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Hickey and Walters (Bespoke) submit:
Earlier we noted how S&P 500 stocks were doing on their report days. Below we break down 1-day average performance on earnings report days for stocks in each sector. As shown, Consumer Staples stocks have been the most volatile on earnings this season. The average stock in the sector has gained 1.2% on its report day, which is the best of all ten sectors. The average Staples stock that has beaten estimates is up 3.2% on the day, while the average stock that has missed has gotten crushed at -9.5%. Four sectors have averaged declines on their report days -- Telecom, Utilities, Technology, and Energy. Utilities and Telecom stocks that have beaten estimates have averaged declines on their report days. Technology stocks that have beaten have gained an average of 1.5% on the day, but stocks in the sector that have missed have declined 5.6%. Health Care and Materials stocks have done the second and third best this season, averaging +0.7% and +0.6% on their respective report days. Financials, Consumer Discretionary, and Industrials are in the middle of the pack.Complete Story »

Frederic Ruffy submits: SentimentVolatility picked up a notch on options expiration Friday. The table was set for early losses on Wall Street after BofA (BAC) and Citi (C) posted stronger than expected earnings, but fell short on revenues. Google (GOOG) also came under fire after reporting earnings that missed Street estimates. The early decline then gathered additional momentum after the latest U of Michigan Consumer Sentiment Index showed a drop to 66.5 in July, down from 76 the month before and much worse than the 74.5 that economists had expected. After Thursday’s horrific manufacturing data, further evidence of deteriorating consumer sentiment is weighing heavily on stock prices. Add some expiration-related volatility to the mix and the Dow Jones Industrial Average is down 230 points heading into the final hour. The CBOE Volatility Index (.VIX) added 1.96 to 27.10. Trading is active, with 6.9 million calls and 7.1 million puts traded so far.Bullish FlowAction in Goldman Sachs (GS) continues. Total options volume is running 2.5X the average daily, with 109K calls and 76K puts traded. About half the volume is in the front-month July options, with players scrambling to buy and sell premium in reaction to volatility in shares and ahead of the expiration. The top trades of the day are in the October month, however, after a strategist apparently sold Oct 130 puts to buy the Oct 160 – 175 call spread. This bullish three-way spread traded at a 24-cent debit, 1750X. It’s max pay-off would be at $175 per share at the October expiration, or $27 above current levels, and would represent an increase in market value of about $15 billion. Shares are up $2.78 to $148 on news the investment bank has settled fraud allegations with the SEC for $550 million.Complete Story »

Kendall J. Anderson submits: We believe that predicting short-term swings in the market is an exercise in humility. Longer-term market predictions can have some value, but they should be based on a form of valuation methodology of the underlying securities which make up the market of choice. A consideration of the current mood of the market participants should also be included in that short term prices can be driven by emotions. We don’t believe there are scientific factors which can be isolated and replicated to provide insight into short-term market predictions. However, we do know that over longer periods of time, the price of a security or the total market value of all the securities in a market will approximate the underlying capital retained and available for earning future income for its owners.Complete Story »

Hickey and Walters (Bespoke) submit:
Below we highlight the performance of S&P 500 sectors from the market's 2010 high (4/23) to its July 2nd low as well as since July 2nd. As shown, the Financial sector is up the most since July 2nd with a gain of 10%, followed by Materials (9.5%), Technology (7.8%), and Energy (7.6%). The Financial sector was also down the most during the correction. The four defensive sectors -- Utilities, Consumer Staples, Health Care, and Telecom -- have all underperformed the S&P 500 since July 2nd.click to enlargeComplete Story »

Gary Gordon submits: At its low moment for 2010, the S&P 500 had forfeited 17% of its bull market gains. The heralded U.S. gauge has since rallied back to a more tolerable 10% correction level. What are the reasons for a renewed interest in risk assets? Credit the appearance of less uncertainty, from BP’s capping of the oil gusher to AA’s profitable quarter to investor acceptance of the likely passage of a watered-down financial bill.Complete Story »

Hickey and Walters (Bespoke) submit:
As we come to the end of the first half of the year, below we take a look at S&P 500 sector performance so far in 2010. At this point, no sector is up year to date. The S&P 500 as a whole is down 6.17%, while the Materials sector is down the most at -12.22% and the Consumer Discretionary sector is down the least at -0.31%. Four sectors are outperforming the overall index (Consumer Staples, Financials, Industrials, and Consumer Discretionary), while six sectors are underperforming (Materials, Energy, Telecom, Technology, Health Care, Utilities). When markets are down, the cyclical sectors are usually down the most, while defensive sectors are down the least. That hasn't really been the case so far at this point in the year.click to enlargeComplete Story »

Hickey and Walters (Bespoke) submit:
The S&P 500 broke above its 200-day moving average today and crept back into positive territory for the year. The percentage of S&P 500 stocks trading above their 50-day moving averages, which is one measure of underlying breadth, is now at 39%. While not great, this reading indicates that the market has at least picked itself up out of the doldrums. In terms of individual sectors, only Telecom and Utilities have more than 50% of stocks above their 50-days. Consumer Discretionary, Consumer Staples, and Technology all have readings in the 40s, while Materials, Financials, and Industrials currently have the worst readings.click to enlargeComplete Story »

Jeff Pietsch submits: The market was able to repair itself somewhat last week with the S&P 500 (SPY) higher by +2.7%. While price action may face significant resistance just overhead and we are mildly short-term overbought, it was very encouraging this week to see select leading ETFs recapture their ten-month moving averages, including the Russell 2000 (IWM), Industrials (XLI), Transports (IYT), Consumer Discretionaries (XLY) and Real Estate (IYR). While it's true that the most oversold indices often bounce the hardest, that is a seemingly bullish slate indeed.(Click Image to Enlarge/ ETF Rewind Glossary)Complete Story »

Hickey and Walters (Bespoke) submit:
As we enter the new trading week, the S&P 500 sits at a new correction low on a closing basis. Below we highlight our trading range charts for the S&P 500 and its ten sectors. For each chart, the blue shading represents between one standard deviation above and below the 50-day moving average. The green shading represents between one and two standard deviations below the 50-day, and vice versa for the red shading. Moves into or above the red shading are considered overbought, while moves into or below the green shading are considered oversold. Investors certainly don't have to worry about an overbought market at the moment! As shown, the S&P is currently trading just below the bottom of the green zone, which means it's more than two standard deviations below its 50-day. The index has been bouncing around current levels for a couple weeks now, and we'll likely soon find out whether traders want to break this thing below February support or not.Complete Story »

Street One Financial submits: By Paul Weisbruch Back on January 31 of this year, we published a piece on using market cap oriented S&P index ETFs alongside revenue weighted as well as equal weighted ETFs that are based on the same S&P indexes. The original article appears here.Complete Story »