Your go-to source for data-driven research, analysis and tools.
The surge in agricultural commodities suggests higher food prices
A basket of agricultural commodities surged by 8% over the trailing 5-day period. At the same time, the index closed at a new all-time high. After similar signals, food prices continued higher, especially on a 3 & 6-month basis.
Wall Street is losing faith in higher stock prices
When stocks lose the faith of Wall Street analysts, then we know things are bad. And lately, they've been more aggressively cutting price targets on S&P 500 companies, though they haven't been as busy downgrading earnings estimates. The sample size is tiny, but similar behavior occurred near market troughs.
Seasonal trends to keep an eye on
Seasonality is "climate, not weather." As a result, it is rarely a good idea to rely solely on a seasonal trend to enter a trade. But when an ordinarily reliable seasonal trend is used in conjunction with either a) a solid existing trend, b) a security hitting support/resistance suggesting a potential sharp reversal, or c) some favorite indicator, the results can be highly robust. This piece highlights a few markets that fit into the second category.
Crosscurrents in the energy sector
Energy prices have continued to increase, with unleaded gas and natural gas hitting multi-decade highs. There appears to be little reason to fight the trend - and "conventional wisdom" is that energy prices may move much higher still. Nevertheless, normal seasonal tendencies in the energy markets and significant corporate insider selling suggest that investors not lose sight of the nearest exit.
Everyone wants out of U.S. stocks
In a new report from the U.S. Treasury, foreign investors pulled a stunning $90 billion from U.S. equities in March. That was on the heels of another huge outflow in January. Even expressed as a percentage of the market capitalization of U.S. stocks, this is a large outflow, and stocks tended to rebound following similar behavior.
Should we position for a rally after an 18% decline in the S&P 500
The S&P 500 has declined by 18.06% since its peak on January 3rd. The drawdown represents the 21st instance of this magnitude since 1929. Let's assess the outlook for the S&P 500 after similar downturns from a 252-day high.
Tactical Composite Trend Model Update for May 16
The following is an update for the Tactical Composite Trend Model. The TCTM uses a weight-of-the-evidence approach to identify the major market trend.
Gamma Exposure and corrections
Small options traders spent more money on put protection than they did on speculative calls, for one of the few times in 22 years. Gamma exposure among dealers is extreme, which normally means buying pressure will increase. After so many stocks fell into corrections and bear markets, Friday's thrust may have changed their mindset.
A Nasdaq High/Low indicator flashes green
When more stocks are making new lows than new highs, it is generally an unfavorable indication for the stock market, implying overall weakness. However, suppose new lows overwhelm the number of new highs by a large enough degree for long enough. In that case, it typically marks capitulation by investors and sets the stage for a market bottom. An indicator I follow gave just such a signal on 5/12/2022.
TradingEdge Weekly for May 13 - More new lows, washed out sentiment, tightening financial conditions
This week, we saw more weakness across most markets. There was a large spike in issues falling to 52-week lows on both the NYSE and Nasdaq exchanges, as more than half of S&P 500 stocks fell into a bear market. The price/earnings ratio of the index has already dropped more than 35%. Declining markets are causing financial conditions to tighten and sentiment to become despondent.