Stocks with extreme valuations have taken a serious haircut since the space peaked on February 22nd. On that date, 59 stocks in the Russell 3000 had a price-to-sales multiple north of 100x. That group had a median price-to-sales multiple of more than 311x on that date. Today, those 59 stocks have a price-to-sales multiple that’s 53.6% lower than it was February 22nd. That compares with a median price decline of 25.4% among the 59 stocks, or -22.5% weighted by market cap. In other words, while prices in this group have been hit very hard, their valuation has compressed substantially more.

Below we show the 20 stocks out of the 59 that have seen the largest drops in price since February 22nd. Among this worse-performing subset, the median stock has plunged 51%, in-line with the median 58% drop in price-to-sales since February 22nd. Despite the huge drops in prices over the last few months, these names are still very aggressively valued at a median price-to-sales multiple of 90x. Virgin Galactic (SPCE) has actually seen an infinite price-to-sales multiple after reporting zero revenue in its most recent quarter. From a valuation perspective, it’s still hard to call any of these stocks attractive.  Click here to view Bespoke’s premium membership options for our best research available.

The past week has been one of the worst short term runs for the major indices of the past several months, and sentiment this week is reflecting that negative price action.  Bullish sentiment as measured by the AAII weekly sentiment survey took a spill, dropping 7.8 percentage points to 36.5%.  Whereas just over a month ago bullish sentiment hit a multi-year high at 56.9%, this week’s reading was the lowest since the last week of October.

The over 20 percentage point decline in that time was the biggest drop in a span of five weeks since a 22.73 percentage point decline in the five weeks ending February 8th, 2018. In the table below, we show the past 11 periods in which bullish sentiment fell by at least 20 percentage points in five weeks without another occurrence in at least a year.   Overall, they have consistently preceded solid runs for the S&P 500 with frequent moves higher that are on average larger than the norm. One and three months later have both seen the S&P 500 trade higher 81.8% of the time and a half year to a full-year out has seen the index lower only one time (in 2007). Additionally, each of the prior instances since 2009 has been marked by the S&P 500 trading higher across all time frames.

With bullish sentiment lower, bearish sentiment gained 3.9 percentage points.  At 27%, it is at the highest level since early February though still a few percentage points above the historical average of around 30%.

That has resulted in the bull-bear spread dropping 11.7 points to 9.5.  That is the first single-digit reading in the spread since the first week of February, but it still indicates that overall sentiment remains biased towards the bulls.

While bearish sentiment has only risen modestly, neutral sentiment is flying. After gaining another 4 percentage points this week, neutral sentiment hit the highest level since the second week of 2020. Similar to bullish sentiment, the move higher in neutral sentiment over the past few weeks has been one of the largest in roughly three years.   Click here to view Bespoke’s premium membership options for our best research available.

Last week’s initial jobless claims number had been the first break below 500K since the pandemic began. Although that no longer applies this week after a 9K revision higher to 507K, initial claims continue to impress as the most recent print saw a more considerable break below 500K. Claims this week fell 34K to another new low of 473K. In total over the past two weeks, initial jobless claims have now fallen 117K.

On a non-seasonally adjusted basis, regular state claims combined with claims from the Pandemic Unemployment Assistance (PUA) program totaled 590.97K this week; another pandemic low. The lion’s share of these claims are of the regular state programs as only 103.57K are PUA claims.  That reading was ever so slightly higher this week (up 1.76K) and remains just off the lowest level of the pandemic.

While initial claims have seen great progress over the past several weeks, continuing claims continue to be a bit more disappointing. For the first time since the week of April 9th, seasonally adjusted continuing claims did finally fall, dropping 45K to 3.655 million, but that was 5K less than the decline that had been penciled in by economists. Overall, the general trend remains the same.  Whereas there were massive improvements throughout much of 2020, the pace of those improvements slowed last fall. From the end of 2020 through the end of March, claims had averaged around a 100K decline per week. Since the start of April, it has slowed even further with claims averaging only a 14K decline over the past four weeks as shown in the second chart below.

The picture is slightly better when including all programs (although this data is lagged by an extra week). Through the week of April 23rd, total continuing claims across all programs rose 697K to 16.884 million. While lower than most of the pandemic, that had erased the prior two weeks moves lower and was the largest one-week uptick since the first week of March.  That uptick was driven almost entirely by PUA claims and Pandemic Emergency Unemployment Compensation.   Click here to view Bespoke’s premium membership options for our best research available.