Ticker Sense

September Follows Through: Look for A Q4 Gain

It has been widely noted and discussed that this month's was one of the strongest monthly gains in September ever.  We went one step further with our analysis to see what that means for the rest of the year.  Below we looked at the six other Septembers where the S&P 500 gained in excess of 5%.  As shown, in each of the recent occurrences the market is up for the year after September's gain and posts a gain in the fourth quarter.  Don't look for October to be off the charts bullish, but there is a good chance of a high single digit gain going into Q4.

 

Oil Is Climbing but Don't Get Suckered

Oil is up about a dollar this morning after gaining ahead of the GDP report.  At $78.86 the November contract is creeping back towards the psychological "expensive" level of $80.  While this rally is helping the energy stocks - S&P 500 energy +0.71% yesterday - don't get suckered into buying USO.  As shown in the chart below, the United States Oil Fund pays a significant premium each month when it rolls out of (sells) the expiring futures contract and into (buys) next month's contract.  Since the fund is always invested in the front month and never actually takes delivery of the physical crude, the ETF will always underperform when the commodity is in a state of contango.  In essence USO has to sell its current holdings at $78.86 and buy its new investment at $80.10 (using current prices for the November and December oil futures contracts).  

Most of the time both futures and options traders are willing to pay a higher premium for contracts expiring further into the future, therefore futures and options markets are usually in contango and any fund rolling through the front month will underperform.  USO is fine to use as a trading vehicle for a day or a week, but for any investment or trade with a time horizon of more than one month you should seriously consider the stocks.

 

Worldwide Currency Performance

Today we took a look at a basket of developed nation currencies and how the have performed against each other since the beginning of the year.  To read the spot price (current values) matrix we have assigned each row as the "master" currency and what it is worth compared to each of the currencies in the subsequent columns.  For example, $1 US is worth 0.73 euros and 83.65 yen; whereas 1 British pound is worth $1.58 US.  The only irregularity is the Japanese yen, when looking across that row the figures correspond to pennies or equivalent.  1 Japanese yen is worth $0.0136 US or 1.36 cents.

The best performing currency by far this year is the Yen, it has risen an average of 10% versus every other currency, especially versus the Danish krone which has declined an average of 7.35%.  The currencies of Japan, Australia, Switzerland and Sweden are the strongest, all posting average gains greater than 5%.  The euro, British pound and Danish krone have declined the most versus the rest.

 

 
 

September 27th Blogger Sentiment Poll

Bloggers are decidedly bullish as the end of the quarter approaches.

 

 

Blogger Sentiment Poll Participants:

24/7 Wall St (+) Carl Futia (+) Dash of Insight (+) Elliot Wave Lives On (+) Fallond Stock Picks (+) In the Money  Learning Curve (-) MaoXian  Millionaire Now (N) Peridot Capitalist (N) StockAdvisors.com  Smart Money Tracker (+) Wall Street Folly  Wishing Wealth (+) 

Apple Makes New Highs All Week

It's another day and Apple has made another all-time-high.  The stock has defied gravity posting a 20% gain in September alone.  Even though the stock is overbought, it seems like just a matter of time before it breaks $300.

 

Emerging Market Weighting Update

Wall Street is favoring the equity markets in China, South Korea and Brazil.

This month, Malaysia was raised to "overweight" at Morgan Stanley and JPMorgan, but cut to "underweight" at UBS.   South Korea was downgraded to "underweight" at JPM and upgraded "overweight" at UBS.

S&P 500 Stocks: Low P/E & High Growth

This morning we ran a quick and simple value screen on the S&P 500 which ended up yielding some surprising names.  To start we looked for stocks whose trailing and estimated P/E ratios are less than 10 (there were about 45 names on that list).  To further pair down we then looked for stocks where the estimated long-term growth is greater than 10.  That list of 23 stocks is highlighted below.  (Long-term growth typically refers to expected annual increase in operating earnings over the next three to five years.)

Chevron and Diamond Offshore stick out because they have the highest growth estimates.  Micron has by far the lowest P/E ratios with Ford and Teradyne close behind.  

 

September 20th Blogger Sentiment Poll

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

 

Blogger Sentiment Poll Participants:

24/7 Wall St (N) Carl Futia (+) Dash of Insight (+) Elliot Wave Lives On (+) Fallond Stock Picks (-) In the Money  Learning Curve (-) MaoXian  Millionaire Now (N) Peridot Capitalist (-) StockAdvisors.com  Smart Money Tracker (+) Traders-Talk (+) Wall Street Folly  Wishing Wealth (+) 

S&P 500 Average A/D

The 10-day average of the S&P 500 A/D is at the highest level since September of 2009. 

Euro Screaming Higher

On 9/8 we noted that the Euro was approaching oversold levels and thus a buying opportunity.  Hopefully currency traders saw our post, citing 1.2645 as the low.  On 9/10 the Euro bottomed at 1.2644 and is currently 2.77% higher.

It looks for now like the currency will hold its uptrend, keep using the 50-day average as an indicator.