Posts tagged as Fundamentals

When it's time to switch into Consumer Staples

Over time, there has been an edge in switching between consumer staples and consumer discretionary sectors based on the rate of inflation.

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A very expensive earnings season

As we head into Q1 earnings season, valuations are historically high and Wall Street has high expectations.

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Wall Street is upgrading an already expensive earnings season

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Credit investors are getting a bit nervous

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Where inflation is and what it means

While concerns about inflation are raging, an objective model shows that in the current regime, stocks have done just fine.

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What You Need to Know About Inflation (Part III)

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The yield curve has done this only 3 other times

The 2-year / 10-year Treasury yield curve has cycled from negative to above 110 basis points for the 4th time in 30 years.

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Bending the curve

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The rise in rates reaches an extreme level

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A new high on weaker participation

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A low short base just when markets need it most

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When the ducks are quacking

Bankers are capitalizing on a prime opportunity, facilitating a record amount of share issuance via IPOs and secondary offerings.

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Companies, and bankers, satisfy an eager market

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Industrial stocks face headwinds

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An extreme record in mild valuations

There is now a 40-year high in the percentage of S&P 500 companies that are mildly, moderately, or even severely overvalued.

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A new record in severely overvalued companies

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Why the "smart money" is about to get flattened

Fund managers have never been more confident that the Treasury yield curve will steepen.

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The probability of a new bear market is rising, but...

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The value thesis

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Recovering leading indicators and sentiment

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Rebounding housing and commodities

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For the 1st time in months, oil rigs come back online

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Futures traders' odd position in Treasuries

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Macro Index rebound

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Energy bosses are cutting dividends, and workers

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Rebounding Consumer Confidence

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Emerging market surprises gain momentum

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Housing rebound

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Rebounding economic activity

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German economic rebound

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Copper and interest rates aren't doing what they're supposed to do

The price of copper has soared while 10-year Treasury yields stay flat. This is a big change from their historical relationship.

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Metals and bonds give different picture as excess liquidity spikes

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ISM recovery

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Dollar falls into correction for the first time in years

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U.S. stocks are valued more than almost half of global economic output

The market capitalization of U.S. stocks is larger than more than 40% of global gross domestic product (GDP), the 2nd-highest amount in 60 years.

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Stocks are worth more than the whole economy

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Companies haven't been this conservative in 20 years

To preserve cash, companies have pulled back on buying back their own stock, while issuing more shares via IPOs and secondary offerings.

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Companies pull back on buybacks while issuing more shares

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Earnings surprises trigger quick upgrades

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Gold breaks from its main driver

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Global economic data is improving

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Industrial production gears up

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Rebounding small business optimism

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Financials hit hard as they start to report earnings

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Why do small stocks look so expensive?

The forward price/earnings ratio for the Russell 2000 is at a 25-year high, thanks to a large number of those stocks losing money.

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Nearly a third of small-caps are losing money

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Companies and Wall Street are raising outlooks

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Rebounding Consumer Confidence on both sides of the pond

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The yield curve has done this 4 times in 40 years

Based on consumer attitudes, it looks like the Treasury yield curve is entering a super-steepening cycle.

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Stocks have uncoupled from the dollar

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The impact of the yield curve's potential super-steepening cycle

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The economy is expected to improve. A good sign for stocks?

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Economic recovery (continued)

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Sectors and factors depending on the election outcome

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A rough summer suggests a change in the White House

When an incumbent Republican was up for re-election, the 100 days pre-election were usually positive if the same party held onto the office.

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The next 100 days may hinge on Republicans' chances

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Improving economic data

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Weekly Wrap: Even more speculation as breadth continues to improve

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We're officially in a recession

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Economists have become too negative

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Easing financial conditions

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Corporate executives are "feeding the ducks"

Taking advantage of a good market during an economic downturn, companies are scrambling to issue secondary shares.

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What negative interest rates might mean for stocks and the dollar

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Secondary surge suggests companies are "feeding the ducks"

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Weekly Wrap: More economic weakness as stocks hold up

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Peak claims

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Macro model flips to cash

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ISM new orders crater

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Looking backward, economic data plunge

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Surge in money growth does not have a consistent record

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Global earnings revisions

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Chicago Fed National Activity

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Financial conditions are recovering from epic plunge

Financial conditions are easing after what had been an epic plunge during March.

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Weekly Wrap: Stocks keep soaring despite poor fundamentals

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Financial conditions have made a strong recovery

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Rig rout

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Worst economic data since....

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Wall Street's record downgrade deluge

Wall Street analysts have downgraded a record number of S&P 500 company earnings estimates.

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First earnings season after the start of a recession, bear market

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Weekly Wrap: News flow still horrid, but the buying thrust has been historic

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Signs of a thaw remain elusive

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Sentiment recovers amid an economic plunge

Our proxy of the CNN Fear & Greed model has recovered into neutral from deep pessimism. Economic surprises have plunged, not good for the dollar.

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The worst economy since...

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"Just a bear market rally"

The perception is that this is just a bear market rally, but it has clawed back a large part of the decline. Articles about dividend suspensions have spiked.

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Economic surprises suffer historic plunge

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Weekly Wrap: Initial signs of a recovery, even with weak breadth and bad economic data

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Weak economic data vs. government intervention

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Putting the "rat" in rating

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More shocking economic data

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Price/Sales for various sectors

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Weakness in economic data

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Boom goes bust

A simulated measure of the VIX has (at least temporarily) peaked. The Yardeni Boom Bust Barometer is going bust.

