Bespoke Stock Scores — 12/15/20
Energy Stocks Breaking Out or Down?
While every other sector is down over the past week, the Energy sector is unchanged as it sits further above its 50-DMA than any other sector as shown in the screenshot of our Trend Analyzer below. Of all the sector ETFs, the Energy sector (XLE) is 17.87% above its 50-DMA compared to the other sectors which are an average of just 2.64% above their 50-DMAs. While lower in its trading range relative to the last week, it is also one of the most overbought sectors.
Looking at the chart of XLE, the recent leg higher puts it smack dab in the middle of the range between the spike to the post-pandemic high in June and the high end of the range that had been in place for most of the spring and summer.
Across many individual stocks in the sector, it is the same picture. As shown in the snapshot of Energy sector stocks from our Chart Scanner tool below, a number of individual stocks are below their late spring highs but are also above more consistent highs from the spring and summer.
That is not the case for all stocks in the sector though. Some have in fact moved above those spring spikes. For example, Baker Hughes (BKR) and Haliburton (HAL) have moved well above those highs. Meanwhile, others like Marathon Petroleum (MPC), TechnipFMC (FTI), and Schlumberger (SLB) have been trading right around those highs, yet to make a significant break in any direction.
As previously mentioned, Energy has actually seen decent performance recently. As a result, 96% of the sector’s stocks currently trade above their 50-DMAs meaning there are only two stocks trading below: Cabot Oil and Gas (COG) and Noble Energy (NBL). That compares to a reading of 75% for the broader S&P 500, and only Communication Services has a stronger reading at 100%. Click here to view Bespoke’s premium membership options for our best research available.
Bespoke’s Morning Lineup – 12/15/20 – Futures Giving it Another Go
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week free trial to Bespoke Premium. CLICK HERE to learn more and start your free trial.
“What the wise do in the beginning, fools do in the end.” – Warren Buffett
After four days in a row of losses, equities are looking to break the streak today. The FOMC begins a two-day policy meeting today, so any news on that front won’t be out until tomorrow. In economic data this morning, Import Prices missed expectations (0.1% vs 0.3%) while export prices were higher than expected (0.6% vs 0.2%). The Empire Manufacturing report for December came in slightly weaker than expected (4.9 vs 5.4), but considering the rising caseloads and concerns over their economic impact, it’s encouraging to see that this reading is still positive at least.
Be sure to check out today’s Morning Lineup for updates on the latest market news and events, a recap of economic data out of China, an update on the latest national and international COVID trends, and much more.
What a year it has been for the US Dollar. At the height of the pandemic, flows into the dollar surged as investors sought safety in the uncertainty. At its peak in March, the US Dollar Index surged to its highest level in over three years (January 2017). As concerns over the pandemic eased, though, all of those inflows quickly unwound, and now less than nine months later, the Dollar Index is trading at its lowest level in more than two years (April 2018).
While pot stocks or emerging market currencies have no problem with swinging wildly from multi-year highs to multi-year lows in a matter of months, for an asset like the US Dollar, moves of this magnitude are much less common. The chart below shows the number of days in each year that the US Dollar Index has closed at a two-year high (blue bars) or a two-year low (red bars). Going back to 1973, a period spanning nearly half a century, there have only been three other years where the Dollar Index has closed at two-year highs and two-year lows in the same year. Those years were 1985, 1994, and 2008.
Daily Sector Snapshot — 12/14/20
B.I.G. Tips – Holidays At Home
B.I.G. Tips – Surging SPACs
Chart of the Day – CAT Sales Clawing Back
Bespoke’s Morning Lineup – 12/14/20 – Vaccine Day
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week free trial to Bespoke Premium. CLICK HERE to learn more and start your free trial.
“Spend each day trying to be a little wiser than you were when you woke up.” – Charlie Munger
If you were wondering how many times the market can rally on the same news, the answer is at least one more time. Once again today, the market is rallying on news related to the COVID vaccine, which has started shipping in the US and will start going in the arms of Americans around the country this week. It’s a quiet day with no economic news on the calendar, but as has been the case every day lately, we’re also likely to see a number of headlines related to the prospects (or lack thereof) for an additional relief bill.
Be sure to check out today’s Morning Lineup for updates on the latest market news and events, a recap of the Japanese Tankan survey, an update on the latest national and international COVID trends, and much more.
