Ticker Sense

April 27th Blogger Sentiment Poll

There are more bears than bulls in this week's poll.

Blogger Sentiment Poll Participants:

27/7 Wall St (N) Ahead of the Ticker (N) Carl Futia (+) Dash of Insight (+) Elliot Wave Lives On (-) In the Money  In the Money  Information Arbitrage (-) Knight Trader (N) Learning Curve (-) MaoXian  Millionaire Now! (-) Navivest (+) Peridot Capitalist (-) Smart Money Tracker (-) The Shark Report (N) StockAdvisors.com  Wall Street Folly

Leveraged ETFs - Beware the Performance Conundrum

When leveraged and inverse ETFs were first released they were touted as wonderful new innovations.  Individuals and institutions can double their exposure to a sector or index quickly and easily, the complicated models created by the providers are readily available in a neat little package.  As they have developed more and more investors have caught on to the fact that they don't perform as expected.  

The fund provider clearly states in the prospectus that the ETFs are designed to match double the daily percentage change, and that as a result total return over a period of time will not be double the index.  The real travesty is that the total return for any number of these funds since inception is either negative or grossly different from the index.  Below we examined a small selection of 2x and the new 3x funds.  

• Since June 21, 2006 SSO (2x S&P 500) is down 66% while SDS (-2x S&P 500) up on 12%.  
• Since February 1, 2007 DIG (2x S&P 500 Energy) is down 63% while DUG (-2x S&P 500 Energy) is down 56%.
• Since November 6, 2008 FAS (3x Russell 1000 Financials) is down  84% while FAZ (-3x Russell 1000 Financials) is down 87%!!  The inverse ETF has underperformed the long in a period where the underlying index is down 18%! 

Birinyi Growth Portfolio Outperforming S&P 500 by 1,750bps

Included in Birinyi Associates' monthly newsletter are three stock portfolios.  These portfolios are maintained on a monthly basis and as a result are locked for that period.  Noted below, the GROWTH portfolio is up 11.12% for the year and the TRADING portfolio is up 6.21% versus a market that is down -6.38%.

Click here for more information about subscribing to the Reminiscences Newsletter by Birinyi Associates.

April 20th Blogger Sentiment Poll

The majority of bloggers remain bullish for the week.

Blogger Sentiment Poll Participants:

27/7 Wall St (N) Ahead of the Ticker (N) Carl Futia (+) Crossing Wall Street  Dash of Insight (+) Elliot Wave Lives On (-) In the Money  Information Arbitrage (-) Learning Curve (+) MaoXian  Millionaire Now! (-) Navivest (+) Peridot Capitalist (-) Self Investors (-) Smart Money Tracker (-) The Shark Report (N) StockAdvisors.com  Traders-Talk (-) Wall Street Folly  Wishing Wealth (+)

Week In Review - Stocks Moving On High and Low Volume

Within the S&P 1500 universe the following stocks had significant price changes relative to the rest of the market.  ETFC for example was up 91% this week on above average volume.  SPW was down nearly $9 for the week also on above average volume.

The stocks highlighted below also had significant price changes but did so on below average volume.  

Important Upcoming Earnings Reports

Key earnings reports continue through the end of the month.  Below we highlight some of the more significant reports expected over the next several days.  Historically GOOG and ISRG are some of the more volatile names, and will likely create trading opportunities for those interested in the after hours.

The spotlight is likely to be on JPM (which reports tomorrow morning) and GE on Friday.

Most Volatile Sectors on Earnings

One easy way we use to measure volatility is looking at absolute change.  Below we looked at the members of the ten S&P 500 sectors and their average historical performance after EPS reports.  Starting in 2002 with the beginning of the last bull cycle and pairing the list down to the S&P's current members we find that tech stocks show the most volatility after reporting quarterly earnings.  Typically these stocks move an average of 4.8% in after hours trading and another 3.4% during the trading day.  

The tech sector will present the broadest trading opportunities on earnings.

April 13th Blogger Sentiment Poll

The bulls still lead the poll.

Blogger Sentiment Poll Participants:

27/7 Wall St  Carl Futia (+) Dash of Insight (+) Elliot Wave Lives On (-) Fallond Stock Picks (-) In the Money  Knight Trader (+) MaoXian  Millionaire Now! (N) Navivest (+) Peridot Capitalist (-) Smart Money Tracker (-) The Shark Report (N) StockAdvisors.com  Traders-Talk (-) Wall Street Folly  Wishing Wealth (+)

Tech Stocks Lead the Market

Lots of chatter about the market's lower low on 3/9 has many people missing what might be a much more significant picture.  Many stocks did not participate in the decline earlier this year, and as a result have undergone huge rallies off their lows.  

As an example, below we highlight the fifteen biggest market movers in the S&P 500 since 11/20/08 (excluded from this list are SGP and WYE because of takeovers).  Since 11/20 Goldman Sachs, Morgan Stanley, and Amazon.com have all doubled.  Goldman and Amazon are probably most noteable because these were also noteable dollar changes.

The fifteen stocks shown have been responsible for nearly half of the S&P's 9.66% change during the period, and have averaged a gain of 48.59% across the group.  We've also highlighted the number of tech stocks (eight out of the fifteen); which have been responsible for 27% of the market's total gain.  It has been our contention that a strong bull market would not be lead by the health care sector - which was favored by most strategists at the end of 2008.  If you are looking for leadership the list below might not be a bad place to start.

Follow Oil for Energy Stocks

Today's market highlights the importance of following multiple indicators.  At 10:30 the DOE's oil inventory numbers were released and crude prices reversed what had been a decline.  As shown below, the energy sector turned at the exact same time and has followed crude prices higher.

On a year-to-date chart we see that gains in oil preceded gains in the energy sector and any divergence of the two should be taken as a leading indicator.

Also as a corollary to our previous post, crude held the 50-day moving average and continues to trade higher.  Based on forward contracts a fair price for the commodity over the next 6 months is a range of $50 - $60.