Out Fox The $treet

Bespoke ran a poll this weekend asking readers where they thought the SP500 would end one month from now. Very interesting to see that currently 58% of respondents are bearish. While a poll of only 429 votes is hardly scientific, it is very indicative of the current mood of the markets. Apparently everybody is expecting a another summer selloff which could be a good signal that after 2 nasty summers the market is ready for a surprise. Will the S&P 500 be higher or lower than its current level one month from now? Selection   Votes Higher  42%                      182 Lower  58%         247 429 votes total Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

While the market appears overbought and everybody claims to be bullish, several indicators of action show a different story. The sentiment versus action debate in investors is beginning to match that of the consumer confidence reports.  Bespoke had an interesting graph yesterday showing that analysts have not had a single day of net upgrades this year. During the rally upwards in 2012, every day analysts come out downgrading stocks only to see them go higher.  This action related number gives a completely different view than the investor sentiment polls. Considering analyst actions typically are great contrarian indicators does this mean the market goes higher? Considering the 8th appears to have been the most negative day of the year so far with 25 more downgrades. Wow!

Great list of the most heavily shorted stocks by Bespoke Investment. Amazed to see that 3 stocks in our Opportunistic models appear on this list. Sears Holdings (SHLD), Savient Pharma (SVNT), and Liz Claiborne (LIZ) all have roughly 30% of the outstanding float short. Hopefully one day these short levels will lead to a massive short squeeze. SHLD continues to buy back stock meaning that the float will continue to shrink likely leading to higher and higher percentages. What the shorts don't seem to understand is that SHLD while a troubled retail operation has a ton of valuable assets and a solid balance sheet. The short story just doesn't add up. SVNT on the other hand just raised $100M plus to fund the sales rollout of FDA approved KRYSTEXXA that helps patients with extreme gout problems not solved by existing drugs. Shorters appear willing to bet that a slow sales start is because the drug lacks a market rather than the initial lack of a sales team. With the cash in hand,...

While the markets focus on just the oil/crude inventories, it's more important to look at the gasoline and distillates as well. The market expected a net 2.1M decline. Instead the inventories plunged by 10.2M barrels. Thats a major decline and much, much higher then expected. The market will typically just focus on the major miss by the headline grabber crude. Losing 3.3M barrels versus the expected gain of 0.8M barrels was a substantial miss in it's own right. Still petroleum inventories and especially crude remain at very high levels. See info from Bespoke . Though its very key to note that these graphs show average numbers for the last 20-30 years when storage facilities and demand was lower. With gasoline and distillates plunging at an alarming rate, look for the next few reports to be critical to whether the inventory trend is finally much lower. If so, energy demand might finally be placing supply questions into the forefront. 10:34 AM   EIA Petroleum Inventories ...

If you follow the market at all, you've probably heard numerous stories about this market being overbought or overextended. Bespoke had good stats a couple days back about the historical nature of this run since 1990. True it's one of the longest streaks so that does cause some concern, but at the same time this recent market and the Great Recession have been historical so why wouldn't this rally? During the 1994 and 1995 rally the market had 2 stretches of roughly 70 days where the market didn't have a pullback of 1%. It would not shock me at all to see that record broken. It also wouldn't shock me to see a 2% pullback tomorrow. For the record to break, we're looking at 5 more weeks without a big selloff. Seems absurd, but do you really want to bet against it? Most people seem to expect a selloff even when history provides evidence that these abnormal scenarios tend to always happen after recessions. The facts from the below report suggest that we are in fact...

According to this report from Bespoke Investment Group, Sears Holdings (SHLD) tops the list with Eastman Kodak (EK) and AIG as the most disliked stocks by the analyst community. Pretty impressive company to be in the same group as AIG. The contrarian in me suggests that this makes SHLD an excellent investment at these levels. SHLD reported nearly $4 in earnings per share in 2009. Considering how horrible the retail environment was last year, its likely that SHLD will report even better numbers in 2010. Even lowly chain KMart has now turned around its fortunes and actually posted positive comps in Q4. Trading at nearly $100 the PE might seem high at nearly 25 on a trailing basis, but as has been documented numerous times on my website and via other reports SHLD has several assets that aren't properly reflected on its balance sheet such as its real estate. Its worth a lot more just earnings alone. All in all, its strange that only 3 out of 500 stocks in the SP500 have a 50% sell r...

The Bespoke Investment Group has an incredible chart on the dramatic rise in the CDS default risk of financials in the SP500. It's not surprising to see periods of rising default risk as the recovery gathers steam but this is really unexplainable. The Obama/Volker plan is concerning for a small portion of profits but it surely doesn't provide this level of risk to the system. Rather it seems like spoiled 'Wall Street' crowd is using the 'fear' of these new regulations to scare the system into trading profits. After the Brown victory and the healthcare plan defeat, I'm not sure why anybody gives these plans such credence. We all know it'll likely be bogged down in Congress due to its complexity. The VIX also spiked the last couple of weeks. A similar bounce took place in November as well. Will it rollover like November or are we talking about issues similar to 2008 when the VIX spiked in the 80s. Maybe this is related to the so called tightening in China...