B.I.G. Tip – 3% Declines Near an All-Time High
It’s hard to imagine a time when there has been such a transformational shift in sentiment in the span of less than a day. Heading into the close yesterday, equities surged on optimism that the Remain camp would come out on top in the UK referendum. As the polls started coming in, though, it became clear that Brexit would come out on top. So, after closing within 1% of an all-time high on Thursday, the S&P 500 fell over 3% today, and compared to the rest of the world, we got off easy!
Today’s decline marks only the sixth time in the S&P’s history that the index closed within 1% of an all-time high on one day, but then closed down over 3% the next. In a B.I.G. Tips report just sent to Bespoke Premium and Bespoke Institutional members, we detail the historical reaction following prior occurrences where the S&P 500 fell so much while trading so close to an all-time high. Read the full report by signing up.
See the full B.I.G. Tips report by signing up for a monthly Bespoke Premium membership now. Click this link for a 10% discount ($89/month).
ETF Trends: US Indices & Styles – 6/24/16
Brexit has demolished the value of international ETFs with Spain and Italy falling double digits over the past five sessions. Every other European ETF also got hit hard, while gold exploded highe today along with the Japanese yen and USD. MLPs have also surprisingly outperformed over the past week.
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.
S&P 500 Sector Trading Range Charts
Below is an updated look at our one-year sector trading range charts. You’ll notice today’s drop for most sectors, but the magnitude of the drop may not look as big as you’d expect.
Some quick takeaways: Consumer Discretionary’s drop today has caused a short-term chart breakdown. The same goes for Financials. Technology, Industrials, Health Care and Materials are now on the verge of breakdowns but have yet to do so. Energy remains within its uptrend channel, and the three defensive sectors — Consumer Staples, Utilities, Telecom — are actually catching bids.
Dow 30 Post Brexit Vote
Below is an updated look at our Dow 30 trading range screen now that the Brexit vote has come and gone. For each stock, the dot represents its current price, while the tail end represents its price one week ago. The black vertical “N” line represents each stock’s 50-day moving average, and moves into the red or green zones are considered overbought or oversold.
We’ve also included today’s change and the current dividend yield for each stock in the index. It’s worth noting that just 3 of 30 Dow stocks now have dividend yields less than the current yield on the 10-Year Treasury Note.
Today’s steep drop for U.S. markets is painful, but so far the bottom hasn’t fallen out. Major indices are not even at one or three-month lows. Within the Dow, 11 stocks are now oversold, but 5 are still overbought. Looking at today’s change, Goldman Sachs (GS) is down the most with a decline of 6.35%, followed by Caterpillar (CAT) and JP Morgan (JPM), which are both down 5.9%. One Dow stock — Wal-Mart (WMT) — is actually up on the day. Other stocks holding up well heading into the weekend include Home Depot (HD), Johnson & Johnson (JNJ), Verizon (VZ), and UnitedHealth (UNH).
Bespoke Brexit Presentation
We were scheduled to host our Q3 Outlook call today based on the Quarterly Outlook report we published on Wednesday. Instead, due to the volatility around the Brexit “Leave” vote last night, we pivoted our presentation towards Brexit implications because it has obviously become much more relevant today. It was certainly an interesting exercise to get it prepared from about midnight last night when the BBC called it for “Leave” through this morning at 11 am when we were scheduled to hold the call. Having said that, we hope our clients found it useful to put today’s events in context. We will of course have more to say about Brexit over the coming days (and beyond).
The Brexit presentation and audio recording of the call are available for paid members only. You can become a member with one of our three subscription levels, descriptions of which can be seen at our Bespoke Research Packages page. If you are already a member, please login here to view the replay and slides.
Chart of the Day: Domestics vs. Internationals
S&P 500 and Oil Price Charts
Below is a chart of the S&P 500 that includes where it’s set to open this morning with futures down 3%+. As you can see, the index is set to open at the same level where it has made two near-term lows, and for now it will still be above its 200-day moving average.
The price of oil is down sharply but has thus far managed to hold above support at its 50-day moving average.
B.I.G. Tips – SPY 3% Downside Gaps
The UK has voted to leave the EU and financial markets around the world have taken a massive hit. At present, the S&P 500 (SPY ETF) is set to gap down 3.8% on the open.
In a B.I.G. Tips report just sent to Bespoke Premium and Bespoke Institutional members, we detail the historical reaction to huge gaps down at the open, showing the gap down, open-close move, entire day move, and returns over the last week for every >3% gap down on SPY over the last 20 years. Read the full report to see the clear historical pattern that large gap downs typically lead to.
See the full B.I.G. Tips report by signing up for a monthly Bespoke Premium membership now. Click this link for a 10% discount ($89/month).
The Closer 6/23/16 – “No Lead For Leavers”
Looking for deeper insight on global markets and economics? In tonight’s Closer sent to Bespoke clients, we update the major data releases of the day (New Home Sales and Chicago Fed National Activity Index) as well as provide an update on the EU Referendum in the UK. We also discuss the UK current account balance.
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!
ETF Trends: Fixed Income, Currencies, and Commodities – 6/23/16
BBelow is our daily list of the twenty best and twenty worst performing ETFs over the last five trading days. Oil stocks gained the most over the past day. Region and country based exposures, again with the exception of Asian stocks, remained strong. US Treasuries, bonds, and related stocks continued to fall. Gold also had another weak day.
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.