It was a generally disappointing day for equities as the major averages finished well off their highs of the day.  One sector that looked to take today’s weakness rather hard was the Machinery group.  After trading in a sideways range for well over a month, weakness in the group has picked up steam in the last two days and just today it closed below its 50-day moving average (DMA) for the first time in over three months.

Three individual stocks in the group that also faltered today are also three of the larger stocks in the group, and we’ll take them alphabetically.  First, Caterpillar (CAT) hasn’t been able to top the $150 level for quite some time and based on today’s trading, buyers look to have given up.  The stock fell over 2.2% today for its worst day since October 1st.  CAT reports earnings on 1/30, and if it doesn’t break $150 with that report, $130 may be the next stop.

Deere’s (DE) chart looks very similar to CAT, but its rally in the last three months hasn’t been nearly as steep.  Like CAT and the broader machinery group, though, DE broke below its 50-DMA in today’s sell-off. DE doesn’t report earnings until late February, and the stock looks to have more meaningful support not far below current levels.

Lastly, Parker Hannifin’s (PH) chart looks more like CAT than DE, and like CAT, the stock was down nearly 2% today.  PH has less support near current levels, and it also reports earnings on 1/30. Start a two-week free trial to Bespoke Institutional to access all of our research and interactive tools.

Of all the stocks in the S&P 500, only one has had a positive return every day in 2020: Waste Management (WM). Isn’t it fitting that a company involved in garbage hauling is doing so well in a year where it seems like many of this year’s best-performing stocks came from the trash heap of last year’s worst performers?

WM currently yields around 1.8%, and while that’s not high, it is right in line with the yield of the S&P 500.  WM has also continuously increased its payout over the past 20 years, and with a payout rato of just 44% it has the ability to not only continue to pay shareholders but also grow the dividend.

Up until the final weeks of 2019, WM had been in a downtrend since the late summer when investors rotated from momentum to value names. But in mid-December, it broke out of this downtrend before going on the current run of 15 consecutive up days (including today); the longest such streak in the stock’s history (second chart below). As a result of this winning streak, the stock looks to be on the verge of a breakout with the stock making its first 52-week high since early September.

As Waste Management is just beginning to break out, it has seemingly been working at a lag to what is the company’s largest competitor, Republic Services (RSG). Similar to WM, back in August RSG had consolidated around record highs without moving above those levels until the final week in December. Since then, RSG has taken out those prior highs and rallied an additional 5%.  While there is obviously no guarantee that WM will follow in the footsteps of RSG’s breakout, especially as WM currently trades at extremely overbought levels, RSG has set a promising path. Additionally, because RSG has run up more than WM, its dividend yield is lower and its P/E is higher. Start a two-week free trial to Bespoke Institutional to access our Chart Scanner, Trend Analyzer, and the rest of our interactive tools and research.

As the US equity market has rallied over the last decade, share prices have risen dramatically.  When the S&P 500 hit is Financial Crisis low on March 9th, 2009, there were just six stocks in the S&P 500 trading above $100/share.  At the same time, there were 119 stocks in the index (24%) trading with a single-digit share price of less than $10.  Fast forward to today and there are now 235 stocks (47%) in the S&P 500 trading above $100/share, while there is just one — ONE — stock in the index trading below $10/share.  The one stock trading with a single-digit share price is also a single-letter ticker — Ford (F).

We are constantly running our decile analysis on the S&P 500 to see which stock characteristics are driving performance within the index.  To do this, we break the index into deciles (10 groups of 50 stocks each) based on things like P/E ratio, market cap, dividend yield, analyst ratings, etc., and then we calculate the average performance of the stocks in each decile over a given time period.

Share price is a very basic stock characteristic that most people don’t (nor should they) use as an investment factor.  But when we ran our decile analysis recently, we still found it notable that the highest priced stocks in the S&P are outperforming the lowest priced stocks by quite a bit.  As shown below, the 50 stocks in the S&P with the highest share prices at the start of the year are up an average of 3.67% year-to-date.  The next 50 stocks with the highest share prices are up an average of 4.03% YTD.  On the other end of the spectrum, the 50 stocks with the lowest share prices at the start of the year are up just 1.4% YTD, while the next 50 lowest-priced stocks are up just 0.77%.

In case you’re interested, below is a snapshot of our full decile matrix so you can see the other stock characteristics we like to analyze.  This analysis is very helpful for finding underlying trends that are driving market performance.  To unlock the full matrix, start a two-week free trial to Bespoke Premium then view our recent B.I.G. Tips report at this link.