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The economy today is just as bad as...

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Margin debt has fallen to a multi-year low

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Other than the stock market, few signs of a thaw

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Bad surprises and the probability of a bear market

A Goldman Sachs model estimating the likelihood of a further 20% decline is on track to plunge. Economic surprises have made a historic drop.

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Weekly Wrap: Historic plunge, compressed stimulus, and massive buying thrusts

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Shocking economic data

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Bear market probability is on the verge of plunging

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Valuations: price to book

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As volatility explodes, the Equity Risk Premium hits a record low

The Equity Risk Premium has plunged to a record low as earnings haven't caught up to volatility. Volatility in Australia just hit a record high.

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Equity Risk Premium back to extreme under-valuation

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This is (and isn't) like 2008

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Valuations across sectors & countries

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What I'm looking at - valuations, Optix, 2 week crash, volatility

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What I'm looking at - ZEW, yield curve, USD spike, S&P's intraday range, commodities collapse

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What I'm looking at - bullish percent, U.S. recession, historic volatility, historic overseas selling

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Fed emergency rate cut asset reactions

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What I'm looking at - New Home Sales, sharp pullback, oversold breadth, safe haven sentiment

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What I'm looking at - Building Permits, USD, MACD buy signals

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Financial conditions have never been easier...or bubbly

The Bloomberg Financial Conditions Index is at a practical maximum reading. Growth stocks have surged relative to value stocks.

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What I'm looking at - new highs, job openings, VIX, economic surprise

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Market & fundamentals overview: the rally continues

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What I'm looking at - Dow earnings, German manufacturing, tech rally, shallow drawdowns, Treasuries sentiment

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What I'm looking at - ISM, Hindenburg Omen, oil, semiconductors, China

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Leading Indicators Lag As S&P Suffers Key Reversal

The Leading Economic Indicators is showing the worst growth in years. The S&P 500 suffered a key reversal day from a high.

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What I'm looking at - Cass Freight Index, strength of the trend, more breadth, Put/Call

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5-Year High In Bull Markets Amid Deteriorating Fundamentals

More than 85% of S&P 500 stocks are above their 200-day averages. There is a high and rising number of stocks with declining operating earnings.

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Asset Managers Have Record Exposure As Wall Street Favors Technicals

Asset managers are net long a record amount of equity index futures. Wall Street analysts have raised price targets but not earnings estimates.

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The "Energizer" Rally Keeps Going Despite Rising Jobless Claims

Smart Money and Dumb Money spread has been wide for 2 months but momentum keeps stocks rising. Continued jobless claims are rising.

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What I'm looking at - tech vs. finance, volatility of volatility, high yield, corporate earnings

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ETF Traders Are Long And Leveraged; Baltic Dry Index Is Plunging

ETF traders are piling into leveraged long funds while leaving leveraged short (inverse) funds, and the Baltic Dry Index is plunging.

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What I'm looking at - more MACD signals, economic policy uncertainty, Baltic Dry Index, copper:gold

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Bond Investors Sound The All Clear

Spreads on high yield bonds are plunging, which stock investors take as an all-clear sign. Emerging market stocks are in a new bull market.

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Market & fundamentals overview: new year and new decade

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Investor And Advisor Optimism Is The Highest In Years

Investor and advisor optimism has spiked, as the yield curve goes from inversion to the steepest in a year.

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What I'm looking at - AIM, yield curve steepening, Macro Index, Initial Claims, emerging market currencies

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Market & fundamentals overview: Santa Claus rally

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What I'm looking at - sentiment, LEI, Hong Kong volatility, strong momentum, Mexico surge

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Market & fundamentals overview: post-trade war rally?

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OECD Composite Leading Indicator Turns Up

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What I'm looking at - OECD, advance-decline line, VIX, NASDAQ models + sentiment indicators

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Market overview: not QE

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December 7, 2019: Fundamental Overview Part 2

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Insiders' Sentiment Is Less Rosy Than Investors'

Corporate insider sentiment has diverged from investors' as the AAII survey shows a jump in optimism.Insiders’ insightsThe ISM survey of purchasing managers continues to hover near its lowest level in years, even while the gain in stocks over the past 12 months is among its best in years. That ...

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What I'm looking at - HiLo, coffee, Sweden PMI, AAII and blow-off top

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What I'm looking at - business activity, GDP coincident index, Shanghai Index small range, persistent consumer staples

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Looking At A Potential Risk Failure

We're seeing potential failure in some warning signs, as financial conditions ease.Failed warnings…maybeDue to extremely high optimism across a broad array of indicators, our  Medium-Term Risk Level has been elevated for a few weeks. And yet, the S&P 500 is higher now than when risk first ...

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What I'm looking at - financial conditions, stocks vs. bonds & commodities, more on sentiment, soft data, short term breadth

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What I'm looking at - momentum, MACD, Medium Term Risk Levels, GS Current Activity Indicator

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What I'm looking at - Intermediate Term Optix, New Home Sales, small caps breadth, large caps breadth, gold volatility

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What I'm looking at - small caps breakout, VIX, healthcare sentiment, cocoa sentiment, global money supply

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Market overview: examining short term risks

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November 23, 2019: Fundamental Overview Part 2

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What I'm looking at - LEI, sentiment pullback, low volatility stocks, NASDAQ, Index Put/Call

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What I'm looking at - Building Permits, VIX Put/Call, long term breadth, high yield bonds, Value vs. Growth

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Breakout In "Overboughtness"

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.Overbought breakoutsThe worst environments for sentiment indicators are momentum markets. They don’t happen very often, but when they do, sentiment can get ...

