Our popular Earnings Explorer tool has quarterly earnings results and share price reactions to those earnings reports for nearly every US stock going back to 2001.  The database is online, massive, and it’s interactive so that users can quickly look up historical results for individual companies.  One way to use the database is to see how stocks that are set to experience huge opens higher on earnings typically trade from the open to the close of trading after their initial moves higher.  Two stocks that are set to gap up sharply on earnings this morning are Facebook (FB) and Tesla (TSLA).  At the moment, both are set to open higher by more than 5%.

Below we have pulled all historical instances in which both Facebook and Tesla have gapped higher by at least 5% at the open of trading following quarterly earnings reports.  Coincidentally, each stock has had 11 prior gaps up of 5%+ on earnings in their history as public companies.  For Facebook (FB), when it has gapped up 5%+ in the past, it has actually traded lower from the open to the close 7 of 11 times for an average open to close change of -0.91%.  This tells us that at least in the past, investors have more often than not used these opportunities to lighten up on shares during the regular trading day.

For Tesla (TSLA), when it has gapped up 5%+ on earnings, the stock has also traded down from the open to the close more often than it has traded up from the open to the close, but its average open to close change on these 11 prior gaps higher has been positive at +0.46%.  We’d note that this will be the third quarter in a row that TSLA has opened higher by 5%+ on earnings, and the prior two quarters saw a slight positive move from the open to the close for the stock.  If you’d like to test out our Earnings Explorer tool to see how your stocks typically trade on earnings, start a two-week free trial to Bespoke Institutional.  You’ll also gain access to our entire platform that includes our most actionable research reports and our full suite of investor tools.

Stocks have continued to rally this week and for many individual names, these gains have lifted them above their 50-DMAs.  As shown in the chart below,  over three quarters of stocks in the S&P 500 have now moved back above their 50-DMAs.  Three sectors—Technology, Communication Services, and Health Care—have more than 90% of their stocks above their 50-DMAs with Health Care leading the way at 96.7%.  Readings above 90% are very rare — just as rare as the sub-10% readings we saw in March.  As for the other sectors, similar to the S&P 500, Consumer Staples, Consumer Discretionary, and Materials all have over three-quarters of their stocks above their 50-DMAs. Meanwhile, Financials, Industrials, and Energy are lagging somewhat but still have more than half of their stocks above.  The only two sectors that are truly lagging with just 32.1% and 38.7% above, respectively, are Utilities and Real Estate — two defensives.

Health Care and to a lesser degree Consumer Staples were the first sectors to see a large number of stocks trade above their 50-DMAs. This reading for both sectors saw a more gradual build throughout April.  As for the rest, the percentage of stocks trading above their 50-DMAs has exploded higher and in a much more rapid fashion, especially within the past week. In fact, as recently as last Thursday, excluding Health Care and Consumer Staples, the highest reading across sectors was only 40.85% (Technology). The big pickup in the number of stocks moving above their 50-DMAs means two things. For starters, many stocks are clearing resistance at their averages which is a positive technical development. Second, many stocks are roughly around the same areas of their trading ranges and are moving higher together (strong breadth). Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.

As we noted yesterday, more and more sectors have begun to cross back above their 50-DMAs in the last couple of weeks. With the outperformance of recent underperformers in yesterday’s session, the most beaten-down sector, Energy (XLE), finally managed to move back above its 50-DMA. Yesterday marked the first time that XLE had closed above its 50-DMA since January 10th. As for today, XLE is poised to gap up over 3% at the open bringing it further above its 50-DMA.

With XLE being under its 50-DMA for nearly four full months, that streak ending at 74 trading days was the fifth-longest in the ETF’s history.  The last time XLE experienced a similar streak was in 2017 which was actually the longest streak on record ending at 119 days. The other longer streaks came in 2015, 2008, and in 2001.

As for performance after these long streaks below the 50-DMA come to an end, XLE has typically been pretty weak.  In the table below, we look at all prior streaks below the 50-DMA that lasted for at least 60 trading days (roughly three months).  One week after such streaks come to an end has only seen XLE higher around a quarter of the time with an average decline of 0.47%.  Returns have also been positive less than half of the time one, three, and six months later. Fortunately, one year later XLE has been higher 71.4% of the time with an average gain of 2.8% (median 6.17%), although even here, those returns are nothing to get overly excited about.  Start a two-week free trial to Bespoke Institutional to access our full range of research and interactive tools.

This morning the BEA released one of the worst GDP numbers in the modern history of the US economy. Total output fell 4.79% at annual rates, worse than the 4.0% decline (again, at annual rates) that economists had forecasted. That’s not as bad as the worst numbers from the financial crisis, but the details under the hood were qualitatively different. Instead of being led down by falling capital expenditures and gradually decelerating consumption, Q1 saw an outright collapse in services and durable goods spending with large but historically less remarkable declines in business spending. Services spending has been the steady Eddie of US growth for the better part of a century now: it’s never contributed more than an 82 bps headwind to total QoQ SAAR growth since World War 2. But in Q1 it was a 5% headwind, almost an order of magnitude more than its worst quarter in the global financial crisis. We outline the sobering numbers in more detail below.  Start a two-week free trial to Bespoke Institutional to access our Chart Scanner, custom screens, and much more.

This morning, we highlighted the recent performance of sector ETFs noting how Health Care has led the way higher rising the furthest above its 50-DMA.  Consumer Discretionary (XLY), Technology (XLK), Materials (XLB), Communication Services (XLC), and Consumer Staples (XLP) each had also risen above their 50-DMAs.  Given their outperformance, as shown in the table below, headed into today these were the sectors closest to their levels on the S&P 500’s last all time high on February 19th.  The Health Care ETF (XLV) actually headed into today less than 2% away from its 2/19 levels and XLP was also under 10% away.

Today, that performance was turned on its head as some of the sectors that have been playing catch up outperformed while those that have been the outperformers recently underperformed. Whereas it has typically been the strongest sector, Health Care (XLV) actually fell the most dropping ~2%.  On the other hand, Energy (XLE) rose over 2.1% and it even finally rose above its 50-DMA.  Other areas of strength today included Financials, Industrials, and Materials which all finished up over 1%.  Recent winners were the losers today while the recent laggards were today’s winners.  Start a two-week free trial to Bespoke Institutional to access our full range or research and interactive tools.