory (>2 standard deviations below its 50-DMA). These are areas where you typically start to see some upside mean reversion, although it’s certainly not a guarantee.
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Defense Outperforms
Losses are accelerating as the S&P 500 (SPY) has, as of this writing, fallen 8% since the July 16th high. That move has occurred on a rotation out of former market leaders like the mega caps as markets contend with a number of factors ranging from recession fears to rising geopolitical tensions abroad. While breadth has been rough in that time, it hasn’t been a total wash with roughly a third of the index having risen since July 16th. On a sector level, the groups with the largest share of stocks rising since 7/16 come from defensive sectors like Utilities (83.9%), Consumer Staples (63%), Real Estate (61%), and Health Care (57%).
What is impressive is that in looking only at the S&P 500’s 20 best performing stocks since the 7/16 high, the two sectors with the largest representation are Health Care and Industrials. However, looking more closely, a number of those Industrial stocks are also in the Aerospace & Defense industry with stocks like Lockheed Martin (LMT), Northrop Grumman (NOC), and RTX (RTX) all posting double digit gains.
As a result, the S&P 500 Aerospace and Defense Industry index has risen 1.4% since the July 16th high compared to the high single-digit percentage decline in the broader market. Looking at the 14-trading day performance spread of the industry and the broader market, that 9.5 percentage point difference is a 99th percentile reading dating back to 1990. While not every spike in this spread is due to geopolitical tensions (for example in the spring of 2020 it surged as equities recovered from the Covid Crash), this spread has tended to rise sharply around tense periods for geopolitics. This current spike surpasses that from when Hamas attacked Israel on October 7th and is now the most elevated reading since November 2022 (North Korea missile launches and Russia/Ukraine war was underway) and when Russia invaded Ukraine in early 2022 before that. Prior to 2020, the only other time defense stocks outperformed the S&P 500 by such a wide margin was in the late 19990s and early 2000s. More specifically, the current reading would be the highest since February 2002 in the early days of the War on Terror when these companies began to receive large contracts from the US government.
While the industry as a whole has outperformed the S&P 500 by a decent margin, under the hood it actually hasn’t seen the best breadth. Of the dozen stocks belonging to the industry, just four defense names are higher since 7/16, and each one has earnings to thank. As shown in the charts below, those four stocks all rose sharply in late July in the wake of their latest earnings reports. Impressively, the reaction to earnings for Northrop Grumman (NOC) and RTX (RTX) were both the best on record for their respective earnings histories based on data from our Earnings Explorer tool. Howmet Aerospace’s (HWM) gain after reporting the most recent quarter also ranks highly as their third best reaction on record, however, it has not been immune from selling over the past few sessions meaning that gap has since nearly been filled. Lockheed Martin’s (LMT) saw its sixth best reaction to date. In other words, while some are arguing that the defense group is up due to geopolitics, it has really been a few strong reactions to Q2 earnings reports.
