The S&P 500 is headed back up towards record highs today, but the index’s pullback earlier in the week was shared with other equity markets around the world.  In the table below, we show the ETFs tracking the stock markets of the 23 countries in our Global Macro Dashboard. Last week most of these were overbought with some at extremely overbought levels of more than 2 standard deviations above their 50-DMAs. Performance over the past week has been mixed but broadly speaking these countries are now lower within their respective trading ranges.  One notable exception has been Taiwan (EWT) which has been the best performer rising to 52-week highs and moving into extreme overbought territory.  Mexico is also at a 52-week high today.

When it comes to developed versus emerging market countries, though, these are two outliers with their cohorts mostly on the other end of the spectrum.  On average, EM countries are underperforming on a year-to-date basis and the only countries in the red in 2021 are EM names.  As a result, these also are generally much further from their 52-week highs. For example, Malaysia (EWM), Brazil (EWZ), India (INDA), and China (MCHI) are all the furthest (at least 5% below) from their 52-week highs.  Granted in the past week EM has outperformed on average with the exception of INDA which has been the worst performer of the 23 countries as COVID cases soar in that country. Meanwhile, developed market countries are 34 bps lower on average but generally closer to their highs and more overbought.

In the charts below we show the five countries that are furthest from and closest to their 52-week highs.  As we noted in today’s Morning Lineup, Japanese equities (EWJ) last peaked in mid-February but have been trending lower ever since and have taken a sharp leg lower in recent days. That leaves EWJ right at the low end of the past few months’ range. That is the only developed market country of those the furthest below their 50-DMAs. Of the other countries with the furthest to go until they reach their 52-week highs, only INDA is also around critical support levels after a significant short-term move lower recently. EWM, EWZ, and MCHI on the other hand are further off their lows. EWZ has even been trending higher over the past month.

As previously mentioned, Taiwan (EWT) and Mexico (EWW) are both setting new 52-week highs today.  There are a handful of other countries that are within 2% of doing the same but Switzerland (EWL), the US (SPY), and Australia (EWA) are the closest. Click here to view Bespoke’s premium membership options for our best research available.

It hasn’t been a particularly good week for a lot of stocks to this point, but Altria (MO) has been especially hard hit following news that the Biden Administration may issue restrictions on the amount of nicotine that can be contained in cigarettes.  While the stock is off its lows from earlier in the week, it’s still down 9%.  Meanwhile, Philip Morris International (PM), which has no exposure to US tobacco sales and regulation, has risen more than 2% so far this week.

The snapshot of the two stocks from our Trend Analyzer shows the divergent paths of each stock following Monday’s news.  Through Tuesday, while MO dropped below its 50-DMA, PM moved from merely overbought to ‘extreme’ overbought levels.

Over time the stocks of both MO and PM have trended to track each other pretty closely, especially over the last five years.  Therefore, given the short-term disparity in performance between the two stocks, does this week’s sell-off in MO provide an attractive risk/reward trade-off relative to PM?

At first glance, that would seem to be the case, but some perspective is on order.  The chart below shows the 50-day performance spread between MO relative to PM going back to 2008.  What’s important to keep in mind is that this week’s move has only narrowed what was previously an extreme performance gap where MO was outperforming PM and MO is still outperforming PM over the last 50 trading days.  In fact, back in late March when the performance gap between the two was over 15 percentage points, it was the fifth widest spread since Philip Morris split up its international and domestic units in 2008.  As bad as a week as its been for MO relative to PM over the last few days, the last few weeks had been just as painful for PM relative to MO. Click here to view Bespoke’s premium membership options for our best research available.

If we’ve learned anything over the last two trading days after what seemed like a one-way move higher for the S&P 500, it is that equities can also go down.  Even after the declines of the last couple of days, though, the S&P 500 still remains close to 4% above its 50-day moving average (DMA) and more than 10% above its 200-DMA.  While there have been a handful of days since the COVID lows where the S&P 500 has dipped below its 50-DMA, there hasn’t been a single day since last June where the S&P 500 came even close to testing its 200-DMA.  We’re only in late April now, but as long as the S&P 500 doesn’t see a significant fall in the next two months, it has the potential to go a full year without closing below its 200-DMA.  When the 200-DMA does finally come into play again, many investors may not recognize what it is.

The chart below shows the percentage of time over a rolling one-year period that the S&P 500 traded above its 200-DMA.  At 89% now, the current level is hardly remarkable by historical standards.  Right before the COVID crash last year, the percentage reached as high as 97.6%, and three years ago in March 2018, it was up at 100%. What is remarkable about the chart, though, is how elevated this moving average has been for so long.  The last time it was below 50% was back in December 2009!

It’s easy to tell by looking at the chart, but thanks to short and swift pullbacks in the post-financial crisis period, this current streak without a sub-50% reading is the longest on record.  To put a little more meat on the example, after the current streak of nearly 11.5 years, the next longest streak stretched over a period of just under ten years spanning from April 1991 through March 2001 while the one behind that was less than five years (ending in May 2008).  And you only thought the market had been defying gravity recently!  Click here to view Bespoke’s premium membership options for our best research available.

In an earlier post, we highlighted the volatility of Netflix (NFLX) who is set to report first-quarter earnings tonight.  As for where NFLX’s volatility stacks up to other comparable stocks reporting over the next month, in the table below we show the most volatile stocks of those with at least 5 years worth of data in our earnings database that have also beaten EPS and sales estimates 75% of the time in Q1 like NFLX has. In other words, it is a list of stocks that, like NFLX typically see volatile responses to earnings in spite of solid results.  NFLX and its 10.78% average move ranks as the tenth most volatile name on the list.  The company is also by far the largest of these with its market cap being more than five times larger than the next closest: Chipotle Mexican Grill (CMG) and Align Tech (ALGN).

There are also four names, SolarEdge (SEDG), Fluidigm (FLDM), Enova (ENVA), and Blucora (BCOR) that are more volatile than NFLX by more than five percentage points.   Of these, only FLDM has more often than not, like NFLX, seen negative stock price reactions to Q1 earnings.  While less volatile, Vocera (VCRA) and GrubHub (GRUB) have also dropped more often than they have risen on Q1 earnings days. On the other hand, SEDG, ENVA, Air Transport Services (ASTG), and Zillow (ZG) have frequently traded higher with some of the largest average gains on this list.  Click here to view Bespoke’s premium membership options for our best research available.