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What I'm looking at - healthcare, France, GDP growth, MSCI World Index, breadth

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A High HiLo

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.HiLo is highOver the past week, there have been an increasing number of signs of a “split” market, with many winning and losing stocks. That has caused the ...

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November 16, 2019: Fundamental Overview Part 2

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OECD drops below 98

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What I'm looking at - OECD, low volatility, SKEW, Bullish Percent Index, emerging markets

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4 Reasons Why A Volatility Event Is On The Horizon

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 ...

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November 9, 2019: Fundamental Overview Part 2

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November 2, 2019: Fundamental Overview Part 2

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What I'm looking at - Chemical Activity Barometer, Risk Appetite, Sensex, NASDAQ breadth

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What I'm looking at - VIX, nonresidential fixed investment, healthcare, finance, SKEW

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What I'm looking at - ex-U.S. stocks, NYSE Up Issues, Economic Surprise, more overseas breadth

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Market overview: with stocks at all-time highs, what's next

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October 26, 2019: Fundamental Overview Part 2

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What I'm looking at - bear market, profit warnings, VIX Put/Call, homebuilders, manufacturers' new orders

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What's Wrong With The Smart Money?

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.Another one bites the dustThe Conference Board’s Leading Economic Index® is a popular indicator to watch for potential recessions ahead, and the latest ...

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What I'm looking at - TLT Optix, Leading vs. Coincident, Russell range, DAX breadth, REITs, Smart Money Index

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Market overview: weighing the bullish and bearish evidence

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October 19, 2019: Fundamental Overview Part 2

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Econo-Dread, Options Fear, Money Tree, Dollar Impact On Earnings Season, Transports, Hated Commodities

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What I'm looking at - Industrial Production, housing's comeback, VVIX, U.S. Dollar drop, loans

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What I'm looking at - Chinese profits, Nikkei breadth, Germany breakout, VIX Put/Call, fund flows

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Transportation index moves to new high

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Tuesday Color - VIX below 14, card rates, transport services, slow growth, utility momentum

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What I'm looking at - dividend yields, gold & USD, wholesalers' sales, oil positioning, 50 dma breadth.

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Yield Curve Flips As Uncertainty Spikes

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.NormalizingThe most widely watched Treasury yield curve un-inverted in recent days, triggering some calls that now the risk for stocks has declined, that the ...

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Market overview: lots of chop, no clear direction

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October 12, 2019: Fundamental Overview Part 2

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Yield curve turns positive

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Fundamental Overview: Part 1

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What I'm looking at - momentum's resurgence, new highs-lows, Index Put/Call, job openings, soft data

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Earnings Slump And Junk Spreads Blow Out

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.Earnings slumpStandard & Poor’s is estimating that operating earnings among the 505 companies in the S&P 500 index will decline from where they were a year ...

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S&P 500 earnings decline

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USA Leading The World In Surprises (Both Good And Bad)

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.Leading the worldMost of the ways the U.S. has been surprising the world have not necessarily been the good kind. When it comes to economic reports, though, ...

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What I'm looking at - S&P and MSCI trailing earnings, high yield spreads, Sweden PMI, Dow Transports

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Monday Color - Breadth whipsaws, small traders, surprise spread, bond sentiment

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Market overview: should you be concerned along with everyone else?

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Investors' cash cushion is near the lowest in 30 years

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.No cash cushionIn September, individual investors reduced their cash position to one of the lowest levels in 30 years. They’re not alone. Other groups of ...

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What I'm looking at - VIX Put/Call, ISM vs S&P, USD trend, small cap earnings

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S&P stocks are starting to roll over, but...

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.Manufactured pessimismA popular economic data series has tumbled into recession territory. The ISM Manufacturing survey has cratered over the past year and ...

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Wednesday Color - 1% losses, sensitive sectors to ISM data, no cash cushion, breadth anomolies

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What I'm looking at - Index Put/Call, Hard vs. Soft data, earnings estimates collapse, Arms Index, REITs

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Tuesday Color - ISM plunge, currency flight to safety, eurozone surprises

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What I'm looking at - MACD sell signal, Business Climate Indicator, VIX, different surprise indices, gold's 4Q rally

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Market overview: no fat pitch

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Small options traders bought this much protection only 3 times in 20 years

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 traders being testedThe smallest of options traders keep buying a large amount of put options. Over the past 6 weeks, they’ve spent more than 24% of ...

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What I'm looking at - South Korean exports, HiLo, gold's top?, no daily movements, India's surge

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Foreigners Flood In As Hard Economic Data Rebounds

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.Foreign flowForeign investors have started to come back to U.S. stocks after a year of net selling, as we saw earlier this week.Among other major markets, ...

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Market overview: a little less bullish

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Citi economic surprises hit 200-day high

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What I'm looking at - Economic Surprise, low volatility, breadth, McClellan Summation, DAX

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ETF Traders, Foreigners Jump In Right Before Momentum Stock Shock

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.Momentum stock shockAfter last week’s huge drop in momentum stocks, and shift toward value from growth, those shares fell a bit more and have since rebounded. ...

