Jobless claims spiked higher in early January, but the second half of the month saw some of that unwind with the most recent reading through the week of January 29th showing a drop to 238K from the previous week’s upward revised reading of 260K.  That means claims have improved over the past couple of weeks and are still at a historically healthy level even if they remain off the pre and post-pandemic lows.

On a nonseasonally adjusted basis, after two weeks of smaller declines than what has historically been the norm, claims fell 11.7K WoW to 257K which was a larger drop than what could have been expected for the given week of the year (average decline of 4.89K since 1967).  Heading into the next several weeks, NSA claims will continue to have seasonal tailwinds at their back while declining COVID caseloads will also likely help improve the claims situation.

Delayed an extra week, continuing jobless claims continued to sit at the low end of the past several decades’ range.  Seasonally adjusted continuing claims fell 44K this week down to 1.628 million.  That is now slightly above the absolute low of 1.555 million set in the first week of January.  Click here to view Bespoke’s premium membership options.

Are you ready for the Olympics?  The 2022 Winter Olympics will kick off this Friday, and with that, we wanted to provide an update on how equities typically perform during the winter games.  In the table below, we list the start and end dates of every Winter Olympics since 1972 and show the performance of the S&P 500 and the host country’s benchmark stock index during each one.  For the S&P 500, performance has tended to be positive with an average gain of 1.0% (median: 0.9%) and positive returns just under 70% of the time.  Compared to all two-week periods over that same period (average: +0.4%, median: +0.6%), these returns are better than average.

For the host country, stock market performance has also been strong.  Since 1972, the host country of the Winter Olympics has had an average gain of 1.3% (median: 1.6%) with positive returns 80% of the time.  The most notable outperformance came in 1992 when French equities rallied 5.4% during the Albertville games while the S&P 500 gained just 0.1%. On the other hand, the S&P 500 considerably outperformed South Korean equities in the 2018 Games in PyeongChang, resulting in a performance spread of 4.6%. In fact, in each of the three most recent Winter Olympic Games, US stocks outperformed stocks in the host country by an average of 2.5%.  Countries often bid to host the Olympics in order to shed a positive light on their country, but it hasn’t always helped their stock markets outperform in the short run. To track the performance of China during the Olympic Games this year (starts on 2/4 and ends on 2/20), subscribe to Bespoke Premium today to gain access to our trend analyzer & chart scanner.

Bitcoin has rallied over 10% since the low a little over a week ago, but that still leaves the world’s largest cryptocurrency down over 40% below its all-time high set back in November.  In fact, the past few months have seen Bitcoin trade in a steep well-defined downtrend which the rally over the past several days rally has now run up against.

While that downtrend line has the potential to act as resistance, the steep drop has resulted in Bitcoin consistently trading at oversold levels (measured in standard deviations from its 50-DMA).  In fact, today marks the 30th consecutive day in which Bitcoin has traded at least one standard deviation below its 50-DMA.

As for the consistency of oversold readings, there have only been ten streaks including the most recent one in which Bitcoin has been oversold for at least 20 straight days. The current stretch is now the longest since December 2018. Other than that streak, only those ending in January 2015 and July 2018 also extended for at least 30 days.

While the current streak is not over, in the table below we show the performance of Bitcoin after the end of those past streaks of oversold readings that went on for at least 20 days.  As shown, the end of those streaks have typically seen a bounce in the week after with positive returns two-thirds of the time and gains that are in line with the historical average.  One month later has typically seen the crypto fall further, though, with positive performance only a third of the time.  Three and six-month performance have been more consistent to the upside with positive returns nearly two-thirds of the time but average and median gains that are smaller than what Bitcoin has averaged across all other three and six-month periods since 2014.   One year later has been a similar story with below average forward returns but a very high consistency of positive returns. Click here to view Bespoke’s premium membership options.