This is an abridged version of our Daily Report.

A really long correction

The S&P is at day #110 after falling into a correction, surpassing its usual length of around 90 days. Other times an S&P correction lasted this long without either setting a new high or falling into a bear market, it ultimately led to 11 new highs and 3 bear markets.

Gold shorts press their bets

Even as gold sinks to a 52-week low, open interest in the futures is rising rapidly.

This is unusual and has led to more weakness. Most of gold’s bottoms have coincided with a sudden and dramatic drop in open interest.

Muddled metals

Palladium is on the cusp of closing at a 50-week low with its worst weekly loss in at least 50 weeks. Over the past 25 years, it has done something similar 5 times.

Small-caps vs tech

The Russell 2000 fund, IWM, was up more than 0.5% on Thursday while the Nasdaq 100, QQQ, was down more than 0.5%. That’s happened 40 other times.

This is an abridged version of our Daily Report.

Not much movement

Volatility in stocks, bonds, and currencies is among the lowest in 25 years.

All three have declined over the past month and collapsed since February. The few other similar periods led to gains in stocks, gold, while the dollar declined.

A yellow-tinted correction

Gold is close to tipping into a correction for the first time since late 2016, as another small down day will push it 10% below its peak from the past six months. Other corrections preceded more short-term weakness, medium-term strength.

Java jive

Coffee can’t hold a rally, and investors have given up. The 10-day average of the Optimism Index has dropped below 17 for only the 2nd time in 5 years. Since 1991, there have been 74 days when it was this low.

Low flow

According to the ICI, investors have withdrawn funds from non-U.S. ETFs for 8 straight weeks.

This is an abridged version of our Daily Report.

A record reversal

The Nasdaq 100 fund has never enjoyed as large a recovery as it had on Tuesday. The QQQ fund opened Tuesday’s trading down more than 1%, then reversed to close at a 52-week high, something it’s never done before. The underlying index has had several large recoveries, leading to minor short-term dips.

Black Swans might be on sale

The SKEW index is showing that options traders expect a high chance of a big move, pricing in a near-record probability of a 2 standard deviation move in stocks during the next 30 days.

Longer-term options are not showing any kind of similar concern, leading to an extreme in the ratio of the SKEW to the VIX and the CS Fear Barometer.

Risk-free competition

The yield on 3-month Treasuries is now higher than the dividend yield on the S&P. That’s the first time since 2008, leading some to worry about stocks. But since 1971, stocks have rarely yielded more, and on average the 3-month has offered investors 2% or more than the S&P’s dividend.

Steady Staples

Since Staples had become so out of favor in May, they’ve been on a slow but steady rise. The XLP fund on Tuesday closed above its 200-day average for the first time in 102 sessions, tied for the 3rd-longest downtrend since its inception in 1999.

This is an abridged version of our Daily Report.

Some lag during latest leg

The Nasdaq Composite closed at a 52-week high on Friday but relatively few stocks have come along, with fewer than 60% of members trading above their 50- and 200-day averages.

The one-year return in the Nasdaq averaged -2.2% when so few stocks were above their averages versus +14.9% otherwise.

Emerging nerves

The “fear gauge” for emerging markets is extremely high versus U.S. stocks. It’s at a 52-week high while the VIX is near the bottom end of its own range. The two other times there was so much relative anxiety, emerging stocks did better.

Transports sending a signal

The Dow Transports closed just above its 200-day average. When it’s in a downtrend, it has served as a headwind for the Dow Industrials. When the Transports were above the 200-day, the Industrials advanced at an annualized +9.1%. When the Transports were below the 200-day, the Industrials only returned an annualized +3.9%.

More lag

A day after the S&P set a 100-day high, the McClellan Oscillator is already showing slowing breadth momentum by closing below zero.

This is an abridged version of our Daily Report.

Highly correlated

The S&P’s path over the past six months has some highly-correlated analogs. They showed some weakness over the next couple of months, then strength. The bubble peak in 2000 came close but didn’t make the top 10 of most highly-correlated periods.

Investors aren’t using gold for inflation protection

The correlation between gold and inflation-indexed Treasuries has turned highly negative.

This is abnormal, since the two have a high positive correlation over time. The few other times it inverted to this degree, gold provided good returns.

The latest Commitments of Traders report was released covering positions through Tuesday

There weren’t many big changes this week as hedgers mostly edged back on their extremes. They did move to a record long position in hogs, though. As a percent of total open interest, they’re holding the most exposure since 2009.

Small vs large

The small-cap Russell 2000 fund, IWM, closed near the day’s low on Friday while the Dow Industrials fund, DIA, closed near its high. That has happened 24 other times since 2000.

This is an abridged version of our Daily Report.

A great season of earnings

Earnings season is expected to bring another quarter of impressive growth.

When that growth is high, however, earnings season carries more risk than reward.

Tech is leading the charge

The Nasdaq Composite is leading the four major equity indexes to new highs. It gave a false signal in March and its short-term record as a leader is poor.

