B.I.G. Tips — A Market Round Trip in “Concorde” Speed
Bespoke CNBC Appearance (8/19)
Bespoke co-founder Paul Hickey appeared on CNBC’s Squawk Box on Wednesday to discuss markets after the S&P 500’s new high. To view the segment, please click on the image below. Click here to view Bespoke’s premium membership options for our best research available.
Bespoke’s Morning Lineup – 8/19/20 – Nasdaq New Highs Trouncing S&P 500
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.
“In business or in life, don’t follow the wagon tracks too closely.” – H. Jackson Brown Jr.
Yesterday, it was Home Depot (HD) and Walmart (WMT) and today one of each company’s chief competitors released earnings, and they did not disappoint. Lowe’s (LOW) reported a 34.2% increase in comp sales which was basically twice expectations while Target’s (TGT) comp sales came in nearly triple forecasts (24.3% vs 8.6%). Whether they’re the result of stimulus or not, the results were astonishing.
Outside of those big earnings reports, there’s not a lot of data today besides the Fed minutes and Nvidia’s earnings after the close. Futures were higher earlier following on the record closing high from Tuesday but have been drifting lower as we approach the opening bell.
Be sure to check out today’s Morning Lineup for a rundown of the latest stock-specific news of note, market performance in the US and Europe, trends related to the COVID-19 outbreak, and much more.
The S&P 500 just broke a streak of nearly six months without making a new high on a closing basis, but the Nasdaq made its first post-COVID record high more than two months ago on June 8th and since then has made 18 record highs compared to the S&P 500’s one new high yesterday. For the entire year now, the Nasdaq (34) has made 20 more new highs than the S&P 500 (14). Going back to 1980, there have only been three other years where the spread was wider in the first 159 trading days of the year, and they were all in the 1980s. In other words, the gap between the number of record highs for the Nasdaq and S&P 500 hasn’t been this wide in more than 30 years. It’s time for the S&P 500 to play catch up, and don’t even get us started on the Russell 2000.
Daily Sector Snapshot — 8/18/20
Chart of the Day: Crash Concerns
Bespoke Stock Scores — 8/18/20
Tesla (TSLA) Now in Top 10
Tesla (TSLA) announced a 5 for 1 stock split one week ago after the close on August 11th. Shares are up 37% since then.
While Tesla (TSLA) is not yet in the S&P 500, if it were, it would now be the 10th largest stock in the index. TSLA’s $350 billion market cap puts it in between Walmart (WMT) at $380 billion and Procter & Gamble (PG) at $341 billion. Click here to view Bespoke’s premium membership options for our best research available.
Retail Earnings On Deck
Earnings season came to its unofficial end today with the release of Q2 results for Walmart (WMT). As shown in the snapshot of our Earnings Explorer below, the earnings slate has slowed considerably but there are still several reports per day over the next month. The busiest day will be August 27th with 37 reports.
Similar to today, retail earnings dominate the upcoming calendar. While WMT and Home Depot (HD) blew the doors off their reports, upcoming earnings will give a better picture of how the consumer has been impacted by the pandemic. Over the next month there are 52 retailers scheduled to report second-quarter results. Of these retailers, less than half are expected to show positive EPS. Companies that have historically beaten EPS the most include Ollie’s Bargain Outlet (OLLI), Ulta Beauty (ULTA), and Restoration Hardware (RH). In terms of topline results, Vipshop (VIPS), OLLI, and Alibaba (BABA) have topped sales forecasts the most consistently.
In terms of stock price reactions, Land’s End (LE) has averaged the strongest performance on earnings days with an average full-day gain of just under 6% with positive returns a little better than half the time. Sportsman’s Warehouse (SPWH) is the only other stock on this list to have averaged a gain of more than 5% on earnings days. SPWH along with ULTA, and Burlington Stores (BURL) have also been the ones to most consistently experience a positive stock price reaction.
