The Bespoke Report – 11/11/22 – Real? Or Just Fantasy
This week’s Bespoke Report newsletter is now available for members.
If you thought things were going to calm down after the midterms, think again. No later than two days after Americans voted, financial assets of all types had what were some of the most extreme moves in years. On Thursday, the 10-year US Treasury yield had the 17th most extreme downside move (normalized to the last 200 trading days) since 1980. The S&P 500 had the 15th largest one day rally since 1980, and the US Dollar Index had its 9th largest daily decline over that same span. Investors have been through a lot over the last several years, but Thursday ranked right up there with all of them, and we’re not even including the ‘you-know-what’ show that’s been going on at Twitter! All we can say is that thankfully the moves in stocks and bonds were up rather than down.
There wasn’t a lot of data this week, but it was still full of fireworks rivaling any grand finale. To read this week’s full Bespoke Report newsletter and access everything else Bespoke’s research platform has to offer, start a two-week trial to one of our three membership levels.
Daily Sector Snapshot — 11/11/22
October 2022 Headlines
Homebuilders Extended
Every day we browse through our Trend Analyzer tool (available with a Premium or Institutional membership) to monitor trends and overbought/oversold levels across financial markets. When we got to the homebuilder stocks this morning, we had to do a double-take after seeing some of the recent moves in this space. Have a look at the moves in the snapshot below. Most homebuilder stocks have rallied 12-15% over the last five trading days, leaving them in extreme overbought territory, which means they’re more than two standard deviations above their 50-day moving averages. DR Horton (DHI), Lennar (LEN), NVR (NVR), and PulteGroup (PHM) are the most extended. Even after the rally in these names over the last week, we’d note that they’re still all down sharply year-to-date as the spike in mortgage rates from 3% up to 7%+ has caused activity in the space to slow to a crawl. A drop in those mortgage rates over the last few days was the catalyst for the recent move higher in share prices. If you’re wondering which way the homebuilders are likely to trade going forward, keep an eye on interest rates — that’s the entire story these days. Click here to learn more about Bespoke’s premium stock market research service.
Banks and Brokers on Fire
The Financial sector ETF (XLF) has been on fire since its intraday low of $29.59 on October 13th, which was the day of the hotter than expected September CPI report. From that low point on 10/13, XLF is up 20.2%. As shown below, the ETF is currently at the very top end of a wide sideways range that has been in place over the last six months.
Below is a sampling of some of the most well-known banks and brokers that are part of the Financial sector. As shown, names like Goldman Sachs (GS), JP Morgan (JPM), Jefferies (JEF), Raymond James (RJF), and Stifel (SF) are all more than 10% above their 50-DMAs, and the only stock that’s not overbought (>2 standard deviations above 50-DMA) is LPL Financial (LPLA), which traded lower on earnings yesterday.
A quick look at the six-month price charts of the stocks listed in the table above gives you a glimpse into the huge rally that this area of the market has experienced since early October. Investors have seemingly been loading up on them with short-term Treasury yields now significantly higher than the interest rates these banks and brokers are paying customers on deposits. Click here to learn more about Bespoke’s premium stock market research service.
B.I.G. Tips – Interesting Breadth Around the 200-DMA
Bespoke’s Morning Lineup – 11/15/22 – Full-Conductors
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“Honor to the soldier and sailor everywhere, who bravely bears his country’s cause. Honor, also, to the citizen who cares for his brother in the field and serves, as he best can, the same cause.” – Abraham Lincoln
Below is a snippet of content from today’s Morning Lineup for Bespoke Premium members. Start a two-week trial to Bespoke Premium now to access the full report.
We’re seeing some modestly positive follow-through to yesterday’s ripper in early trading as the bond market is closed for Veterans Day. With banks and the bond market closed, there’s little in the way of earnings news or economic data. The only report on the calendar is the Michigan Confidence report at 10 AM. The key metric to watch in that report will be inflation expectations. Outside of the US, Asian markets rallied sharply in a continuation of Thursday’s rally here in the US, but signs of some loosening in China’s strict zero-Covid policy have also contributed to the positive mood. A reopening of China would likely have some upside inflationary pressure in terms of energy prices, but it would also loosen some supply chains which remain constrained.
There’s been nothing ‘semi’ about the performance of chip stocks over the last week, and some of the gains we have seen in individual stocks have been unbelievable. Just yesterday, the Philadelphia Semiconductor Index (SOX) was up over 10%, and over the last five trading days, the index is up over 16%. With gains like that, you can only imagine how some of the individual components of the SOX have performed, and below we summarize the performance of the 15 largest stocks in the index based on market cap. All 15 of them have experienced double-digit moves and four are up over 20% in the last five trading days. Even Intel (INTC) is up over 10%!
While the short-term gains have been mouth-watering, coming back to reality, all 15 stocks listed below are still down YTD, and most are down sharply. While Texas Instruments (TXN) and Analog Devices (ADI) have managed to get by with declines of less than 10%, more than half of the 15 stocks listed below are still down over 30% YTD. AMD has declined over 50% while NVIDIA (NVDA) and Taiwan Semiconductor (TSM) are both down over 40%. Whether this is the beginning of a new rally or just a bear market rally remains to be seen, but rallies have to start somewhere.
Our Morning Lineup keeps readers on top of earnings data, economic news, global headlines, and market internals. We’re biased (of course!), but we think it’s the best and most helpful pre-market report in existence!
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B.I.G. Tips – 5%+ Up Days
The Bespoke 50 Growth Stocks — 11/10/22
The “Bespoke 50” is a basket of noteworthy growth stocks in the Russell 3,000. To make the list, a stock must have strong earnings growth prospects along with an attractive price chart based on Bespoke’s analysis. The Bespoke 50 is updated weekly on Thursday unless otherwise noted. There were five changes to the list this week.
The Bespoke 50 is available with a Bespoke Premium subscription or a Bespoke Institutional subscription. You can learn more about our subscription offerings at our Membership Options page, or simply start a two-week trial at our sign-up page.
The Bespoke 50 performance chart shown does not represent actual investment results. The Bespoke 50 is updated weekly on Thursday. Performance is based on equally weighting each of the 50 stocks (2% each) and is calculated using each stock’s opening price as of Friday morning each week. Entry prices and exit prices used for stocks that are added or removed from the Bespoke 50 are based on Friday’s opening price. Any potential commissions, brokerage fees, or dividends are not included in the Bespoke 50 performance calculation, but the performance shown is net of a hypothetical annual advisory fee of 0.85%. Performance tracking for the Bespoke 50 and the Russell 3,000 total return index begins on March 5th, 2012 when the Bespoke 50 was first published. Past performance is not a guarantee of future results. The Bespoke 50 is meant to be an idea generator for investors and not a recommendation to buy or sell any specific securities. It is not personalized advice because it in no way takes into account an investor’s individual needs. As always, investors should conduct their own research when buying or selling individual securities. Click here to read our full disclosure on hypothetical performance tracking. Bespoke representatives or wealth management clients may have positions in securities discussed or mentioned in its published content.