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What I'm looking at - Housing Starts, CFO's pessimism, ZEW, FedEx crash

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What I'm looking at - manufacturing still weak, housing recovery?, bearish tops, NASDAQ breadth, new highs

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Industrial production falls below 0.4%

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Tuesday Color - Big Managers Get Bullish, Gold/Dollar Correlation Spike, Repo Rate, Volatility Premium

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Bond Bulls Curb Their Enthusiasm

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.Break in bond bullsFor the first time in more than 9 months, optimism on bonds has come down to neutral territory. That ends one of the longest streaks in ...

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Market overview: almost at an all-time high

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Hedge Funds Hate Bad Stocks

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.Fund factorsHedge funds that focus on long/short equity strategies seemingly have very low exposure to stocks, which has been a pattern for all of 2019. More ...

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What's Better Than Bonds?

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.Beautiful breadthThe Cumulative Advance/Decline Line for most of the major indexes are at or near all-time highs. Same for every one of the major S&P 500 ...

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What I'm looking at - OECD, small caps, various breadth indicators

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Wednesday Color - Russell vs Nasdaq, Sector Divvies, Bond Whipsaw, Jumps Above BBands

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What I'm looking at - NASDAQ McClellan, Rotation, Greed & Fear, Small Business Hiring, world economy

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Momentum Traders' Massive Loss

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.Massive momentum moveOn Monday, many momentum traders likely had their worst day in a decade. Stocks that showed the best gains year-to-date suffered some of ...

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Tuesday Color - Value's Back, Small Business Outlook, Euro Banks, Index & Gold ETF Flow

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What I'm looking at - GS Bear Market, Consumers, Rydex, Earnings, Seasonality

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Gold's Shocking Drop

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.Gold’s bull runETF traders have consistently poured money into gold funds, even during Thursday’s big drop, which was a “shocking” decline.It started to fall ...

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Market overview: some more signs of macro weakness

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What I'm looking at - Citigroup Economic Surprise Index, semiconductors, breakout, NAAIM, copper reversal?

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Wall Street Is The Most Confused In 20 Years

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.The Street is behind and confusedWall Street analysts have underestimated the growth in S&P 500 company earnings growth for a year, one of the longest ...

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What I'm looking at - Recession Probability Model, emerging markets, Treasury yields, breadth, Consumer Confidence

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Imminent Recession (So They Say)

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.An unequal monthAn index that equally-weights each of the stocks in the S&P 500 badly under-performed the capitalization-weighted version of the index that ...

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What I'm looking at - ISM PMI, 60/40 portfolio, XLU, gold:silver ratio

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Market overview: looking at the stock market from multiple angles

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What I'm looking at: stocks vs. gold, fractals,McCulley, copper, yield curve

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Consumers Vs. Investors As Silver Pops

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.Consumers vs. investorsThe latest Consumer Confidence reading shows that U.S. consumers continue to demonstrate an extremely positive outlook on their ...

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What I'm looking at - CNN Fear & Greed, Chemical Activity Barometer, silver's 2 year high, SLV Optix, SKEW

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1 Of The Whippiest, Most Uncertain Months In A Decade

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.A whippy monthOn an average day over the past month the S&P 500 has moved 1%, one of its widest ranges since the financial crisis.When coming soon after a new ...

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What I'm looking at: National Activity Index, SPY breadth, short term breakout, bond yields, Ifo

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A Volatile, But Sound, Month

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.Quite A MonthWe seem to be on track for another whipsaw, as markets try to recover from conflicting messages over the weekend, following a rocky end to the ...

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Monday Color - A Month Of Swings, Economic Uncertainty, Sectors, Scramble For Protection

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S&P 500 after Economic Uncertainty 5-day avg > 250, w/in 10% of high

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Market overview: facts over opinion

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Timing A Move Out Of Stocks, As They Whip Around And Bond Spreads Blow Out

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.Bond blowoutThe riskiest segment of the corporate bond market has been suffering, while safer bonds have been less of a focus for sellers.That raises the ...

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What I'm looking at - State Coincident Index, Conference Board, McClellan Summation, TLT Optix, Treasury yields

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What I'm looking at - Put/Call spike, Rydex flows, Rydex breadth, Economic Surprise & bonds

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Gold Beats Stocks' Double-Digit Jump

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.Rising and falling togetherThe major sectors within the S&P 500 have mostly been moving in concert, so correlations have risen quickly over the past month. ...

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What I'm looking at - small caps vs. large caps, corporate earnings, bonds, daily swings, RV's

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What I'm looking at - economic conditions, German manufacturing, Equity Put/Call, New Highs & Lows, Dollar vs. Gold

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Market overview: combining technicals & fundamentals

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What I'm looking at - manufacturing weakness, housing recovery?, Dumb Money, CNN Fear & Greed, Risk Appetite

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Thursday Color - Turmoil, Double Losses, Recession Talk, Financials, Sectors

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One Of These Curves Is Not Like The Others

Bulls yieldStocks plunged on Wednesday, with the most common excuse being renewed fears of recession due to a further inversion in the Treasury yield curve. Between various maturities, 60% of the curve is now inverted. That preceded a prompt and severe drop in stocks in 2000, but the three other ...

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Wednesday Color - Curve, Fund Managers, Gold & Yen, 1% Moves, Skew

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The End Of A Historic Streak Of Terribleness

Beating expectationsFor the first time in 6 months, economic reports in the U.S. haven’t totally sucked. The Citi Economic Surprise Index is starting to rise quickly, as economists deflated their estimates enough for the economic data to catch up. This ends the longest terrible streak since the ...

