Here's what's piquing my interest as stocks gyrate in what is likely going to be a pattern of low (and lower) volume in the days ahead.Overseas ReboundIn the Hang Seng index of Hong Kong stocks, 90% of them have jumped enough to trade above the 10-day averages. That has preceded some short-term exhaustion lately.But it's worth noting the context. That figure was under 5% within the past week, and more than half the stocks are still trading below their 200-day averages. This suggests a ...Signup / Login to read this post
With the stock market still volatile on a day-to-day basis, here's what I'm looking at:Economic ConditionsThe University of Michigan publishes a Current Economic Conditions Index that asks consumers how they view current economic conditions in the country. The survey includes more than 500 households (not a huge sample size), but the data series itself is not incredibly noisy (as is the case with many sentiment-based economic indicators). As you can see in the chart below, most economic ...
The S&P 500 has gone nowhere for 1.5 years, an especially long time, especially since it's trading near the top of its range and close to its all-time high; The 10-day Up Volume Ratio became oversold, then there were back-to-back 75% up days; More than 90% of S&P 500 stocks rose on back-to-back days; Dumb Money hit a 100-day low, and bond yields hit an extreme oversold level
Safe haven heavenFriday provided some relief, but the past few weeks have been rocky for stocks. In response, investors moved aggressively into havens like bonds and gold. The 3-week change in the total return on bonds and gold are so far above that for stocks that it’s neared a 30-year extreme.There were really only three distinct time frames in the past 30 years when this happened - January and November 2008, and again in August 2011. If we relax the parameters to get a larger sample size, ...
Markets are jumping to start the new week, and that always seems to generate a lot of "what happens..." questions. Monday-morning gaps tend to be emotional reactions to weekend news headlines, and have generated some good signals in the past, both ways.If you missed it, Troy posted a great weekly summary that's worth reviewing. There are some strong studies that have triggered, with a mostly positive bias as we head into the fall. The investment models that we'll be posting more information ...
I usually write an overview of the markets each week that combines the technical & fundamental indicators I look at:Technicals (1-2 months): no clear edge in either direction. If I had to guess, I think there’s a 60% chance that the S&P makes new lows. Not decisive.Technicals (3-6 months): mostly bullish.Technicals (6-12 months): mostly bullish.Fundamentals (6-12 months): no significant U.S. macro deterioration (this could change as we get more data).Long term risk:reward doesn’t favor ...
The total returns on Treasury bonds and gold over the past 3 weeks have exceeded the S&P's total return by one of the largest in 30 years; Smart money hedgers are betting on copper while heavily shorting gold; The Arms Index (TRIN) has averaged 2 over the past week; Up Volume has surged and plunged twice each the past 2 weeks
Financial correctionLess than three weeks ago, financial stocks within the S&P 500 were within spitting distance of a fresh 52-week high. Now they’re mired in a correction, having pulled back more than 10% from their high.That’s a quick turnaround, which always worries investors. This was not a consistent recipe for weakness in the broader S&P index. There were only two losses over the next two months, both of which then showed a gain the next month. Most notably, the risk/reward was heavily ...
Here's what's piquing my interest as bulls try to enjoy a summer Friday.AnxiousSigns of nervousness are everywhere. Over the past couple of days, we've seen a spike in pessimistic extremes, so there's no shortage of examples. Troy pointed out several aggregate sentiment gauges (Dumb Money, CNN Fear & Greed, Risk Appetite) have moved to notable lows, especially given the market's trend is still relatively positive.Even Bloomberg notes that their measure of risk-on sentiment is the lowest in ...
Markets remain volatile amid a flood of "RECESSION" headlines. I'll publish a comprehensive market overview that combines fundamentals with technicals this weekend. But for now, here are a few things I'm looking at. Manufacturing weaknessWhile the media is screaming "RECESSION INCOMING", not all parts of the economy are weak. There are pockets of weakness, which are usually centered around:The yield curveManufacturingLet's look at manufacturing. Industrial Production's year-over-year change ...
