SentimenTrader Blog


2019-11-15 | Troy Bombardia | Premium

Here's what I'm looking at:Breadth & sentimentBreadth has been rather weak recently, with relatively few stocks making highs along with the broad index. This has caused the NYSE HiLo Logic Index to exceed 2.5:Such high readings represent a relatively split market, which hasn't been great for stocks in the past. The following table demonstrates every case in which this Index exceeded 2.5, and what the S&P 500 did next:As you can see, the S&P's returns are consistently worse than average over ...

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2019-11-14 | Jason Goepfert | Daily Report

Two warning signs (Hindenburg Omen and Titanic Syndrome) triggered on the Nasdaq on consecutive days; The S&P rose in the past 7 days but breadth was negative on 6 of those days; The forward price/earnings ratio on the equal-weight S&P 500 is below the ratio for the capitalization-weight index; Low volatility stocks have dropped while the S&P rises

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2019-11-14 | Jason Goepfert | Lite

This is an abridged version of our recent reports and notes. For immediate access with no obligation, sign up for a 30-day free trial now.There’s always tomorrowSince early October, holders of the S&P 500 have not had to suffer back-to-back losses. It’s been 25 sessions since the S&P faced losses on consecutive days, its longest streak since 2012, one of the longest since 1998 - and even among the longest going all the way back to 1928.Most momentum-related studies show even more strength ...

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2019-11-14 | Troy Bombardia | Premium

Here's what I'm looking at:OECD U.S. Composite Leading IndicatorAs Willie Delwiche mentioned, the OECD U.S. Composite Leading Indicator continues to sink to levels that were often reached during recessions. This indicator looks at Consumer Confidence, interest rate spreads, new orders, manufacturing, among others. Not surprisingly, manufacturing continues to weigh on this indicator:When this indicator fell below 98.8 in the past, the S&P's returns over the next few months were often ...

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2019-11-13 | Jason Goepfert | Daily Report

The S&P 500 has not suffered back-to-back losses for 25 sessions, the longest stretch in 7 years; Another corner of the bond market is seeing unusual selling pressure, BB-rated collateralized debt obligations (CLOs); The spread in optimism between XLU and XLK is wide; The Russell 2000 has enjoyed a Golden Cross

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2019-11-13 | Jason Goepfert | Lite

This is an abridged version of our recent reports and notes. For immediate access with no obligation, sign up for a 30-day free trial now.Volatility eventSeveral indicators influenced by the options market are throwing off concerning readings, showing that traders have become complacent about the current trend.We’re currently seeing weeks of low put/call readings, with low premiums being paid for put protection, very low expectations for an imminent volatility event, and heavy betting ...

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2019-11-13 | Troy Bombardia | Premium

Here's what I'm looking at:Rotation (continued)Looking at sector sentiment, it's clear that there's been a shift away from defensive sectors like utilities and a rotation into cyclical sectors (as Jason also mentioned)XLU Optix's 10 dma is now below 30, while XLK Optix's 10 dma is now above 70. This is quite a spread. The 4 other times this has happened from 1999-present, it has generally be bullish for utilities and bearish for tech (including the broad U.S. equity market).Here's what the ...

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2019-11-12 | Jason Goepfert | Daily Report

A ratio of cyclical to defensive stocks has broken out to its highest level in more than 5 years for the first time in months; Several options indicators are showing a high likelihood of a volatility event for the VIX within the next two months; The spread between Smart and Dumb Money has reached a scary-wide level; TLT suffered a big outflow

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2019-11-12 | Jason Goepfert | Lite

This is an abridged version of our recent reports and notes. For immediate access with no obligation, sign up for a 30-day free trial now.Risk on assetsOver the past 50 days, a handful of “risk on” assets have all returned more than 2.5%, while “risk off” assets have all lost more than -2.5%, showing a notable coordination in investor behavior.Since 1990, when all the risk-on assets rose at least 2.5% over the past 50 sessions while all the risk-off ones lost at least -2.5%, for the S&P 500 ...

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2019-11-12 | Troy Bombardia | Premium

While I was sick last week, several notable things have been going on in financial markets. Let's dive into it:BreakoutsAs global stocks continue to rally, various indices continue to breakout and ex-U.S. equity indices are showing stronger breadth. For starters, the MSCI World Index (including U.S.) broke out to a new all-time high at the start of November.More recently, the MSCI World Index's breadth is improving. The % of members above their 200 dma has reached 75% for the first time ...

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