Sector Divergence
On this last trading day of January, below is a snapshot of how the major US sector ETFs have performed so far this year. Over these last few weeks as the broad market has rallied, we’ve definitely seen some sector divergence. Defensive sectors like Consumer Staples (XLP) and Utilities (XLU) have come under selling pressure, while cyclical sectors more tied to the business cycle have surged. Communication Services (XLC) and Consumer Discretionary (XLY) are both up more than 12% YTD already, while Technology (XLK), Materials (XLB), Real Estate (XLRE), and Financials (XLF) are up more than 5%. The only sectors down on the year are Consumer Staples, Utilities, and Health Care (XLV). At the moment, four sectors are overbought (more than one standard deviation above their 50-DMAs) versus three that are oversold (more than one standard deviation below their 50-DMAs). Click here to learn more about Bespoke’s premium stock market research service.
Below is a snapshot of price charts for six sector ETFs pulled from our Chart Scanner tool. These are the three sectors up the most YTD (XLC, XLRE, XLY) and down the most YTD (XLP, XLU, XLV).
As we get set to enter a new month, last week we published a report for subscribers looking at historical market seasonality in February and for the remainder of the year based on how the market performs in January. Does a positive January typically mean positive returns going forward or does it not matter? To find out the answer to this question and see everything else Bespoke is publishing for subscribers, sign up for a one-month trial to Bespoke All Access today.
Daily Sector Snapshot — 1/30/23
Chart of the Day – Energy Commodities In Deep Drawdowns, Stocks Not So Much
Bespoke’s Morning Lineup — 1/30/23
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“There is no better teacher than history in determining the future. There are billion-dollar answers in $30 history books.” – Charlie Munger
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.
With just two more trading days left in the month, below is a chart we published in our Chart of the Day from last Tuesday looking at rest-of-year performance when January has been a positive or negative month. Remember, since WW2, the rest of the year has generally been stronger when January has been an up month versus a down month. As shown, the S&P has averaged a decline of 0.27% across all Februarys, but the index has averaged a gain of 0.37% in February when January has been up versus a decline of 1.21% in February when January has been down. The trend is the same when looking at the rest of the first half and the rest of the year.
Drilling down further, there have only been two other instances since WW2 where the S&P gained more than 5% in January after posting a double-digit percentage decline in the prior year: 1967 and 1975. See how things turned out in those years by reading today’s full Morning Lineup.
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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Bespoke Brunch Reads: 1/27/23
Welcome to Bespoke Brunch Reads — a linkfest of the favorite things we read over the past week. The links are mostly economy/market related, but there are some other interesting subjects covered as well. We hope you enjoy the food for thought as a supplement to the research we provide you during the week.
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Economy
Big Tech Is Really Bad at Firing People by Chris Stokel-Walker (Wired)
Thousands of tech workers have been laid off over the last few weeks, and they aren’t happy with the way their firings have been handled. [Link]
Corporate Layoffs Spread Beyond High-Growth Tech Giants by Chip Cutter and Theo Francis
It’s not just high-growth tech companies laying off workers, companies like IBM and Dow have also started to announce layoffs. There’s always dog walking. [Link]
How These Dog Walkers Make Over $100,000 a Year by Alyson Krueger (NYT)
Charging upwards of $35 per walk (more than the hourly rate for babysitters), some dog walkers in New York are making six-figure salaries. [Link]
You Quit Your Job, but You’re Still Miserable. Now What? By Eilene Zimmerman (NYT)
Overworked Americans who have quit their jobs have found that the absence of work and structure leaves them unmotivated and unable to move forward. [Link]
CVS, Walmart to Cut Pharmacy Hours as Staffing Squeeze Continues by Sharon Terlep and Sarah Nassauer (WSJ)
Both chains will curtail the operating hours of their pharmacies citing a lack of available pharmacists. Pharmacists were already in short supply before the pandemic, and consumer demand for Covid-19 shots and tests put additional strains on pharmacy operations. [Link]
Chase Locking Up Some ATMs at 5 P.M. Due to NYC Crime by Luke Funk (Fox5NY)
Citing higher crime risk at night and increased vagrancy, the bank will curtail the availability of 24-hour ATMs. [Link]
Smartphone Shipments Suffer the Largest-Ever Decline with 18.3% Drop in the Holiday Quarter by IDC
The drop marks the largest-ever decline in a single quarter and contributed to a steep 11.3% decline for the year. [Link]
Americans Fall Behind on Car Payments at Higher Rate Than in 2009 by Claire Ballentine (Bloomberg)
Higher interest rates and depleted savings have resulted in car repossessions surging to the highest rate since 2009. [Link]
Science
Earth’s Inner Core May Be Reversing Its Rotation, Study Finds by Eric Niier (WSJ)
Researchers believe the Earth’s inner core has reversed its rotation after they analyzed earthquake-driven seismic waves as they pass through the Earth. The result is that the length of a day has been shaved by fractions of a millisecond [Link]
The Food Expiration Dates You Should Actually Follow by J. Kenji López-Alt (NYT)
Believe it or not, most of those expiration dates are meaningless. “Vinegars, honey, vanilla or other extracts, sugar, salt, corn syrup, and molasses will last virtually forever,” and even eggs last much longer than their sell-by dates. [Link]
Humanity May Reach Singularity Within Just 7 Years, Trend Shows by Darren Orf (Popular Mechanics)
“On average, it takes a human translator roughly one second to edit each word of another human translator, according to Translated. In 2015, it took professional editors approximately 3.5 seconds per word to check a machine-translated (MT) suggestion — today that number is just 2 seconds. If the trend continues, Translated’s AI will be as good as a human-produced translation by the end of the decade (or even sooner).” [Link]
