ETF Trends: US Indices & Styles – 1/6/17
Gold miners have outperformed over the past week, with Biotech, oil services, and a few EM names also doing quite well. Not all of EM has rallied over the past week, however. Turkey and Mexico are two of the weakest performers over the past five sessions, with Turkey drastically underperforming thanks in large part to chaos in USDTRY. Natural gas has also gotten pounded by weather shifts, while the USD has delivered a pretty weak showing, especially in the last two days.
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The Closer 1/5/17 – Are Trump Trades Still Intact?
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Looking for deeper insight on global markets and economics? In tonight’s Closer sent to Bespoke Institutional clients, we update our tracking of US crude oil inventories and production as well as checking in on the performance of post-election Trump trades.
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Death By Amazon Lives Up to its Name
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With big blowups from Kohl’s (KSS) and Macy’s (M), it was a bloodbath for retail related stocks today. A perfect illustration of this weakness was the performance of our Death By Amazon Index. Bespoke’s “Death By Amazon” index was created in 2014 as a way to track the performance of the companies most affected by the rise of Amazon.com (AMZN). Companies included must be direct retailers with a limited online presence (or core business based on physical retailing locations), a member of either the Retail industry of the S&P 1500 Index or a member of the S&P Retail Select Index, and rely on third party brands. We view these attributes as the best expression of Amazon’s threat to traditional retail.
Of the 54 stocks that currently make up the index, all but seven were down today, and the average return of the 54 stocks was a decline of 3.57%. The table below lists the best (stocks that were up) and worst (stocks down 5%+) performing components of the index in Thursday’s trading. Leading the way to the downside were KSS and M, which proved today why they were included in the index in the first place! Other big losers included Dillard’s (DDS), J.C. Penney (JCP), and Nordstrom (JWN). On the upside, the only two stocks that were up more than 1% on the day were CVS Caremark (CVS) and Costco (COST). Meanwhile, while the Death By Amazon Index sank today, Amazon’s stock feasted on the weakness, rising 3.07%.
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Bespoke’s Consumer Pulse Report — December 2016
Bespoke’s Consumer Pulse Report is an analysis of a huge consumer survey that we run each month. Our goal with this survey is to track trends across the economic and financial landscape in the US. Using the results from our proprietary monthly survey, we dissect and analyze all of the data and publish the Consumer Pulse Report, which we sell access to on a subscription basis. Sign up for a 30-day free trial to our Bespoke Consumer Pulse subscription service here. With a trial, you’ll get coverage of consumer electronics, social media, streaming media, retail, autos, and much more.
Bespoke’s Sector Snapshot — 1/5/17
We’ve just released our weekly Sector Snapshot report (see a sample here) for Bespoke Premium and Bespoke Institutional members. Please log-in here to view the report if you’re already a member. If you’re not yet a subscriber and would like to see the report, please start a 14-day trial to Bespoke Premium now.
Below is one of the many charts included in this week’s Sector Snapshot, which simply highlights the year-to-date returns so far for the major S&P 500 sectors. In 2016, Health Care was by far the worst performing sector, but it has been the best so far this year. Financials and Energy, on the other hand, were two of the top sectors in 2016, but they’ve underperformed over the first few days of 2017.
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Bespoke’s “Most Volatile Stocks on Earnings”
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Corporate earnings have pretty much been at the back of investors’ minds since the Presidential election back on November 8th. But earnings will come into view again beginning next week when the banks kick off the fourth quarter earnings reporting period. At the start of each quarterly earnings season, we update our list of the “most volatile stocks on earnings.”
But before getting to the individual stocks, we wanted to take a look at earnings volatility at the sector level. Using our Interactive Earnings Report Database, which contains more than 135,000 individual stock earnings reports going back to 2001, we calculated the average one-day absolute percentage change that stocks in each sector have historically seen on their earnings reaction days. For a stock that reports in the morning, its earnings reaction day is that same trading day. For a stock that reports after the close, its earnings reaction day is the next trading day.
As shown below, the average one-day change on earnings for all stocks across all sectors going back to 2001 has been +/-5.55%. That means you can expect the average stock to move more than 5% in either direction when it reports earnings each quarter. But Tech stocks are much more volatile than Utilities stocks. The average Tech stock has historically moved +/-7.21% on its earnings reaction day, while the average Utilities stock only moves +/-2.23%. The next most volatile sector on earnings is Consumer Discretionary, followed by Telecom and then Health Care. The remaining sectors all see average one-day moves below the overall average for all stocks.
Now moving on to the most volatile individual stocks on their earnings reaction days, below is a list of the top 40. To make the list, the stock had to have at least 10 quarterly earnings reports in our database (2.5 years worth), and it had to be trading above $5/share. The stocks below all typically see an average one-day move of more than +/-11.75% on their earnings reaction days. As shown, Rubicon Project (RUBI) is the most volatile of any stock, moving +/-16.93% on its historical earnings reaction days. LendingTree (TREE) ranks second at +/-15.74%, followed by ChannelAdvisor (ECOM), Retailmenot (SALE), and MDC Partners (MDCA).
Some of the more notable stocks on the list include Netflix (NFLX), Travelzoo (TZOO), Tableau Software (DATA), Twitter (TWTR), First Solar (FSLR), and Pandora (P). Netflix (NFLX) typically sees a move of +/-14.05% on its earnings reaction days, so expect a big day either up or down when it reacts to its evening earnings report on January 18th.
Chart of the Day: Asia Breaking Out?
ISM Services Report Surprises to the Upside
Following on the heels of Tuesday’s better than expected ISM Manufacturing report, the ISM Non-Manufacturing report for December also surpassed expectations this morning, coming in at a level of 57.2 versus consensus expectations for 56.8. On a combined basis, the ISM for the month of December was 56.9, which was up 0.2 points from November, up two full points from a year ago, and the highest since October 2015.
Looking at the internals of the report, the strongest component in December was New Orders which jumped to the highest since August 2015. On the downside, the biggest decliner was Employment, which fell from 58.2 down to 53.8. While that doesn’t seem to bode too well for Friday’s Employment report, we would note that the component saw a big jump last month that was not reflected in the employment data. Relative to a year ago, breadth in the internals of the report was mixed, although Prices Paid is up the most of any component. As shown in the chart below, the downtrend in that component has clearly been broken to the upside.
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the Bespoke 50 — 1/5/17
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 nearly doubled the performance of the S&P 500. Through today, the “Bespoke 50” is up 115.8% since inception versus the S&P 500’s gain of 65.4%.
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!
Still No Majority Among the Bulls
Despite a positive start to equities in the New Year, bullish sentiment among individual investors still can’t get over the hump. In this week’s sentiment survey from AAII, bullish sentiment increased from 45.57% up to 46.20%. This makes it 105 straight weeks where bullish sentiment has been below 50% – the second longest streak in the history of the survey (back to 1987).
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The reality is that sentiment on the bullish side really hasn’t moved much in either direction over the last six weeks. In fact, with a range of just over three percentage points in the last six weeks, bullish sentiment has been in the narrowest range since 1995 and the second narrowest six-week range on record.
