Morning Lineup – Bank on It
Positive earnings from the major banks like Bank of America (BAC) and Goldman Sachs (GS) have traders in a modestly positive mood this morning as both stocks are trading higher in the pre-market. BAC has been especially strong, rallying more than 5%. If BAC’s gains hold into the open, it will be the stock’s most positive gap opening in reaction to earnings in seven years and the third strongest going back to 2000! While Goldman is ‘only’ up 3.5%, that would rank as the stocks most positive gap opening in reaction to earnings in over a decade (December 2008). Read today’s Bespoke Morning Lineup below for major macro and stock-specific news events, updated market internals, and commentary.
Bespoke Morning Lineup – 1/16/19
With the S&P 500 clearing the psychologically important 2,600 level yesterday, it’s sort of hard to believe that the index is still below its 50-day moving average. Even more surprising is that of the 24 S&P 500 Industry Groups, barely more than a third (9) are over their respective 50-DMAs. As shown in the chart below, this reading is still severely depressed. Looking on the bright side, though, one more day like yesterday would boost this reading by a lot as through yesterday’s close there were another five Industry Groups trading within 0.50% of their 50-DMAs.
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The Best and Worst Performing S&P 500 Stocks So Far in 2019
Below we take a look at the best and worst performing S&P 500 stocks since we turned the corner into the new year. The top stock in the S&P 500 so far YTD is the healthcare play Celgene (CELG). At today’s close, the company finished up an astounding 37.67% year to date. Nektar Therapeutics (NKTR) and Netflix (NFLX) are not far behind up 35.44% and 32.5%, respectively.
While Health Care and Communication Services stocks make up the top three, the Energy sector is actually the most represented on the list with 11 out of 30 names. Whereas Tech was the poster child for gains for most of last year, there is only a single Technology stock in the top 30, and it’s probably the last one you’d guess — Xerox (XRX).
Taking a look at the other end of the spectrum, with bankruptcy talks dominating the focus of the stock, PG&E (PCG) has fallen 70.91% in just 15 days. Macy’s ranks 2nd with a decline of 16.12%, while Newmont Mining (NEM) ranks 3rd at -10.48%. These are the only three stocks in the index down more than 10% on the year.
The worst performers have a much larger variation on a sector basis. Health Care, which was another outperformer of 2018, is the only standout with 8 companies represented in the worst 30. The only sectors without a stock making this list are Real Estate, Communication Services, and Energy.
B.I.G. Tips – To Test or Not to Test
Bespoke Stock Scores — 1/15/19
Chart of the Day: Dollar Independent
Morning Lineup – Earnings Begin in Earnest
What was looking like a positive day has taken a turn south as a weak earnings report from JPMorgan Chase (JPM) has put investors in a more defensive mood. This afternoon’s Brexit vote in the UK is also likely to cause volatility as we approach the close. In economic data, PPI for December came in weaker than expected while Empire Manufacturing for January also missed. Read today’s Bespoke Morning Lineup below for major macro and stock-specific news events, updated market internals, and commentary.
Bespoke Morning Lineup – 1/15/19
We’ve gotten a handful of high profile earnings reports this morning, and the pace will only pick up as the week goes on. Of the companies reporting this morning, though, the results have been mixed. While Delta (DAL) and UnitedHealth (UNH) both exceeded forecasts on the top and bottom line, JPMorgan Chase (JPM) came up woefully short in terms of both earnings and revenues. The more important thing to watch, though, is how the stocks react, and given the size of JPM’s miss, the reaction could have been worse. As of this writing, it is trading down just 2%.
As with every earnings season, one of the most important metrics to watch is not necessarily how the companies report relative to expectations or even guide, but how their share prices react to earnings. So far this earnings season, the results haven’t been great.
The chart below shows the one-day share price reactions for S&P 1500 companies reporting YTD (through Monday). It’s a relatively small sample size (22 companies), but the median returns of companies reporting have been negative. While the stocks have collectively seen a modest (and we mean modest) pop of 0.08% at the open, the median change from the open to close has been a decline of 1.67% for a median one day drop of almost 2%. This isn’t a very encouraging start, but at this point in the last earnings season, the median one-day decline of stocks reporting EPS was closer to a decline of 4%. So, it could be worse.
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Chart of the Day: Netflix (NFLX) Q4 Earnings
B.I.G. Tips – Smart Money Buying?
Bespoke’s List of the Most Volatile Stocks on Earnings
Earnings season (Q4) started up today with Citigroup’s (C) report ahead of the open. As you can see below, though, this week is still a relatively slow one on the earnings front. Next week things start to really pick up with more than 50 reports scheduled on both Wednesday and Thursday, and then after that, there are multiple days in the following weeks where over 100 companies will report each day.
As we do at the start of each earnings season, below is our list of the most volatile stocks on earnings. These are the stocks that have historically experienced the biggest moves (on an absolute basis) on their earnings reaction days (the first trading day following a quarterly release).
The first list below only includes stocks from our Earnings Screener (available to Bespoke Institutional members) that have at least 10 years worth of earnings reports (40 quarters or more). The names that made the list have all experienced an average one-day change of more than +/-10% on their earnings reaction days over a 10+ year period. That’s big volatility!
Infinera (INFN) ranks at the top of the list with an average move of +/-15% on its earnings reaction days. In second is Netflix (NFLX) with an average one-day change of +/-13.12% on earnings. NFLX’s earnings volatility is remarkable because it has by far the largest market cap ($145 billion) of any stock on the list. The next closest is Align Tech (ALGN) with a market cap of just $15.7 billion.
Travelzoo (TZOO), YRC Worldwide (YRCW) and Town Sports International (CLUB) rank 3rd through 5th, while other notables in the top 10 include iRobot (IRBT), First Solar (FSLR), and Nutrisystem (NTRI). Other volatile earnings stocks that you might recognize include Stamps.com (STMP), Crocs (CROX), Weight Watchers (WTW), and Akamai Tech (AKAM).
As you’ll notice, most stocks on the list are from the Technology and Consumer Discretionary sectors. If you own or follow any of these names, buckle up for their upcoming earnings reports in the coming weeks!
Subscribe to Bespoke Institutional for complete coverage of earnings season.
The list above only includes stocks that have at least 10 years of quarterly earnings data, but there are even more volatile stocks on earnings if we narrow the cut-off to just 2+ years of earnings reports. Below is a list of the most volatile stocks on earnings that currently trade for more than $10/share that have at least 8 quarters of earnings reports.
The Trade Desk (TTD) ranks at the top of this list with an average one-day change of +/-18.78% on earnings. Impinj (PI) ranks a close second with an average one-day change of +/-18.57%. Other notables on the list include LendingTree (TREE), Twilio (TWLO), Wayfair (W), Twitter (TWTR), Acacia (ACIA), Tableau Software (DATA), and Etsy (ETSY).
Bespoke CNBC Appearance (1/11)
Bespoke Co-Founder Paul Hickey appeared on CNBC’s Power Lunch on Friday (1/11) to discuss markets and the next possible catalysts following the rally off the Christmas Eve lows. To view the segment, please click on the link or image below.
Bespoke CNBC Appearance (1/11)
