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The S&P 500 fell slightly this week as we move towards the unofficial end of earnings season in mid-November.

Below is a look at a handful of charts published this week that we thought were interesting or noteworthy. Additionally, we included a few quotes from Corporate America that we heard on earnings calls this week that have implications for the broader economy. Receive charts and analysis like this in your inbox daily by signing up for a two-week trial to Bespoke Premium.

The prospects of continued inflation have made headlines over the last few months, and the issue is yet to abate. In October’s reading, the trimmed-mean CPI was up a record 8.9% annualized, while the median CPI was up 7.1% annualized. Based on October’s CPI, inflation has outpaced compensation growth over the last year, resulting in less buying power for consumers.

In addition to inflation concerns, the cost and quality of labor is also a significant factor impeding business outlooks. The percentage of businesses in the monthly NFIB survey reporting that the cost or quality of labor was their single most important problem pulled back in October from highs reached in September by about 6 percentage points, but 34% of respondents still indicated that the quality and cost of labor was their largest concern.

After October’s inflation data, the streak of consecutive months where y/y CPI increased 5% or more reached six, which is the highest level since early 1991 (7). In the post-WWII era, there have only been six other periods where CPI increased by 5%+ for six consecutive months. When these streaks have occurred, most extended over a significant period of time while just two others proved to be transitory.

After the close on Monday of this week, every major US index ETF was in ‘extreme overbought’ territory.  Our Trend Analyzer (available with Bespoke Premium or Bespoke Institutional) classifies ‘extreme overbought’ as any time price rises more than two standard deviations above its 50-day moving average.

As shown below, earnings and revenue beat rates have begun to normalize (lower) after spiking in the quarters following the initial COVID shock that caused Wall Street analysts to lower (unnecessarily in hindsight) their estimates.

As the market has been in a consistent bull run since the pandemic low, it is only natural for investors to think about downside potential. For some perspective, the chart below shows that a 20% bear market drop from here would only take the S&P back down to levels seen earlier this year.  A very steep drop of 27% would only take us down to the pre-COVID high seen for the stock market in mid-February 2020.

In addition to this week’s charts, we wanted to highlight that throughout this earnings season, we have been reporting on and summarizing select conference calls for our Bespoke Institutional subscribers. Here are some of the notable quotes from this week’s calls with implications for the broader economy:

Flower Foods (FLO) CEO Ryals McMullian commented, “The labor market remains challenging. Unemployment claims are declining, and job openings are at record levels.”

In regards to cruise bookings, Disney CEO Bob Chapek stated, “booked occupancy… is already ahead of historical ranges at significantly higher pricing.”

Chapek added, “we don’t expect to see a substantial recovery in international attendance at our domestic parks until toward the end of fiscal 2022.” This implies that international travel volumes will remain suppressed into the first half of 2022.

TripAdvisor CFO Ernst Teunissen commented, “we’re not out of the woods yet with COVID still impacting us and although we are cautious about Q4, we remain very optimistic that the recovery is taking root and are bullish about travel in our business in 2022.”

PayPal CEO Dan Schulman stated, “We are seeing the impact of global supply chain shortages in our merchant base. Consumer confidence has weakened with the absence of stimulus payments.”

To see the summaries of the earnings reports we covered, you can start a two-week Bespoke Institutional trial, or click here if you are already a subscriber.

In addition to this earnings coverage, Bespoke Institutional subscribers also have access to our recently debuted Little Known Stocks (LIKS) report. On Wednesday, we published our third LIKS report.

In these reports, we provide an in-depth breakdown of a stock that likely remains under the radar of most investors. In this week’s report, we analyzed a ‘pick-and-shovels’ play to a ‘pick-and-shovels’ industry. Over the last three years, this company has grown its revenues at a compounded annual growth rate of 33.2% and is currently trading at a discount relative to its competitors. Over the last year, this stock has outperformed both the Russell 2000 and its broader industry.  Again, you can start a two-week trial to Bespoke Institutional to see this LIKS report and others.

Receive charts and analysis like the ones above in your inbox daily by signing up for a two-week trial.  Sign up now to read this week’s Bespoke Report!

That’s it for this week.  Have a great weekend and we’ll be back at it on Monday!

The past month has seen the S&P 500 pivot and rally higher after declines throughout the month of September.  Since the end of Q3, the S&P has now gained 8.6%, which is slightly off the highs from earlier this month.  Earnings season has been in full swing over the past few weeks meaning there have been plenty of stocks with catalysts for big moves since the end of September.  Below we show the stocks that have risen and fallen the most since September 30th.

Topping the list is Enphase Energy (ENPH) having rallied 67.77% in the past month and a half. The bulk of that gain came after earnings as the stock leaped 24.65% the day after reporting and plenty of follow-through in the days after. Arista Networks (ANET) is also up over 50%. Like ENPH, a large portion of ANET’s move came from an over 20% gain on earnings in response to a triple play. There are 18 other stocks in the S&P 500 that have risen by more than 25% since the end of September. The largest of those are NVIDIA (NVDA) and Tesla (TSLA).

Only 18% of the S&P 500 has traded lower since September 30th, and by far the biggest decliner has been Moderna (MRNA).  Although it has fallen a dramatic 41% in a short span, that eats into what have been very strong gains this year.  Even after its decline so far in Q4, MRNA has still more than doubled year to date. The only other biggest decliners since September that are still up year to date are Garmin (GRMN), Allstate (ALL), Carnival (CCL), and Dish Network (DISH).  Click here to view Bespoke’s premium membership options.

The S&P 500 has encountered some selling pressure this week, but that hasn’t stopped sentiment from continuing its grind higher.  The weekly AAII sentiment survey saw 48.0% of respondents report as bullish this week up from 41.5% last week.  That puts bullish sentiment at the highest level since the first week of July when it was 0.6 percentage points higher than it is now.

The increase in bullish sentiment borrowed from bears as less than a quarter of respondents reported having negative sentiment for the first time since the last week of July.  Similar to bullish sentiment, bearish sentiment is now at the lowest level since the first week of July when it came in at 22.2%.

Overall, sentiment continues to favor bulls to a wide margin. As a result of the inverse moves in sentiment, the bull-bear spread rose to 24 from 15.5 last week. Again, that is levels not seen since early July.

Neutral sentiment also declined this week falling by 4.5 percentage points to 28%.  Unlike bullish and bearish sentiment, that reading is basically in the middle of the past several months’ range as the reading has generally hovered around the 30% level. Click here to view Bespoke’s premium membership options.