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The S&P 500 cycled from an all-time high to 2-month low in less than a week; The S&P suffered consecutive 2 standard deviation losses; This is the first 7% pullback in more than a year; The "old VIX", VXO popped above 30; Energy stock breadth metrics are showing signs of a true extreme
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Warnings spikeMonday’s selling pressure was enough to push many stocks to 52-week lows. Coming within a week of a day when 52-week highs dominated, this triggered another set of warnings.If you can get past the silly names, and focus on what they’re saying, it’s worth noting since they’re designed to highlight periods when there is heavy turmoil underlying the mask of the indexes. While the origin of the signals include data-mining, they've been "in the wild" for decades and have been just ...
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Now that the U.S. stock market's complacency has snapped, here's what I'm looking at:Volatility is backAs Bloomberg noted, VIX's spike was the largest one day spike in more than 2 years (since 2018's Volmageddon). Such large spikes may or may not see 1-2 additional days of volatility spikes, but from a risk:reward perspective, going long volatility now is not a good idea.When VIX's daily spike was the largest in more than 2 years, its returns over the next few weeks and months were ...
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There has been a spike in Hindenburg Omens and Titanic Syndromes on the NYSE and Nasdaq; NYSE Up Volume was less than 10% for the first time in 6 months; The S&P 500 closed below its 50-day average for the first time in 90 days; Small options traders are still buying calls; Buying climaxes have spiked; The VIX jumped 46% and closed above 25
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Over the past month, there has now been a combined 13 technical warning signs on the NYSE and Nasdaq. At the same time, stocks have ended long streaks of calm conditions.See this report for more detail.Monday was the first 90% down day in almost 6 months.
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Tech’s shocking declineFriday’s loss was more than 2 standard deviations beyond the typical daily change in the Nasdaq over the past year, likely a shock to newer investors. Coming quickly on the heels of an all-time high, there is a temptation to believe it’s a sign the rally has ended.That kind of thinking doesn’t have much support.When we look at every time the Composite quickly cycled from an all-time high to a 2 standard deviation loss since 1970, 3 of them coincided with important ...
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Stocks are tumbling before the open this morning. While there is almost always an easily identified catalyst when markets gap down like this, especially on a Monday, drawing comparisons to past market behavior based on price reaction alone seems iffy this time around.Outside of wartime, we've never really seen a situation like this with large swaths of the world essentially shut down.With that disclaimer, we typically get asked about behavior following large gaps, so below we'll look at how ...
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Here's what I'm looking at:Breadth warnings - Hindenburg OmenThe Hindenburg Omen has triggered again for the 6th time over the past 19 trading days. Some market watchers have noted that the Hindenburg Omen hasn't been a particularly effective bearish signal recently (it has marked more bottoms than tops). That's primarily because many of the S&P 500's recent pullbacks have been shallow, so any indicator thusfar has "failed" at predicting a pullback. It doesn't mean that the Hindenburg Omen ...
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The Nasdaq Composite suffered a 2 standard deviation loss on Friday, soon after it had closed at an all-time high; Professional money managers have increased their U.S. equity exposure, with above-average risk tolerance; Put/call open interest ratios are high even as volume ratios are low; Hedgers sold more ag, gold, and sugar
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Running behindAs the S&P 500 recently hit record highs, fewer of its stocks have kept up. Over the past three months, fewer than 40% of them managed to show a return that was higher than the index itself. In the past 15 years, there was only one date - and not a good one - when so few stocks beat the S&P when the index was hitting a 52-week high.There has been a big cluster of these days lately. Below, we can see how many days in the past 3 months showed fewer than 50% of stocks beating the ...
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Sundial Capital Research is an independent investment research firm dedicated to the application of mass psychology to the financial markets. Sundial publishes the SentimenTrader.com website.
Our focus is not market timing per se, but rather risk management. That may be a distinction without a difference, but it's how we approach the markets. We study signs that suggest it is time to raise or lower market exposure as a function of risk relative to probable reward. It is all about risk-adjusted expectations given existing evidence.
