This is How Individual Investors Celebrate?
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On this eighth anniversary of the bear market lows from 2009 and the start of the most hated bull market in history, it seems only fitting that sentiment gauges of individual investors from AAII came in where they did this week. We’ll start with the percentage of investors who can’t make up their mind and therefore put themselves in the neutral camp. In this week’s survey, that percentage dropped to 23.5%, which is the lowest reading of 2017 and the third lowest reading in the last four years! At the very least, investors appear to finally be taking a stand.
What’s amazing, however, is how few of these investors are willing to commit themselves to the bullish camp. In this week’s survey, bullish sentiment dropped from 37.9% down to 30.0%. That’s the lowest weekly reading in bullish sentiment since the week before the election and also extends the record streak of weeks where bulls haven’t been in the majority to 114!
That leaves us with bearish sentiment, which absolutely surged this week. From last week’s level of 35.6%, bears ballooned to 46.5%, which is the highest reading since the equity market lows last February and the 20th highest weekly reading (out of 418 weeks) in bearish sentiment since the start of the bull market in March 2009! Normally, we would say that this doesn’t seem like the best way to commemorate an eight year bull market, but when it’s a bull market that so many individual investors have watched from the sidelines, it makes sense that they aren’t in any mood to celebrate.
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the Bespoke 50 — 3/9/17
Every Thursday, Bespoke publishes its “Bespoke 50” list of top growth stocks in the Russell 3,000. Our “Bespoke 50” portfolio is made up of the 50 stocks that fit a proprietary growth screen that we created a number of years ago. Since inception in early 2012, the “Bespoke 50” has beaten the S&P 500 by 38 percentage points. Through today, the “Bespoke 50” is up 113.5% since inception versus the S&P 500’s gain of 75,5%.
To view our “Bespoke 50” list of top growth stocks, sign up for Bespoke Premium ($99/month) at this checkout page and get your first month free. This is a great deal!
The Closer — ADP Modeled, Crude Collapses — 3/8/17
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Looking for deeper insight on global markets and economics? In tonight’s Closer sent to Bespoke Institutional clients, we review the monster ADP print from this morning, updated Q4 productivity from the BLS, the US Census’ release of January Wholesaler Sales, and EIA data on petroleum markets that saw a new local high in US crude production last week.
The Closer is one of our most popular reports, and you can see it and everything else Bespoke publishes by starting a no-obligation 14-day free trial to our research!
Lower Highs
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In a ‘normal’ market, the S&P 500 trading within 1.7% of its all-time high would be nothing to even think about, but when the market goes more than 100 trading days without a 1% decline and goes up seemingly every day, traders who have been spoiled tend to take notice of even minor moves. Everything is relative, so a 1% move in one environment can take on a completely different meaning based on the backdrop.
Along with the S&P 500’s weakness over the last week, one trend that has emerged is that since the day after Trump’s address to Congress when the S&P 500 gapped up to another all-time high, the S&P 500 has seen five straight lower intraday highs. That’s the first time that has happened since just before the election on 11/3. That may sound a bit alarming given the bullish tape we have been in, but in the current bull market alone, we have seen similar streaks of the same length or longer 39 other times, including a streak of ten trading days in March 2011. Following the fifth trading day of those 39 prior streaks, the S&P 500 averaged a gain of 0.76% over the following five trading days with positive returns 59% of the time. That’s more than double the average of all five-day trading day periods (0.31%) during the current bull market.
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Bespoke Summary of Economic Indicators: 3/8/17
February Employment Report Preview
Heading into Friday’s Non-Farm Payrolls (NFP) report for February, economists are expecting an increase in payrolls of 197K, which would be a 30K decline from last month’s stronger than expected reading of 227K. In the private sector, economists are expecting an increase of 195K, which would be an even larger decline of 42K from January. The unemployment rate is forecasted to fall to 4.7%. Growth in average hourly earnings is expected to rebound back up to 0.3% after last month’s disappointing print of 0.1%, while hours worked is forecast to remain unchanged at 34.4.
With such high stakes surrounding the report, the market will likely have a big reaction to the upside or downside based on how the number comes in relative to expectations. To that end, we just published our eleven-page monthly preview for the February jobs report. This report contains a ton of analysis related to how the equity market has historically reacted to the monthly jobs report, as well as how secondary employment-related indicators we track looked in September. We also include a breakdown of how the initial reading for September typically comes in relative to expectations and how that ranks versus other months.
One topic we cover in each month’s report is the S&P 500 stocks that do best and worst from the open to close on the day of the employment report based on whether or not the report comes in stronger or weaker than expected. In other words, which stocks should you buy, and which should you avoid? The table below highlights the 25 best-performing stocks in the S&P 500 from the open to close on days when the Non-Farm Payrolls report has been better than expected over the last two years. Leading the way higher, shares of Qorvo (QRVO) have seen an average gain of 2.12% with positive returns between the bells 81.8% of the time. Behind QRVO, 13 other stocks have seen average gains of more than 1%, including relatively well-known names like Skyworks (SWKS), Viacom (VIAB), Charles Schwab (SCHW), and Urban Outfitters (URBN). Another name that has done well and seen consistent upside on better than expected Non Farm Payrolls days is Albemarle (ALB), which has been up from the open to close 91% of the time. ALB is a chemical company that has shown up on the radar of many traders as a lithium play on increased use of batteries in electric vehicles and other applications.
For anyone with more than a passing interest in how equities are impacted by economic data, this report is a must read. To see the report, sign up for a monthly Bespoke Premium membership now!
Bespoke CNBC Appearance (3/8/17)
Bespoke Co-Founder Paul Hickey appeared on CNBC’s Power Lunch on Wednesday to talk about the market’s and hedge fund manager David Tepper’s comments regarding US and global stocks. To view the segment, please click on the image below.
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Fixed Income Weekly – 3/8/17
Searching for ways to better understand the fixed income space or looking for actionable ideals in this asset class? Bespoke’s Fixed Income Weekly provides an update on rates and credit every Wednesday. We start off with a fresh piece of analysis driven by what’s in the headlines or driving the market in a given week. We then provide charts of how US Treasury futures and rates are trading, before moving on to a summary of recent fixed income ETF performance, short-term interest rates including money market funds, and a trade idea. We summarize changes and recent developments for a variety of yield curves (UST, bund, Eurodollar, US breakeven inflation and Bespoke’s Global Yield Curve) before finishing with a review of recent UST yield curve changes, spread changes for major credit products and international bonds, and 1 year return profiles for a cross section of the fixed income world.
In this week’s note, we take a look at what’s driven the spread widening in high yield over the last couple of days.
Our Fixed Income Weekly helps investors stay on top of fixed income markets and gain new perspective on the developments in interest rates. You can sign up for a Bespoke research trial below to see this week’s report and everything else Bespoke publishes free for the next two weeks!
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Chart of the Day: 10 Year Treasury Yields Rise For An 8th Day
ETF Trends: Hedge – 3/8/17
Natural gas, Mexico, and the Philippines were the best performers over the past week with European equities also outperforming. We note that for the first time in a long time, one of the best performers over the past five trading days has been negative. We also note that there’s a large number of big decliners on our worst performers list.
Bespoke provides Bespoke Premium and Bespoke Institutional members with a daily ETF Trends report that highlights proprietary trend and timing scores for more than 200 widely followed ETFs across all asset classes. If you’re an ETF investor, this daily report is perfect. Sign up below to access today’s ETF Trends report.
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