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Only Black Monday And 9/11 Were Worse Than This

Cluster muckSigns of a “split” market started to trigger in mid-July and continued to accrue into the first days of August. This has been one of the tighter clusters of warning signs we’ve seen over the past 50 years.By the time some of these trigger, stocks have already declined somewhat. By ...

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The Dumb Money Is Nearing Maximum Confidence

Confidence nears upper boundOver the last couple of days, Dumb Money Confidence has poked above 80%. While it has gone higher over the past 20 years, this is in the top 2.3% of all readings.'It’s high enough that it has preceded weak returns, especially in recent years, and those times when ...

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An Economic Indicator Is Breaking Out - Why That's Bad For Gold Bugs

Earnings down, stocks upEarnings for S&P 500 companies are projected to be flat or negative from the same quarter last year. Even with the slowest growth in 3 years, stocks have been ticking to new highs.There was a hint of “whistling past the graveyard” in those rallies, as the S&P ended up ...

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Poor Earnings Growth With Stocks At Highs In Q2

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Tuesday Color - Earnings, ETF Flows, Gold vs Baltic Index, XLY, New Moon

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What Scary Thing Do Bond Traders Know?

End to inversionThe spread between 3-month and 10-year Treasury yields has been inverted for more than a month, with the shorter-term bills yielding more than the longer-term notes.At 35 days, the current stretch of an inverted curve is the longest since 2007. When that spread turns positive, it ...

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Friday Color - Yield Curve, Small Caps, XLU vs XLE, Bonds, Brazil

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Don't Fight The Fed's Sentiment

Don’t fight the FedThat market mantra mostly holds true, and based on the sentiment within the Fed, should be on the bulls’ side. A model from Nordea Markets based on language used during FOMC meetings shows that we currently have the most dovish (easiest money) Fed in a decade.There are some ...

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Thursday Color - Dovish Fed, Sector Extremes, Round #, Value Line Lag, Twitter Bulls

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Why Recession Risk Is More Bark Than Bite...For Now

Recession around the cornerAccording to a model from the New York Fed, the risk of recession has risen to a point that has almost guaranteed an economic pullback in the past.But that does not mean it was an imminent danger to stocks, which rose every time but once over the next few months. The ...

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Tuesday Color - High Yield Rally, Sector Breadth, Recession Risk, Yield Drop

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Monday Color - Short-Term Optimism, Funds Vs Options, Lagging Small Caps And Surprises, Bulls Return, Bonds

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Tuesday Color - Tech's Recovery, Gold Loss, Sector Breadth, Semi's, Japan's Surprises

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Wall Street Isn't Keeping Up

Fairly valuedWe’re approaching the halfway point of the year and the S&P 500 has already met Wall Street strategists’ estimate for where it would be at year-end, according to Bloomberg data.When buyers have run ahead of already-rosy Wall Street predictions, stocks have tended to keep going for ...

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Thursday Color - Gas, Wall St Strategists, Sector Breadth, Lagging U.S.

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This Hasn't Happened To Bonds In 3 Years

Brittle bondsThe Optimism Index for bonds hit an extreme low last October. The rally since then has caused it to cycle to the opposite extreme, with the 20-day average now the highest in almost 3 years.Just as it has been rare to see any sustained losses in Treasuries when the Optix gets as low ...

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Wednesday Color - Tweets, Confidence Spread, Gold, Surprise Impact

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1/2 Of Bitcoin Bubble Signals Have Triggered

Bitcoin bubble babbleSentiment on bitcoin is jumping, but is below other euphoric peaks. Barely half of “bubble” signals have triggered, unlike past peaks when 100% of them did.By the time sentiment reached its current level, the coin typically took off on a last gasp buying frenzy, notching ...

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Monday Color - Easy Conditions, Canadian Surprises, Gold Rush, Sector Breadth

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Monday Color - Tiny Range, Options Traders, A Split S&P, Empire Fail

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Friday Color - Bond Flow (!), Recession Risk, Breadth Thrust, Gold Options, Stock Screen

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What The Fed's First Cut Has Meant

First cutThe probability that the Fed will cut rates is rising. It’s still only about a 20% chance in June but more than 80% in July. That will end the longest-ever streak with steady or rising rates. Following these “first cuts”, stocks have done either poorly, or really well, with no middle ...

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A Big Jobs Miss As Highs Surge

JobsWe saw on Thursday that a big miss in the ADP report possibly meant a big miss in the Nonfarm Payroll report today, and if it dove to a 5-year low, would be a bad sign for stocks. The report missed, but wasn't bad enough to trigger the 5-year low. So at least there's that.But the report did ...

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Friday Color - Jobs, Econ Surprises, 4 Gains, Breadth, Energy, Gold

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What A Steeper Curve Really Means

Curve steepensInvestors are fairly obsessed with the yield curve and its potential message for all markets. The widely watched spread between 2- and 10-year Treasuries neared inversion but has quickly reversed and hit its highest level in 6 months.The steepening is often what causes trouble, but ...

