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- Kaeppel's Corner
Global Indexes are breaking down on a relative basis
A significant number of country ETFs are breaking down on a relative basis versus the S&P 500. The severe underperformance is remarkable in Europe, where every ETF closed at a 1-month relative low for the first time since November 2021. Historically, a high level of comparative breakdowns near a multi-month high has foreshadowed negative absolute returns.
Sell (corn) in May and go away
Corn has had a dismal year so far in 2023. This market is deeply oversold and seemingly due for a bounce. But history suggests traders focus on opportunities to trade the short side in the months ahead.
As stocks rally, investors don't do what's expected
Over a nearly two-week period, the S&P 500 rallied well, but models of investor behavior diverged from their typical pattern. Smart Money Confidence increased along with stocks, while Dumb Money Confidence receded. Similar behavior preceded mostly higher S&P returns, but the losses were significant.
The TCTM Long-Term Trend Model reverses from bearish to bullish
The Long-Term Trend Model for the Tactical Composite Trend Model (TCTM) shifted from bearish to bullish. After similar trend change signals, the S&P 500 had a solid upward bias over the next year. Since 1948, the model has registered 17 consecutive winners over the next three and six months.
The first seasonal trend I ever learned
The stock market remains in the relatively early stages of a seasonal trend that - while easy to dismiss - has a surprisingly good track record.
A historic relative plunge in the average stock
A surge in a handful of large stocks has pushed the capitalization-weighted version of the S&P 500 to good gains year-to-date. The equal-weight version of the index has languished, and the ratio between the two indexes has plunged 8% in just three months. Similar declines preceded outperformance by the average stock.
TradingEdge Weekly for May 26 - Subtle shifts in sentiment, oversold defensive stocks, Japan breakout
This week, we saw that professional money managers are showing more bullishness and insiders are buying in the Financial and Utilities sectors, even as many Utilities (and Staples) stocks are oversold. Tech stocks have enjoyed a cluster of breakouts relative to the broader market, and Japanese stocks broke out of a huge base. Commodities tend to see weakness right about now.
A historic semiconductor surge
For only the 24th time since 1960, a semiconductor index surged by more than 5% and closed at a 12-month high. Similar surges accompanied by a breakout led to additional upside momentum. When the momentum breakout occurs with the index below a 24-month high, the group has never been lower a year later.
Jay's charts of interest for May 25th
In his weekly interview with Negocios TV in Spain on 2023-05-25, Jay Kaeppel of Sentimentrader discusses the latest trends in stock index trends, investor sentiment, the real estate sector and the outlook for treasury bonds.
Two key indicators signal an important shift in sentiment
Trying to discern precisely when investor sentiment is reaching a turning point can be very difficult. Fortunately, identifying when sentiment has turned the corner after a bearish extreme can be much more apparent and equally valuable to investors. Two crucial risk on/risk off type indicators recently detected a subtle shift in investor sentiment.