Bespoke’s Morning Lineup – 10/28/22 – Stalling Out
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“We have never said that we’re perfect. We’ve said that we seek that. But we sometimes fall short.” – Tim Cook
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We’re seeing another day this morning where Nasdaq futures are much weaker than the broader market. The culprit this morning is Amazon.com (AMZN) which is trading down over 13% after dropping as much as 20% in after-hours trading. The Nasdaq is indicated to open down over 1% while the S&P 500 is down by about half that. Treasury yields are higher this morning, and the 10-year yield briefly traded back above 4% before falling following the latest batch of economic data. Another factor contributing to the weakness in the tech sector is a report that the Biden Administration is considering adding additional restrictions on technology exports to China.
It’s been a busy morning of economic data and the Employment Cost Index (+1.2%), Personal Income (+0.4%), and PCE Prices (+0.3%) were all in line with forecasts. Personal Spending (+0.6%) was higher than expected, and at 10 AM we’ll get Pending Home Sales and Michigan Confidence.
What a month it has been for the Energy sector. Since its recent low in late September, the S&P 500 Energy sector has rallied about 30% and is currently within 4% of its early June high. Looking at a longer-term chart of the sector shows that it has consistently found support at the trendline that extends back to the higher low it made in late 2020. The fact that it managed to bounce at that support during the last leg lower was impressive given that it followed what was a lower high for the sector in late August.
With its gain of over 60% YTD, Energy has trounced the market on a YTD basis, and while the sector has yet to take out its high from June, its performance gap with the S&P 500 did manage to make a new high yesterday as it’s now outperforming the S&P 500 by 80 percentage points YTD.
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’s Weekly Sector Snapshot — 10/27/22
The Bespoke 50 Growth Stocks — 10/27/22
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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.
Chart of the Day: Dow Strength
Bespoke’s Morning Lineup — 10/27/22
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“You should welcome a bear market, since it puts stocks back on sale.” – Jason Zweig
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 a very mixed picture for equity futures this morning with the Dow indicated up pretty sharply while the Nasdaq is down by a similar magnitude driven in large part by shares of Meta Platforms (META) which is down over 20% and struggling to hang on to triple-digits. The ECB just announced its policy decision and hiked rates by 75 bps (as expected). Here in the US, we have a busy morning of economic data, plus big earnings reports from Amazon.com (AMZN) and Apple (AAPL) after the close.
The US Dollar index peaked about a month ago, and its move lower has coincided with the bounce that we’ve seen in US equity indices. The same trend has played out over a shorter one-week time frame as well, which you can see in the Trend Analyzer snapshot below. Over the last five days, the US Dollar Bullish ETN has fallen 2.8% and broken below its 50-day moving average. At the same time, every other area of financial markets has moved higher within its trading range.
Yesterday, the US Dollar Index broke below its 50-DMA for the first time since August, and it traded the farthest below its 50-DMA since early January. As shown below, the August break did not last long, as the Dollar’s uptrend resumed almost immediately.
This morning the Dollar is back up, and a resumption of its uptrend will almost assuredly coincide with a resumption of the equity market’s downtrend. We’ll certainly be keeping an eye on FX today.
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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Daily Sector Snapshot — 10/26/22
Chart of the Day – Another Curve Bites the Dust
Bespoke’s Morning Lineup — 10/26/22
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“Solving big problems is easier than solving little problems.” – Google Co-Founder Larry Page
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.
Bulls have finally seen some green over the last couple of weeks. In fact, the S&P 500 has gained 1%+ on six of the last nine trading days. Below is a log chart of the S&P 500 since 1952 (when the 5-day trading week began) with red dots showing prior times the index has gained 1%+ on six of the prior nine trading days (the first occurrence in at least three months). As you can see, it is not common, and aside from the occurrence in March of this year, prior periods where this happened saw massive gains over the next six and twelve months.
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 Stock Scores — 10/25/22
Near Record Volatility in the 10-Year Yield*
The 10-year is having another one of those days. After trading up near 4.3% intraday yesterday, the yield got as low as 4.05% this morning and is currently resting at 4.09% for a decline of 14 basis points on the day. In a normal year, we’d be talking about a move of that magnitude as a volatile day, but in 2022, it has become commonplace. Today is actually the 40th trading day this year that the 10-year yield has moved 10 bps or more relative to the prior day’s close. Relative to history, this year’s total of daily 10 bps moves (through 10/25) ranks as the highest since 2009 when there were 54. As shown in the chart below, there have been plenty of other years where the 10-year yield had a much larger frequency of 10 bps daily moves, including 2008 (66) and the early 1980s when both 1980 and 1981 had a total of 123, or roughly once every other trading day.
Based on the chart above, 2022 may look unremarkable in terms of daily volatility, but it’s leaving out a key variable and that’s the actual level of the yield on the 10-year at the time of the move. A 10 bps daily move is a lot more significant when the average yield on the 10-year is 2.8% as it has been this year compared to a year like 1980 or 1981 when the average yields were 11.4% and 13.9%, respectively. In order to adjust for the level of yield, the chart below shows the ratio of the number of days where the 10-year yield moved 10 bps versus the average yield of the 10-year during the specific year. After making that adjustment, 2022 still isn’t at a record, but it’s close. In both 2008 and 2020, the ratio was 1,812, and in 2009 it was 1,664. At 1,444, the ratio for 2022 ranks as the fourth highest on record. Already this year, 2022 ranks as one of the most volatile, in terms of daily yield changes, but there are still over two months left in the year. If the current pace continues through year-end, we could revisit this chart in just over two months and find that the ratio for this year was higher than any other year on record. Click here to learn more about Bespoke’s premium stock market research service.