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Thursday Color - Bond Moves, Yield Curve, Jobs, REITs & Utes, New Highs, Mexico

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Monday Color - Cycle Peak, De-Risking, Silver, Breadth Extremes

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Tuesday Midday Color - Shanghai, , DAX, Bond Bulls, Euro Sentiment

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A Perfect Technical Buy Signal

Earnings approach peakSince last fall, earnings among S&P 500 companies have been in a pullback. A recent trend higher has nearly erased that and they’re closer to their peak than they’ve been in six months.After other times earnings near their peak after several months, stocks performed well.A ...

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Wednesday Midday Color - Technical Buy, Asia Flows, Economic Woes

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Monday Midday Color - Gaps Again, Sector Divvies, Flight To Safety

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Are You Panicking Like Everyone Else?

Panic-level sellingWe’ve already touched on the persistent negative gaps traders have faced most mornings over the last couple of weeks. It’s worth noting again, because the gaps are now on par with panic-level conditions over the past 35 years.Other than 2008, future returns were excellent. ...

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What Happens When Hard Data Hardens

Post-recovery pullbackStocks recovered from a morning drop, but the S&P still lost more than 3.5% from its recent peak on an intraday basis. That’s largest drop so far during the recovery from the December low, more than 90 trading sessions.This ends one of the longest-ever streaks since 1928 ...

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Monday Midday Color - Cranky Calls, Big Breadth, Can't-Miss Swiss

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Wednesday Midday Color - Bond Bulls, High-Yield Breadth, Lagging S&P Stocks, Tech Values

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Tuesday Midday Color

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Monday Midday Color

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Wall Street Is Technically Bullish, Fundamentally Bearish

Technically bullish, fundamentally bearishIn recent weeks, Wall Street analysts have been raising price targets on stocks within the S&P 500. At the same time, they’ve been lowering their earnings estimates.Usually, there is a positive correlation between the two. When there is a divergence like ...

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Friday Midday Color

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2 Reasons Why Earnings Season Is A Worry

Let the earnings beginAs companies start to report earnings this week, there is a fear that projected weak growth could be a stumbling block. To check, we go back to 1930 and look for every two-year span with the most similar earnings pattern of high growth, then low to negative growth, then ...

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Thursday Midday Color

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An Important Shanghai Rally Amid Terrible Economic Surprises

An important thresholdWhen big rallies in the Shanghai Composite failed, fewer than 90% of stocks on the exchange had managed to rise above their 200-day averages. When more than 90% did so, the rallies lasted long-term, at least over the past 17 years. That just happened again.It’s also been a ...

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Economic Surprises Bad For Dollar

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Slowing GDP As Survey Sentiment Rebounds During A Nice Couple Of Months

Slowing growthThe GDP release relieved some investors by being better than feared. But forecasts show that growth this quarter is likely to be the lowest in 8 quarters.Like we’ve seen during past studies looking at economic or earnings recessions, the hype doesn’t often translate to forward ...

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Nasdaq Hugs Its Average As Volatility Recede Despite Recession Risk

A tight hugThe Nasdaq Composite has hugged its 200-day average for more than a week.Bulls and bears could both make an argument for what that might mean, but since 1971 the Nasdaq has powered higher in the longer-term when it showed this kind of indecision around the widely-watched metric, ...

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Calm Conditions Reign As Economic Reports Stink

Calm againOptions traders are once again pricing in a narrow trading range for the S&P 500 in the month(s) ahead. The VIX has declined sharply and is below 15 for the first time in almost 90 days.The ends of other long streaks above 15 have led to a rise in the VIX every time, along with Low ...

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Economic Surprises Turn Negative

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Thursday Midday Color

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Tightest 100-Day Correlations Amid A 20-Year Best Earnings Season

Just like usThere have been nearly 20 different 100-day time windows that have a high correlation to the past 100 sessions in the S&P 500. Most of them ended up peaking right about this time and saw pullbacks over the medium-term.These analogs have been suggesting for a while that stocks ...

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The End Of A Very Good Q4 Earnings Season

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Jobless Claims Hit 52-Week High As High Beta Shows Relative Struggles

Climbing claimsA 4-week average of jobless claims hit a 52-week high this week, triggering an increase in the probability of recession.Other times that claims cycled from a 52-week low to a 52-week high since 1967, there was a headwind for stocks and tailwind for bonds, especially over the next ...

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Jobless Claims Hit 52-Week High

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Possible Earnings Contraction; Mom And Pop Roar Back; Dollar Momentum

Earnings contractionCompanies in the S&P 500 have shown 10 quarters of year-over-year growth in operating earnings, but that streak is in danger of ending. Estimates for this quarter continue to come down.If that’s going to be the case, then traders start to anticipate slower growth, and returns ...

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Nonfarm Payroll Beat

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Emerging Markets Breakout; Fidelity Managers Beat Cash; Baltic Dry Collapse

This is an abridged version of our Daily Report.Breaking outEmerging markets have closed above their 200-day average for the first time since last spring, a streak of nearly 9 months. That’s one of the longer streaks in 30 years.Other times an emerging markets index ended long streaks below its ...

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Last-Hour Binge Buying; Shutdown Ends; Consumers' Flagging Expectations

This is an abridged version of our Daily Report.Happy endingOver the past month, the S&P 500 has rallied more than 0.3% on average during the last hour of trading, one of its largest-ever clusters of gains.Not only has it been aggressive, it has been consistent. As noted by the fine folks at ...

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The Anti-Hindenburg Omen; Fed Recession Risk Rises

This is an abridged version of our Daily Report.The anti-HindenburgA compelling reason for caution last fall was the kind of split market that triggered a cluster of Hindenburg Omen warning signs. Over the past two weeks, there has been a cluster of signals that are the exact opposite of the ...