ChatGPT Is Coming for Classrooms. Don’t Panic by Pia Ceres (Wired)
ChatGPT has caused fears of rampant cheating in American education, but many educators say that the potential disruption is just what the US educational system needs. [Link]
Google, Not OpenAI, Has the Most to Gain From Generative AI by Mark Sullivan (Fast Company)
Alphabet has been criticized for ‘missing the boat’ on AI, but this article reminds readers that the company has been calling itself “AI-First” since 2017 and has invested heavily in the space. [Link]
Meta Embraces AI as Facebook, Instagram Help Drive a Rebound by Jeff Horwitz and Salvador Rodriguez (WSJ)
Fueled by heavy investment in AI, Meta is starting to see a path to recovery after the toughest year in the company’s history [Link]
Sports
MSG Owner James Dolan Threatens Alcohol Ban at MSG Over Facial Recognition Controversy by Fox 5 Staff (Fox5NY)
Madison Square Garden owner James Dolan has banned lawyers who are suing any of his companies from entering the Garden. The New York State Alcohol board has threatened to pull the Garden’s liquor license, so Dolan has suggested he may stop serving beer at one Rangers game and tell anyone who is upset about it to call the head of the state authority. [Link]
Quality Control Fiasco: George Brett Autograph Ends up on a Babe Ruth Baseball Card by Tyson Shushkevich (Just Baseball)
Can you imagine pulling an autographed Babe Ruth but then realizing that the actual signature was George Brett? You’d be mad. Think George Brett pine tar too high mad. [Link]
Ranking the top five Royal Rumble winners in WWE history: Is Steve Austin or Ric Flair No. 1? By Daniel Yanofsky (Sporting News)
With this weekend’s Royal Rumble, check out this list of the top five Royal Rumble Winners. Who will win the right to face Roman Reigns at WrestleMania 39? Will The Rock make a comeback? [Link]
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Have a great weekend!
The Bespoke Report — Equity Risk Gauge — January 2023
This week’s Bespoke Report newsletter is now available for members.
In this week’s newsletter, we’ve updated our Equity Market Risk Gauge for the month of January, and we also take a look at market technicals, improving internals, international equity market outperformance, interest rate movements, and next week’s upcoming FOMC meeting.
To see our updated Equity Risk Gauge and access everything else Bespoke’s research platform has to offer, join Bespoke Institutional and get half off for the first three months!
Daily Sector Snapshot — 1/27/23
Bad Gas
If you think the clobbering of growth stocks in 2022 was harsh, check out the performance of natural gas. Towards the end of last summer when there were real worries that many Europeans were going to freeze to death in the winter cold without gas to heat their homes, the price of natural gas in the US traded to the highest levels in over a decade and approached double-digits. As steep as the runup last year was, the downfall has been even steeper. Suffice it to say, the price of the front month futures contract is nowhere near $10 anymore, and just this week dropped below $3 to its lowest level in more than a year. More recently, the slide has been pretty relentless with 14 declines over the last 20 trading days.
The chart below shows the 100-trading day rate of change in natural gas futures going back to 1991. Through Thursday’s close, the price of the front month contract was down by more than two-thirds (68.21%), which, believe it or not, is the steepest drop over a 100-trading day period in the history of the futures contract (since 1991). It’s interesting to note that the current decline comes just eight months after what was the second-strongest 100-trading day rally in the history of the futures contract (+147%). The strongest 100-day rally was all the way back in December 2000 when prices surged 160%. Like the rally last May, that strong rally was followed eight months later by what is now the second-largest 100-day decline in natural gas prices.
The lesson here may be that if natural gas rallies 100% in 100 days, you probably want to avoid it. In the eight prior periods when the commodity rallied 100% in 100 days, its median performance over the following year was a decline of 30.1% with declines 75% of the time. Conversely, the performance of natural gas following 50%+ declines in 100 days hasn’t been as consistent. In the five prior periods that fit that criteria, natural gas was up by a median of just 1.4% with gains three out of five times. Click here to learn more about Bespoke’s premium stock market research service.
Bespoke’s Morning Lineup — 1/27/23
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.
“If it doesn’t matter who wins or loses, then why do they keep score?” — Vince Lombardi
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.
It’s conference championship weekend for the NFL as the Bengals travel to Kansas City in the AFC and the 49ers travel to Philadelphia in the NFC. The AFC championship game is an exact repeat of last year’s match-up when the Bengals upset the Chiefs on the road. We’ve only seen the same two teams play in the same location in the AFC Championship game in back-to-back years two prior times, once in 2011/2012 (Ravens at Patriots) and once in 1978/1979 (Oilers at Steelers).
If you’re looking for more individual stock ideas, yesterday we updated our Bespoke 50 list of noteworthy Russell 3,000 growth stocks. We like this list as an idea generator for further research into the 50 names that make the cut each week.
At the index level, take a look below at our Trend Analyzer snapshot of major US index ETFs. It’s green across the board when it comes to 50-DMA spread, 5-day change, and YTD change. The Nasdaq 100 (QQQ) is in the lead on a YTD basis with a gain of 10.1%, and it’s also up the most over the last five days and the farthest above its 50-DMA. This is the opposite of what we saw in 2022 when QQQ lagged the rest of the market severely. As you can see, every single index ETF on the list is now “overbought” with the exception of the Dow 30 (DIA).
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!
Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.
The Bespoke 50 Growth Stocks — 1/26/23
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 nine 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.