Posts tagged as Models

Weekly Wrap for Oct 22 - Breadth Thrusts, Risk-On Behavior, Metals Double

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Investors Have Soured on Stocks AND Bonds

Optimism toward both stock and bond markets has ebbed enough to be considered low, if not extreme. It's unusual to see pessimism in both markets.

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After 17 Months of Speculation, Investors Are in Risk-Off Mode

For the first time in well over a year, investors are showing risk-off behavior and widespread signs of pessimism.

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For the First Time in a Year, Investors Move to Risk-Off

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The Probability of a New Bear Market is Rising

Just as macro conditions are deteriorating, the Bear Market Probability model has jumped to one of the highest levels in decades.

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Macro Conditions Deteriorate as Bear Market Probability Rises

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Macro Conditions Are Plunging

Our Macro Index Model is declining and is now almost to the level from the pandemic.

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Weekly Wrap for Jul 23 - Risk Off Then Reversal, No Recession, Surging Coffee

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Within 1% of a High...And Investors Are Already Fearful?

The Fear & Greed model has been falling even while stocks have been holding near highs...that's not the positive it's made out to be.

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Sentiment Isn't Yet the Support It Needs To Be

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The Probability of a New Bear Market is Rising

According to the Bear Market Probability model, the chances of a 20% decline in the year ahead is rising.

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The Probability of a Bear Market is Rising

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This year is just like...

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Bearish to Bullish Volatility Reversal Buy Signal

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Risk-on behavior is nearing record levels

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EWZ (Brazil) Bollinger Band Buy Signal

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QQQ Bollinger Band Buy Signal

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Sentiment on stocks nears record vs bonds and gold

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Dumb money has never been so smart

At the end of February, Dumb Money Confidence was extremely high, and Smart Money Confidence extremely low.

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Weekly Wrap for Feb 19 - More speculation that hasn't mattered, gold and bonds get battered

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Excess upon excess as Dumb Money is smartest ever

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Moving beyond optimism to euphoria

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We haven't seen extremes like this in 15 years

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What this model is saying about a new bear market

A bear market probability model has climbed above 50% again, as fundamental, valuation, and price-based inputs recover.

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

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Bond sentiment turns sour

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Despite losses, Dumb Money Confidence is still pretty high

Dumb Money Confidence has declined over the past couple of weeks but remains historically high for a time when the S&P was at a 1-month low.

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Options traders pull back as Dumb Money loses confidence

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Speculative behavior makes a comeback

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Sentiment indicators as trend following models

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Risk is wrong as dumb money is right

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Risk is high and Dumb Money is confident...and they've been exactly right

"Dumb money" investors have been highly confident for weeks, and risk has been high, but stocks continue to rise.

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What it means when Dumb Money is so smart

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Poor environment coupled with high optimism

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Sentiment is the opposite of sour

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Confidence returns to pre-crisis levels

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The spread between Smart and Dumb Money is narrowing

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Macro model flips to cash

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

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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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Sentiment has recovered out of deep pessimism

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Aggregate model goes negative

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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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Bear market probability is on the verge of plunging

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A historic 3-day buying thrust is changing sentiment

The past 3 sessions have seen a record skew in positive stocks and volume. Our CNN Fear & Greed proxy model is curling higher after extreme pessimism.

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Sentiment is starting to turn

The spread between Smart and Dumb Money Confidence is starting to narrow. Commodities suffered one of the worst couple weeks on record.

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Uncharted waters as Panic Button hits record

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A(nother) week for the ages

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A historic 7 days as sentiment plunges

The past 7 days have seen historic volatility in the S&P 500, with four shocking declines. Optimism has plunged over the past two weeks.

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What a week

The Nasdaq Composite is the only "big four" index to hold above its 200-day average. Our CNN Fear & Greed proxy model fell to 0%.

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Smart/Dumb and indicators flip to pessimism

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Less greed and more warnings

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Stocks are hitting new highs, and with less greed

The CNN Fear & Greed model is showing a behavioral divergence, with less enthusiasm on this rally. The put/call ratio is stretched from its trend.

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Sentiment Is Normalizing As Technical Warnings Trigger

Smart Money and Dumb Money Confidence shows sentiment is starting to normalize. The Hindenburg Omen is triggering again.

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'Big Four' Indexes Register Warnings As Sentiment Recedes

All 'big four' equity indexes have triggered technical warning signs. Our Optimism Index for stocks is pulling back from an extreme level.

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An Extreme - And Protracted - Stretch Of Optimism

There has been an extreme number of indicators showing optimism over the past month. More than 25% of S&P 500 stocks are overbought.

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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: breadth thrusts, financial conditions, USD, copper

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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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Traders Buy Calls As Smart/Dumb Money Plunges

There is now a historic spread between Smart Money Confidence and Dumb Money Confidence, as the Equity Put/Call Ratio plunges.Historic spreadBuilding on a true extreme reached late last week, the spread between Smart and Dumb Money Confidence widened further, stretching to a threshold rarely ...