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Disappointed Economists; A Weak Leading Index

This is an abridged version of our Daily Report.DisappointedConcerns about an economic or earnings recession have skyrocketed over the last couple of months, and disappointing economic reports worldwide are not helping. Economic surprise indexes across the world are all below zero, and the most ...

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No Bank Failures; Battle Of Time Frames For Moving Averages

This is an abridged version of our Daily Report.As good as it can getLast year, there were no bank failures. That sounds like a good thing, and it’s happened only 3 other times in 85 years. A sample size of 3 makes it difficult to consider the precedents, so if we relax the parameters and look ...

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Earnings Recession; Investors Reduce Exposure; Record Outflows

This is an abridged version of our Daily Report.Recession talkConcerns are rising about a recession. Even if we don’t see an economic one, we may be in store for an earnings recession.The data is not showing that as likely, but even if it happens, it does not necessarily mean that stock prices ...

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Equity Risk Premium Collapses; A Day Of Notable Moves; VIX Not Jumping

This is an abridged version of our Daily Report.Equity premium collapsesThe premium that investors are willing to pay for stocks’ earnings has collapsed relative to the yield available on bonds. The one-year z-score of the Equity Risk Premium is now 4 standard deviations below average, a ...

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Yield Curve Inversion; Intense Selling; November Flows

This is an abridged version of our Daily Report.Upside downThe yields on 2- and 3-year Treasuries are now higher than 5-year maturities, an inversion of the short end of the yield curve.This tends to precede an inversion of the more common 2-year vs 10-year yields. But there has been a long lead ...

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Positive Breadth Divergence; Growth Worries

This is an abridged version of our Daily Report.A positive divergenceWhen the S&P fell to a 6-month low last week, significantly fewer of its individual stocks did so, creating a positive divergence in its Advance/Decline Line.That looks pretty on a chart, but it hasn’t been consistent enough, ...

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Jobless Claims Find Bottom; Margin Debt Declines

This is an abridged version of our Daily Report.A bottom in jobless claimsAfter hitting a multi-year low, jobless claims have hit a 6-month high and are above a 52-week average.That tends to lead to a rise in the unemployment rate, an input to many recession models. But a nascent uptrend in ...

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Sentiment vs Earnings; Massive Buy Programs

This is an abridged version of our Daily Report.Sentiment vs earningsThe S&P 500’s flat return in 2018 so far has been due to the growth in earnings being offset by a drop in sentiment. The price/earnings ratio for the index has declined about as much as earnings have grown, like 2011.Other ...

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Low Volatility Beats High Beta; Worst-Case Corrections; Bad BID

This is an abridged version of our Daily Report.Rush to safetyInvestors have moved into “safe” low-volatility stocks at the expense of “risky” high-beta ones. The ratio between the two just hit a two-year high, which has preceded some trouble for stocks over the shorter-term.Over the ...

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Rallying In A Downtrend; Peak Earnings

This is an abridged version of our Daily Report.Rallying in a downtrendStocks are revisiting the 200-day average, which is now sloping down.If we go back and look for times when the 200-day average was rising for at least three months, then turned lower and the S&P was below its average for at ...

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Gridlock For A Disliked President

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A Non-Recessionary Correction; The Trend Is No Longer Your Friend

This is an abridged version of our Daily Report.Non-recessionary pullbackMost recession models show a low probability of an imminent economic recession. If we use a simple, non-optimized, real-time model, it’s currently showing 0% probability.In that kind of environment, 10% pullbacks in stocks ...

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Money-Losing IPOs Debut Amid Low Uncertainty Ahead Of Elections

This is an abridged version of our Daily Report.Comfortable with losing moneyBankers have brought the most money-losing IPOs to market since 2000. When we looked at this in the spring of 2015, even then it wasn’t as extreme as it is now. The bankers can’t do this unless the public accepts the ...

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Growth Better Than Unemployment As Warnings Cluster

This is an abridged version of our Daily Report.Growth > unemploymentThe President’s triumphant gaffe about a 100-year high in economic success masked a relatively common signal. When GDP growth was higher than the unemployment rate, stock returns were in line with random, suggesting there was ...

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Goldman Model Predicts Trouble As Grains Get Hit

This is an abridged version of our Daily Report.Model troubleA Goldman Sachs model incorporating five fundamental factors shows a high risk of an imminent bear market in stocks.When the model reaches its current level, the average S&P 500 return over the next six months was negative 6%.No gains ...

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Stocks Shrug Off Economic Reports Amid Buying Follow Through

This is an abridged version of our Daily Report.Shrugging off disappointmentEconomic reports haven’t kept up with economists’ outlooks, but it hasn’t mattered as the S&P 500 has rallied to all-time highs. When stocks hit a 200-day high and economic surprises a 200-day low, future returns were ...

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Mid And Small Caps Break Out As Financial Conditions Ease Amid VIX Decline

This is an abridged version of our Daily Report.Large caps lag mids and smallsThe S&P Mid Cap and Small Cap indexes have hit new 52-week highs this week while the large-cap S&P 500 still has not.The lagging S&P 500 tends to catch up, with all three indexes usually rallying in the months ...

