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Cartoon of the Day: No Russell Muscle

Cartoon of the Day: No Russell Muscle - Russell 2000 cartoon 10.20.2014


Don’t forget that even though the Russell was up for the first week in seven last week, over 60% of stocks in the Russell 2000 are currently crashing (-20% from their 12-month highs).


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In mid-October, we saw weak close-in pricing for FQ4 Caribbean itineraries and a still weakening outlook for Europe.



Please see our note:  http://docs.hedgeye.com/HE_Cruise_Pricing_MidOCT.pdf

Video | McCullough on Fox Business Talks Macro, Markets and More

Here is a series of videos from Hedgeye CEO Keith McCullough’s appearance earlier today on Opening Bell with Maria Bartiromo.

Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.46%
  • SHORT SIGNALS 78.35%

Commodities Weekly Sentiment Tracker

Note: Using the z-score in the tables below as a coefficient of variation for standard error helps us flag the relative market positioning of the commodities in the CRB Index. It is not intended as a predictive signal for the reversion to trailing twelve month historical averages. For week-end price data, please refer to “Commodities: Weekly Quant” published at the end of the previous week. Feel free to ping us for additional color.    



1.       CFTC Net Futures and Options Positioning CRB Index: The Commodities Futures Trading Commission (CFTC) releases “Commitments of Traders Reports” at 3:30 p.m. Eastern Time on Friday. The release usually includes data from the previous Tuesday (Net Positions as of Tuesday Close), and includes the net positions of “non-commercial” futures and options participants. A “Non-Commercial” market participant is defined as a “speculator.” We observe the weekly marginal changes in the overall positioning of “non-commercial” futures and options positions to assess the directionally-biased capitulation risk among those with large, speculative positions.


The COTTON, SOYBEANS, and GOLD markets experienced the most BULLISH relative positioning change in the CRB week-over-week

The ORANGE JUICE, SILVER, and ULSD (HO) markets experienced the most BEARISH relative positioning change in the CRB week-over-week


Commodities Weekly Sentiment Tracker - chart1 sentiment


2.       Spot – Second Month Basis Differential: Measures the market expectation for forward looking prices in the near-term.

  • The CORN, NATURAL GAS, and WHEAT markets are positioned for HIGHER PRICES near-term
  • The RBOB GAS, LEAN HOGS, COTTON, and WTI CRUDE markets are positioned for LOWER PRICES near-term

Commodities Weekly Sentiment Tracker - chart2 spot 2nd month basis


3.       Spot – 1 Year Basis Differential: Measures the market expectation for forward-looking prices between spot and the respective contract expiring 1-year later.

  • The CORN, WHEAT, and SUGAR markets are positioned for HIGHER PRICES in 1-year  
  • The LEAN HOGS, LIVE CATTLE, and COCOA markets are positioned for LOWER PRICES in 1-year  

Commodities Weekly Sentiment Tracker - chart3 spot 1Yr basis


4.       Open Interest: Aggregate open interest measures the amount of opened positions in all actively traded futures contract months. Open interest can be thought of as “naked” or “directionally-biased” contracts as opposed to hedgers scalping and providing liquidity. Most of the open interest is created from large speculators or participants who are either: 1) Producers/sellers of the physical commodity hedging their cash market exposure or 2) Large speculators who are directionally-biased on price.


Commodities Weekly Sentiment Tracker - chart4 open interest         


Ben Ryan




Monday Mashup: DRI, EAT and More

Monday Mashup: DRI, EAT and More - 1


Recent Notes

10/13/14 Monday Mashup: DFRG, EAT and More

10/14/14 DRI: No Better Time for Focus and Simplicity

10/16/14 DFRG: Timing is Critical


Events This Week

Monday, October 20th

  • CMG earnings call 5:00pm EST

Tuesday, October 21st

  • EAT earnings call 10:00am EST
  • MCD earnings call 11:00am EST
  • SONC earnings call 5:00pm EST

Wednesday, October 22nd

  • CAKE earnings call 5:00pm EST

Thursday, October 23rd

  • DNKN earnings call 8:00am EST
  • BJRI earnings call 5:00pm EST

Chart of the Day

Milk prices are up +26.2% YTD and +31.3% YoY.

Monday Mashup: DRI, EAT and More - 2


Recent News Flow

Monday, October 13th

  • DRI downgraded to neutral at Piper Jaffray with a $50 PT.

Tuesday, October 14th

  • DRI appointed Jeffrey Smith as Independent Non-Executive Chairman and Gene Lee as Interim CEO.
  • DRI downgraded to Ba1 from Baa3 at Moody's.
  • EAT downgraded to hold at KeyBanc.
  • TXRH downgraded to hold at KeyBanc.
  • CBRL upgraded to buy at Argus with a $120 PT.

Wednesday, October 15th

  • SBUX mentioned positively at Bernstein where it continues to be rated outperform with a $99 PT.

Thursday, October 16th

  • LOCO announced the opening of its nineteenth Las Vegas area location.
  • CAKE announced its newest opening at the new Mall at University Town Center in Sarasota, FL.

Friday, October 17th

  • MCD estimates were reduced at Janney, which reduced its PT to $90.


Sector Performance

The XLY (-0.9%) outperformed the SPX (-1.0%) last week.  Both casual dining and quick service stocks, in aggregate, outperformed the narrower XLY.

Monday Mashup: DRI, EAT and More - 3

Monday Mashup: DRI, EAT and More - 4


XLY Quantitative Setup

From a quantitative setup, the sector remains bearish on an intermediate-term TREND duration.

Monday Mashup: DRI, EAT and More - 5


Casual Dining Restaurants

Monday Mashup: DRI, EAT and More - 6

Monday Mashup: DRI, EAT and More - 7


Quick Service Restaurants

Monday Mashup: DRI, EAT and More - 8

Monday Mashup: DRI, EAT and More - 9


Howard Penney

Managing Director


Fred Masotta


Contributor Call: Short Monsanto ($MON), Says BluePac's Chris Sommers


Hedgeye CEO Keith McCullough talks to Seeking Alpha Contributor and BluePac managing partner Chris Sommers about Sommers' high conviction short idea, Monsanto.

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