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QuantEdge report

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.

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Jay Kaeppel5-17-2022 at 12:30 pm

SentimentEdge report

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.

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Jason Goepfert5-17-2022 at 11:00 am

ModelEdge report

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.

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Dean Christians5-17-2022 at 10:23 am

ModelEdge report

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.

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Dean Christians5-16-2022 at 12:46 pm

SentimentEdge report

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.

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Jason Goepfert5-16-2022 at 11:00 am

QuantEdge report

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.

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Jay Kaeppel5-16-2022 at 9:15 am

TradingEdge Weekly

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.

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Jason Goepfert5-13-2022 at 3:15 pm

ModelEdge report

Should we buy the oversold condition

The term oversold is often overused and misrepresented by market participants. Let's conduct a study to compare the current market conditions to similar circumstances since 1929 to see if a mean-reversion bounce can materialize.

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Dean Christians5-13-2022 at 1:10 pm

QuantEdge report

An organized approach to investing - The 30/30/30/10 Method

Human nature never changes. Fear and greed are the one constant in the financial markets and overwhelm most individuals at one time or another. The only antidote is to adopt an organized approach to investing that takes emotion out of the decision-making process. This piece details one example approach as food for thought.

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Jay Kaeppel5-12-2022 at 12:30 pm

SentimentEdge report

The Panic Button is being pressed

The Panic Button indicator, which monitors a handful of stress-related indicators in credit markets, has risen above 1.0, a high level. As long as it stays relatively low, prospects for stocks are okay. Bulls just don't want to reach a modestly higher level, unless it skyrockets to an extreme that would indicate all-out panic.

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Jason Goepfert5-12-2022 at 11:00 am