Given retailers tend to be fairly seasonal businesses, the table below looks only at these companies’ beat rates and average stock price reactions in just their reports for the Q2 earnings season. As shown, Sportsmans Warehouse (SPWH) has most consistently topped EPS and sales estimates. SPWH has averaged a 9.11% gain following its Q2 reports. On a side note, PDD has a 100% beat rate for its Q2 earnings season reports, but it has only had one prior report during the Q2 earnings season. While SPWH has seen positive returns, stocks like At Home Group (HOME), Duluth Trading (DLTH), and Vipshop (VIPS) have all averaged the worst performance fin reaction to their Q2 earnings reports.
As for where retail stands ahead of their earnings, the snapshot below from our Trend Analyzer shows the 20 most overbought stocks in the sector. Many of the stocks making the cut are retailers that are currently extremely overbought after sizeable runs. As of Monday’s close, the average S&P 500 retail stock is 1.7 standard deviations above its 50-DMA. Click here to view Bespoke’s premium membership options for our best research available.
One Streak Ends, A Longer One Continues
It was a big, albeit brief, moment for the market today when the S&P 500 notched a new intraday record high, fully erasing all of the declines from the COVID-crash in February and early March.
Today’s new high for the S&P 500 ended a streak of 125 trading days without a record intraday high. The chart below shows prior streaks of trading days without an intraday high since 1983 (when our intraday database begins). What’s amazing about the current period is that despite losing roughly a third of its value, the 125 trading day gap between record highs is barely even a blip on the chart, and doesn’t even rank in the top ten in terms of longest streaks without a new high. Even looking at more recent history, since the S&P 500 took out its pre-financial crisis high in early 2013, there have been three other streaks where the S&P 500 went longer without notching a new all-time high.
The S&P 500 may have notched a record high this morning, but it’s a much different picture for the small-cap Russell 2000. At the same time that confetti was streaming for the S&P 500, the Russell not only remains well below its February high, but it’s also nearly 10% below its record high from nearly two years ago at the end of August 2018.
While the S&P 500’s just-ended streak of 125 trading days without a record high wasn’t even one of the ten longest, the current streak of 493 trading days that the Russell 2000 has gone without a new high ranks as the 5th longest streak since 1983. Comparing the chart of Russell streaks below to the same chart for the S&P 500 shows that the Russell has been much more streaky. While the S&P 500 has only had three prior streaks of longer than 400 trading days without a new high, the current streak for the Russell ranks as its eighth such streak of more than 400 trading days. Start a two-week free trial to Bespoke Institutional for full access to our research and interactive tools.
Bespoke’s Morning Lineup – 8/18/20 – Off the Charts Sales
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.
“As sure as the spring will follow the winter, prosperity and economic growth will follow recession.” – Bo Bennett
Up until a few minutes ago, the most impressive stats of the morning were the monster comp sales growth numbers from Home Depot (HD) and Walmart (WMT), but the just-released Housing Starts and Building Permits reports for the month of July blew the doors off expectations. Housing Starts were expected to come in at a level of 1.24 million on a SAAR basis but came in more than 200K higher at 1.496 million (highest since February). Building Permits were similarly strong. While economists were expecting the headline reading to come in at a SAAR level of 1.32 million, the actual reading was just under 1.5 million. That was the best reading for Building Permits since January.
If you’re keeping track at home, Retail Sales hit a record high on Friday, and now Housing Starts and Building Permits are back to pre-pandemic levels. Obviously, these strong numbers have been aided by the relief programs put in place in response to the COVID outbreak, but the strength does show that these programs were effective.
Be sure to check out today’s Morning Lineup for a rundown of the latest stock-specific news of note, market performance in the US and Europe, trends related to the COVID-19 outbreak, and much more.
As mentioned above, the most impressive numbers of the morning originally were the same-store sales results from Home Depot and Walmart. Same-store sales at WMT increased by 9.9% while HD sales increased by over 23%. Keep in mind that these numbers cover a period where the US economy is in a recession!
