SentimenTrader Blog


2019-10-12 | Troy Bombardia | Premium

The stock market continues to swing wildly each day on trade-related news. Here's my market outlook:Long term risk:reward doesn’t favor bulls. Valuations are high, but valuations can remain high for years before stocks crash.Fundamentals (6-12 months): still bullish because there is no significant U.S. macro deterioration, but this could change IF macro data deteriorates significantly over the next few monthsTechnicals (3-6 months): neutral/bullishTechnicals (1-2 months): no clear edge in ...

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2019-10-12 | Troy Bombardia | Premium

This is Part 2 of a weekly update on the U.S. stock market's long term fundamentals. Part 1 can be found here. Fundamentals 1-3 years: market timingI don't try to predict the future of the economy. Plenty of very smart people try, and when you add up the successes+failures, the results are usually no better than a 50/50 coin toss. That's why I focus instead on leading economic indicators. Look at what has already happened instead of predicting the future.The economy drives corporate ...

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2019-10-11 | Jason Goepfert | Daily Report

The 3-month / 10-year Treasury yield curve turned positive after more than 50 days of being inverted; The AAII survey has a positive correlation to the sentiment of older investors, but not to blacks vs whites, men vs women, or political parties; Hedgers mostly added to existing positions; The S&P 500 rose 1% on back-to-back Fridays

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2019-10-11 | 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.In recoveryMomentum stocks have largely recovered from the swift, massive losses earlier in September. That drop triggered a rise in anxiety, but it’s not the drop that’s all that concerning – it’s the fact that these types of stocks have become so volatile. They've swung from a 20-day drop of more than -10% to a gain of more than +10% within a short ...

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2019-10-11 | Troy Bombardia | Premium

This is Part 1 of a weekly update on the U.S. stock market's long term fundamentals. This part is rarely updated. Part 2 is updated each week.Here's how I approach the fundamentals of a country's stock market, such as the U.S. stock market. The key to fundamentals is to think about stocks not as pieces of paper to be bought and sold, but as part ownership in a business that generates earnings. Or as Warren Buffett says:In the short run the stock market is a voting machine.In the long run the ...

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2019-10-11 | Troy Bombardia | Premium

With the stock market still gyrating on trade news, here's what I'm looking at:Trade policyIf there's one word to describe headlines and the stock market's intraday swings over the past few days, it's "wild". As in nobody has an idea what's going on (myself included) on the trade front. From Bloomberg:In my opinion, trading the news in this environment is suicide. (As a rule of thumb, trading the news is not a good idea. It's hard enough to predict the news, and even harder to predict the ...

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2019-10-10 | Jason Goepfert | Daily Report

The severe drop in momentum stocks in September has mostly been reversed, but the heavy volatility in these stocks is a worry; Individual investors in the AAII survey are showing some of the lowest average optimism year-to-date in history, despite good gains in stocks; New lows are creeping up on new highs on the NYSE; Utility breadth is waning

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2019-10-10 | 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.Small slumpThe IWM small-cap fund has been suffering one of its worst stretches in a decade, with ETF traders consistently pulling money from it over the past three weeks.Options traders have also been paying up for the protection of put options. These are both modest positive for small-caps, mostly in the short-term. They’re still fundamentally unhealthy, ...

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2019-10-10 | Jason Goepfert | Premium

Here's what's piquing my interest so far as stocks try to hold the latest trade optimism.Momo ReturnsTroy made a great point about the return of momentum stocks. Their plunge a few weeks ago freaked everyone out (without much historical support) but their recovery has got much less attention. That's how these things tend to work when it comes to investor sentiment - find a reason to panic, then ignore it when it doesn't come to pass and move on to the next headline.The de facto standard for ...

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2019-10-10 | Troy Bombardia | Premium

With stocks still swinging wildly on the latest trade war news, here's what I'm looking at.Momentum's resurgenceMomentum crashed in September, prompting some market watchers to predict that the 10 year bull market in equities was over. Jason looked at momentum from several ways over the past 1.5 months, demonstrating that this argument was questionable (here, here, here, and here).But after crashing in September, momentum is once again on the rise.*The Dow Jones U.S. Thematic Market Neutral ...

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