With a gain of just over 1%, the S&P 500 is already having a decent month, but if seasonal trends are any indication, the second half should be even better. The chart below comes from our Seasonality Tool and shows the median historical one week, one-month, and three-month performance of the S&P 500 over the last ten years. In terms of the one-week and one-month performance, the median gains of 1.2% and 2.93%, respectively, both rank above the 90th percentile. Looking further out over the next three months, the S&P 500’s median gain of 4.06% is still impressive but doesn’t rank quite as strong in the 79th percentile.
Bespoke Brunch Reads: 12/13/20
Welcome to Bespoke Brunch Reads — a linkfest of the favorite things we read over the past week. The links are mostly market related, but there are some other interesting subjects covered as well. We hope you enjoy the food for thought as a supplement to the research we provide you during the week.
While you’re here, join Bespoke Premium with a 30-day free trial!
Pandemic News
Sanofi suffers major setback in development of a Covid-19 vaccine by Helen Branswell (StatNews)
Major global vaccine player Sanofi, who has partnered with GlaxoSmithKline for its COVID vaccine, has had to re-start its Phase 2 trials thanks to a fault in some of the ingredients it used in earlier iterations of its inoculation. [Link]
Hundreds ill, 1 dead due to unidentified illness in India (AP)
A mystery illness has been reported in the Indian state of Andhra Pradesh. While the pathogen has not been confirmed and could be driven by environmental factors like chemical poisoning, the sudden spate of illnesses still brings grim recall of the early days of the COVID pandemic. [Link]
Desperate NYC workers using LIRR, cars as quiet and cheap office spaces by Lambeth Hochwald (NYP)
With offices and coworking spaces closed, some New Yorkers who are desperate to get out of the house and get some work done have been turning to an unusual source of productive zen. [Link; auto-playing video]
Investing
The valuation warning signs for stock markets by Ian Harnett (FT)
Current valuations are consistent with low forward returns over the subsequent decade, even if short-term returns don’t show much correlation to the elevated P/E ratio. [Link; paywall]
Grantham stumbles on $200m profit after Spac swoop on battery maker by Robin Wigglesworth (FT)
A $12.5mm investment seven years ago means a $200mm payday for investor Jeremy Grantham, who is now semi-retired and enjoying the proceeds of a special purpose acquisition company merger. [Link; paywall]
Social Media
Facebook Gets Paid by Craig Silverman and Ryan Mac (BuzzFeed)
Black-box algorithms have been generating perverse – or even perverted – outcomes, but outcomes that mean massive earnings for the world’s largest social media network. [Link]
Weird Markets
The Essex Boys: How Nine Traders Hit a Gusher With Negative Oil by Liam Vaughan, Kit Chellel, and Benjamin Bain (Bloomberg)
A small group of independent traders based in Essex made almost half a billion dollars on the shocking plunge into negative territory for oil futures back in April. [Link; soft paywall]
How Come the Mets Gave a Major League Deal to a Lifetime Minor Leaguer? by Tom Verducci (SI)
A journeyman minor leaguer parlayed some time with the Tampa Bay Devil Rays into a large major league deal, an unusual but not entirely irrational shift in his value as a ballplayer. [Link; auto-playing video]
Antiques
Cheers! Or not: ‘Scandalous’ 1st Christmas card up for sale by William J. Kole (AP)
Christmas Cards have only been commercially printed since 1843, and the first one is now up for auction. It’s expected to get anywhere from $6,000 to $11,000 at auction. [Link]
Politics
The Places That Had the Biggest Swings Toward and Against Trump by Jed Kolko and Toni Monkovic (NYT)
A data-intensive analysis of county-level vote data that shows the big trends from the 2020 election: a small decline in polarization, large metropolitan areas swinging against Republicans, and Latino voters moving towards the outgoing President. [Link; soft paywall]
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Have a great weekend!
2021 Outlook – Yield Curve & Fed
Our 2021 Bespoke Report market outlook is the most important piece of research that Bespoke publishes each year. We’ve been publishing our annual outlook piece since the formation of Bespoke in 2007, and it gets better every year! In this year’s edition, we’ll be covering every important topic you can think of that will impact financial markets in 2021.
The 2021 Bespoke Report contains sections like Valuation, The Fed, Sector Technicals and Weightings, Stock Market Sentiment, Stock Market Seasonality, Housing, Commodities, and more. We’ll also be publishing a list of our favorite stocks and asset classes for 2021 and beyond.
We’ll be releasing individual sections of the report to subscribers until the full publication is completed by year-end. Today we have published the “Yield Curve & Fed” section of the 2021 Bespoke Report, which looks at the year that was in central bank policy and the year to come, as well as the impact of the level of interest rates and their term structure on forward returns for equity markets.
To view this section immediately and all other sections, become a member with our 2021 Annual Outlook Special!