A non-contrary contrary indicator

The weekly AAII survey of individual investors showed the percentage of bullish investors jumped 15 percentage points this week, from 28% to 43%. Be careful with using this as an automatic contrary signal. Two weeks after jumps of 15% in bullish opinion, the S&P 500 was higher 74% of the time by an average of 1.1%.

Turkey burger

The Optimism Index on Turkey sticks out on the Geo-Map (or later in this report) as being one of the few countries showing pessimism. Most are in excessive optimism territory. With a reading of 6, its optimism is back to one of the lowest levels in the history of the TUR fund.

If you want to get started on Twitter, it's hard to find a good list to follow, particularly in finance, trading, and economics.

Most of the "best of" lists for Finance Twitter are based on personal preferences or, worst of all, a simple follower count. The more followers, the better, seems to be the thinking. That's ridiculously misguided.

Much of Finance Twitter is dominated by insular circles that quote and retweet each other, fist-bumping and high-fiving. That leaves other accounts that might provide more use out in the cold.

So how do we find those accounts?

A great new service, SparkToro, lets you check the metrics that matter on a Twitter account. Not just the raw number of followers, but how engaged - and engaging - those accounts are. It tracks the metrics that truly matter, and comes up with scores to determine how potentially useful a Twitter account is to follow.

Working off of most of the "best of" lists for traders, investors, economists, journalists, and others in finance, we've gone through the SparkToro rankings and come up with the ultimate list of most useful people to follow on Finance Twitter. In deference to SparkToro, we're not revealing any of their metrics - we just combined the total scores available and then ranked all of the accounts from highest scoring to least.

What they have in common

The highest scoring accounts have an average follower base of 48,500, and an average total SparkToro score of 143 (this is the combined SparkScore and Engagement Score). These accounts have a healthy number of followers versus the number of accounts they follow, tend to post several times daily, and their posts get a lot of engagement, a sign that they're useful to the people who follow the accounts. Some popular accounts get penalized because they post too much, not generating much interaction with their followers. Others simply follow too many people, hoping to get followed back and boost their own follower count. Others aren't yet officially verified by Twitter or aren't added to many lists among their followers.

This an excellent list for those new to Twitter, or those looking for perhaps more useful accounts to follow than the usual ones based on flawed metrics. It's not exhaustive - surely there are some we missed - but we'll keep it updated and look for the best accounts to follow.

Here is the ultimate list of most useful Finance Twitter accounts: 

NOTE: Edited on July 17, 2018 to add additional accounts

This is an abridged version of our Daily Report.

Correction roadmap

Nearing six months, the current correction is about in line with others since 2009. It most closely resembles 2015, which at this point was about to test its lows.

A big leveraged bet

Assets in leveraged ETFs betting on a rally have neared a record vs short funds, with nearly $10 billion betting on a market rise.

Investors have been comfortable buying dips since the market peaked in January.

Copper’s worst month ever

Copper futures have lost more than 17% since the peak only a month ago. They have declined 17 out of 21 days, tied for the record of most-clustered selling. The other two times it happened, copper rallied hard, but optimism was much less then than it is now.

No thanks, banks

Later in this report, we can see that the Financial ETF had the worst outflow on Tuesday, with nearly $350 million leaving the fund. According to the Backtest Engine, an outflow more than $345 million over the past 9 years has led to a rebound in XLF over the next week.

This is an abridged version of our Daily Report.

Russell band bounce

The small-cap Russell 2000 has bounced from its lower Bollinger Band to its upper in just a week’s time.

That kind of rebound has preceded impressive gains over the next six months.

German vote of no confidence

A German economic poll shows the least optimism in more than 5 years. Other times the survey fell so low then recovered, the DAX powered higher.

Fourth day of gains is the smallest

The S&P 500 futures gained more than 0.75% three days in a row, then added a gain of less than 0.5% on Tuesday. That has happened 9 other times since 1982, leading to a positive return over the next 30 days only 1 time.

Mas optimismo

In the May 15 report, we saw how extremely low optimism had become on the Mexico fund, EWW. It continued to drop into June but has since more than made up the losses, and the 5-day average of the Optimism Index is now 88, the highest since 2009.

This is an abridged version of our Daily Report.

Pre-earnings decline

Financials dropped 4% in the months leading up to the current earnings season, which begins this week as banks start to release quarterly earnings.

Similar selloffs since 1950 preceded rallies over the next month, though it wasn’t a strong edge.

A crude decoupling

Emerging markets have declined even as crude oil prices rallied since March. This is atypical, since there is a strong positive correlation between those stocks and oil.

Other decouplings preceded consistent multi-month rallies in emerging markets.

The latest Commitments of Traders report was released, covering positions through last Tuesday

“Smart money” hedgers moved to a new record long position in coffee, exceeding their prior record from April. They’ve added aggressively to the Canadian dollar over the past two weeks, now long more than 50k contracts, which has preceded a slowing down or stop in selling pressure in the loonie over the short- to medium-term.