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Yield Curve Favors Defense As ETF Investors Flee Developed Markets

This is an abridged version of our Daily Report.Curve favors the defenseA narrow yield curve has led to good returns in defensive sectors. By the time the spread between 2-year and 10-year Treasury yields got as low as it was in July, future returns in the dollar were muted to negative, leading ...

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A Record Beat Rate For Earnings As Investors Flee World ETFs

This is an abridged version of our Daily Report.A record beat rateS&P 500 companies have beat earnings expectations to a record degree. As we near the two-week mark of earnings season, about 90% of companies reported better-than-anticipated earnings. That’s more than 15% above the average beat ...

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Good Growth During Earnings Season As Nasdaq Leads

This is an abridged version of our Daily Report.A great season of earningsEarnings 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 chargeThe Nasdaq Composite is leading the four ...

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Economic Surprises Turn Negative, So Do Investors And Gold

This is an abridged version of our Daily Report.A slip in surprisesU.S. economic surprises have ended their longest-ever positive streak, after being positive since last September.The ends of other long positive streaks led to mixed returns in stocks, excellent ones in bonds, and poor in ...

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Corporate Bonds Suffer As Small Caps Shrug Off Economic Reports

This is an abridged version of our Daily Report.Bloodbath in bondsCorporate bonds have been hammered, with Tuesday seeing the worst breadth readings since 2008 and 2013. Those two crises (the financial meltdown and the end of QE) were the only ones that matched Tuesday’s carnage.Forward returns ...

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Small Caps Shine As Financial Conditions Tighten And VIX Drops

This is an abridged version of our Daily Report.Small caps trying to drag us higherThe small-cap Russell 2000 is within 1% of an all-time high, while the S&P 500 is still more than 5% below.That’s usually taken as a universally good sign for stocks in general. It hasn’t been that easy, ...

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Bad Eurozone Surprises As Crude, Dollar Rally

This is an abridged version of our Daily Report.The euro doesn’t like negative surprisesRecent months have seen the worst economic results relative to expectations in the eurozone since 2011. Only three other periods in 15 years have seen results as bad as this. All three led to weakness in the ...

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Economic Uncertainty During Midterm Summers As Stocks Form Lower Highs

This is an abridged version of our Daily Report.Midterm summer bluesThe summers of midterm election years are weak more often than not. Supposedly, it’s supposed to get even worse if investors are uncertain about government economic policy.Going back to 1900, however, that doesn’t seem to be the ...

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Bond Aren't Buffering Stocks As Earnings Surprises Near Record

This is an abridged version of our Daily Report.Balanced portfolios see unusual lossesOver the past few months, there was a 5-year high in days where stocks sold off and bonds did too.That raises worries that the typical 60/40 stock/bond portfolio allocation will suffer as bonds don’t lift when ...

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Earnings Season As A Savior As Stocks Get Stuck

This is an abridged version of our Daily Report.Good earnings as a saviorAnalysts expect robust growth in earnings as companies report them over the next four weeks. Good growth is also expected to save stocks as they just corrected ahead of earnings season.This has been a shaky leg upon which ...

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Tepid Earnings Reaction As SPY Loses Shares

This is an abridged version of our Daily Report.Investors shrug at good earningsS&P 500 companies have reported excellent earnings growth, after several quarters that also saw growth.While those earnings were reported to investors, though, the S&P 500 index barely budged after all the ...

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Hated Bonds As U.S. Economy Out-Surprises Eurozone

This is an abridged version of our Daily Report.Survey says: sell bondsRecent surveys of diverse investor groups show nearly universal expectations for higher rates (lower bond prices). An average of different surveys is the most extreme since 2005.Other extremes mostly led to lower interest ...

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Shades Of '87 In Stock/Dollar/Rate Moves As 50-Day Fails

This is an abridged version of our Daily Report.Shades of ’87 (among others)Over the past year, stocks have rallied, and the dollar has collapses as the Fed raises rates.That is similar to 1987, but there were also other dates that didn’t lead to nearly such dramatic results. After similar ...

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Easy Conditions As Traders Short More VIX

This is an abridged version of our Daily Report.Easy conditionsA major measure of national financial conditions just reached a historic level of easiness because “it’s all good.”This is despite a sharp jump in interest rates, which is peculiar behavior. That seems like it should be a good sign, ...

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Yield Inversion As Utilities Correct

This is an abridged version of our Daily Report.Yield inversionThe yield on 2-year Treasury Notes is now higher than the dividend yield on the S&P 500. That’s the first time in 10 years, causing consternation among some who only look back that far, since it preceded the financial crisis.But ...

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No Negative Surprises As Indexes Hit Highs

This is an abridged version of our Daily Report.No negative surprisesEvery major Economic Surprise Index across the world is now positive. From the U.S. to China, Europe to Emerging Markets, all regions have had economic reports that have exceeded economists’ expectations.When we’ve had such ...

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Good Times As S&P Shrugs Off Financials

This is an abridged version of our Daily Report.Good timesLow stress and easy financial conditions have led to high confidence, low savings and good economic surprises.That combination of positive factors has never been seen to the degree we’re enjoying now. Prior “good times” led to mixed ...

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Amazon's Optimistic Group-Think

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Amazon Upgrade As A Sign Of A Top

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Positive Markets On Nonfarm Payroll Miss

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Big Payroll Miss

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Gapping Down On A Nonfarm Payroll Miss

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The Most Frightening Chart

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Large Loss On Nonfarm Payroll Day

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Nonfarm Payroll Reaction

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