The Bespoke Report – Heads Bulls Win, Tails Bears Lose
Sometimes words just can’t do it justice, and while it seems like we have been using that phrase a lot recently, this week is certainly a fitting use of it. After the market rallied for two days to start the week on market expectations of a Clinton victory (or so the market thought) it followed with another two days of gains after Trump staged one of the biggest political upsets in US history. It was a perfect heads bulls wins, tails bears lose scenario!
On Friday things settled down a bit as the bond market was closed in observance of Veterans Day, but there was more than enough action in the week’s first four days to fill a whole month let alone a week. Before we go any further, we would like to extend a big thank you to all of our country’s veterans and their families. Again, words just can’t do it justice on how much you are all appreciated and we know how tough a job it must be.
While everyone is aware of what happened to markets this week, we wanted to quickly recap some of the major moves we saw across asset classes, and also mix in what investors can expect going forward. From there, we will recap the week’s economic data and where things stand with earnings season, and then finally give a brief recap of sentiment and emotions. We’ve all had a busy week, and hopefully this weekend we can all get some rest, because while there were fireworks this week, something tells us that they have only just begun.
While politics seemingly drove this week’s trading, the seeds of the rally were planted in the technicals. As we pointed out in last week’s report, in the sell-off that lasted through one week ago, the S&P closed last Friday right above its 200-DMA. Then on Monday, the S&P 500 bounced and hasn’t looked back. As long time Bespoke clients are aware, we realize that while every different approach to investing has its flaws, they also have their strengths that should be tracked and studied. In terms of technicals, if you are going to focus on anything, you should always be aware of a security’s or asset class’ long-term moving averages. This week’s bounce was actually the second time in six months that the S&P 500 successfully bounced right at or around its rising 200-DMA.
If you’d like to see the rest of this week’s 40-page report covering the election and possible implications going forward, we cover it and much more in this week’s Bespoke Report newsletter, which we just sent to Bespoke subscribers. You can try out Bespoke’s subscription platform and read this week’s Bespoke Report by starting a 14-day free trial. Below is a look at recent asset class performance using our key ETF matrix.
Have a great weekend!
The Closer 11/11/16 – End of Week Charts
Looking for deeper insight on global markets and economics? In tonight’s Closer sent to Bespoke clients, we recap weekly price action in major asset classes, update economic surprise index data for major economies, chart the weekly Commitment of Traders report from the CFTC, and provide our normal nightly update on ETF performance, volume and price movers, and the Bespoke Market Timing Model.
The Closer is one of our most popular reports, and you can sign up for a trial below to see it and everything else Bespoke publishes free for the next two weeks!
Click here to start your no-obligation free Bespoke research trial now!
Mexico’s Stock Market Tanks Post Trump
If there’s a country stock market around the world whose price action investors might have looked to as a predictor of the eventual outcome of this Tuesday’s US Presidential election, it’s Mexico. From trade to immigration to “the wall,” the consensus has been that Clinton=good for Mexico and Trump=bad for Mexico. On Monday and Tuesday this week, we saw Mexico’s stock market jump nearly 10% as Clinton’s lead in the polls solidified and her odds on the betting sites ticked up towards 90%. But the action for Mexican stocks was following the polls just like everyone else, and the action of the stock market both in Mexico and around the world completely failed to predict that the polls had it wrong. As shown below, Trump’s win quickly erased all of Monday’s and Tuesday’s gains for Mexico’s stock market, and since Wednesday’s open it has only fallen more. At this point, the EWW Mexico ETF is down 20% since Tuesday’s close.
With Mexico’s market dropping 20% and US stocks actually rallying since the election, we’ve seen the ratio of SPY (S&P 500) to EWW spike to its highest level in more than ten years. Below is a chart of this ratio since 2005. What’s noteworthy to us is that the spike in the ratio since Trump won is only a continuation of a trend of outperformance we’ve seen for the US that began more than three years ago at the start of 2013.
ETF Trends: International – 11/11/16
Biotechs, banks, and metals continue to own outperformance over the past week with 12 ETFs we track up double-digits. Gold, Mexico, and bonds continue to be the biggest thematic losers over the past week, but other EMs (Malaysia, Indonesia, Brazil, South Africa) are also lagging as currencies plunge versus higher real rates in the US.
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.
See Bespoke’s full daily ETF Trends report by starting a no-obligation free trial to our premium research. Click here to sign up with just your name and email address.
Best and Worst Performing Stocks on Earnings this Season
The average stock this earnings season has fallen 0.36% on its earnings reaction day, but the 40 stocks below are the ones that have seen the biggest one-day gains in reaction to their earnings reports. As shown, Encore Capital (ECPG) ranks at the top of the list with a gain of 34.63%, followed closely by Metaldyne Performance (MPG) with a gain of 34.27%. Blue Nile (NILE), ConforMIS (CFMS), and Sucampo Pharma (SCMP) round out the top five — all with gains of more than 33%. Other notables on the list of big earnings season winners include NVIDIA (NVDA), which is up 23.45% today in reaction to earnings, Netflix (NFLX), Logitech (LOGI), Bankrate (RATE), BE Aerospace (BEAV), and SodaStream (SODA).
Below is a list of the 40 worst performing stocks on their earnings reaction days this earnings season. All but one of the stocks listed had one-day drops of more than 20%. Ouch.
The Closer 11/10/16 – Deficit And Delinquent
Looking for deeper insight on global markets and economics? In tonight’s Closer sent to Bespoke Institutional clients, we continue to assess the market impact of Tuesday’s election. We also discuss an update to deficit figures released by the US Treasury today and mortgage delinquency stats for Q3.
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!
Bespoke’s Sector Snapshot — 11/10/16
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 is our trading range screen for the S&P 500 and its ten sectors. We discuss in more detail how to read the chart in the full version of the report, but basically the dot is where the sector is currently trading, while the tail end is where it was trading one week ago. As shown, we’ve seen massive rotation over the last week, with most of it coming since Election Day on Tuesday. The S&P 500, Energy, Financials, Industrials and Materials have surged into overbought territory since Trump won, while Utilities, Consumer Staples, Telecom and Technology have been weak.
To see our full Sector Snapshot with additional commentary plus six pages of charts that include analysis of valuations, breadth, technicals, and relative strength, start a 14-day free trial to our Bespoke Premium package now. Here’s a breakdown of the products you’ll receive.
Chart of the Day: California Stocks Post Trump
the Bespoke 50 — 11/10/16
ETF Trends: US Sectors & Groups – 11/10/16
Biotech is the undisputed champ of the last week with equal weight (XBI) up almost 23% and cap-weighted (IBB) up 17%. Metals continue to trade well after copper futures rose 13 days in a row through yesterday, as do banks. Gold is the exception, where miners have taken a big leg lower over the last week or so. Bonds have started to turn around a bit intraday but versus a week ago the sharp move higher in yields means much lower prices for high duration securities.
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.
See Bespoke’s full daily ETF Trends report by starting a no-obligation free trial to our premium research. Click here to sign up with just your name and email address.