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Near-Record Levels Of Optimism

Dumb Money Confidence has spiked while Smart Money is retreating.Near-record optimismA year ago, the “dumb money” was the most bearish in 20 years. Now, a year later, they’re the 2nd-most optimistic, barely eclipsed by a few days in April 2010. Indicators focused on the “smart money” are near ...

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Smart Money / Dumb Money Confidence Spread < -63%

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Adding emerging markets to models

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Bull Stampede

The Rydex family of mutual funds is showing that investors are almost the most bullish on record.Bull stampede at RydexIn the Rydex family of mutual funds, traders have positioned themselves in perhaps the most aggressive way ever.It’s not hip to be a mutual fund manager anymore – all the cool ...

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CNN Fear & Greed Model Above 80

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

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Applying sentiment indicators to different models

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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 The Breakout In Small Caps Might Mean

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.Intermediate Term Optimism IndexWith the stock market pushing higher relentlessly, sentiment remains elevated. Our Intermediate Term Optimism Index's 20 day ...

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Testing Unemployment Rate Breadth

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Trade Gap

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Smart / Dumb Money spread widens

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Smart Money vs Dumb Money Is Getting Extreme

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.Confidence conflictQuite a few times over the past couple of months, we’ve discussed how various aspects of sentiment were curiously subdued. From individual ...

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Testing unemployment models for other countries besides the U.S.

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Testing earnings models for other countries besides the U.S.

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ETF traders pull out of small caps as fear creeps in

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 ...

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Testing indicators + models

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What I'm doing - applying the Stock/Bond ratio to models

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Gold Has Only Done This 4 Other Times

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.Stocks down, bonds upHeading into the last few sessions of the month, the total return on the S&P 500 was on track for one of its worst in almost 30 years ...

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What I'm looking at - DAX, Put/Call, all-or-nothing, gold:silver ratio, AUDUSD

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Stocks Have Gone Absolutely Nowhere

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.Going nowhereThe most benchmarked index in the world has gone nowhere for over a year and a half. The S&P 500 was just trading at the same level it was at in ...

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Market overview: combining technicals & fundamentals

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Financials As A Sick Canary

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 ...

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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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Dumb Money Confidence Reaches 80%

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Wednesday Color - Dow Stocks, Dumb Money, Gamma, Microsoft Expectations, Germany

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This Has Only Happened Twice In 40 Years

High confidenceDumb Money Confidence has recovered from its dip below neutral territory in May. Now above 77%, it’s to a level that has preceded weak annualized returns in stocks.As a signal, the first reading above this level after a dip below 50% has led to mostly weak short- and medium-term ...

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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 - Fund Manager Panic, New Model, OEX, UAE, Miners

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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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From Risk-On To Risk-Off In Near-Record Time

Risk-on to risk-off in a monthIn April, investors were showing extreme risk-on behavior, according to their eagerness to buy some markets over others. Barely a month later, that has cycled to extreme risk-off behavior.The first risk-off reading following risk-on behavior has usually led to a ...

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Confidence Has Flipped From Dumb To Smart

Confidence flipFor the first time in four months, Smart Money Confidence has moved above Dumb Money Confidence.Usually by the time the spread between them has flipped after several months, stocks were seeing the last bits of selling pressure.With one major exception, these were mostly good ...

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Sentiment Is Curling

Summation finally weakensWe’ve discussed the McClellan Oscillator and Summation Indexes a lot in recent months, because they have been showing notable readings of momentum. That’s starting to ease with the long-term Summation Index, which dropped below 750 for the first time in months, ending ...

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Most Confident "Dumb Money" In A Decade

Maximum optimismDumb Money Confidence has been climbing steadily for a month, and stocks have so far shrugged off that extreme optimism. Now it has reached its highest level in a decade.Every date that saw this high of a reading in the past 20 years sported a negative return in the S&P 500 at ...

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Dumb Money Confidence Highest In A Decade

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Tuesday Midday Color

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Wall Street Analysts Are Catching Up To Dumb Money

Not-so-dumb moneyDumb Money Confidence rose to an extreme in February, yet the S&P 500 has tacked on more than 5% since then, suggesting it’s not so dumb after all. The recent gains in stocks have attracted more of these traders, and their Confidence just surged to a new high – that has been a ...

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Tech's Perfect Signal

Tech’s fully recoveryOut of the S&P 500’s 11 major sectors, only one has made a fully recovery from the December decline, and it’s an important one. The information technology group has fully recovered from its decline of more than 24%.Other times it fully recovered a drop of 20% or more within ...

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What Happens When Oil Recovers From A Plunge

A crude recoveryAs markets sold off in December, crude oil futures fell more than 30% below the 200-day average, one of the largest deviations since their inception in 1986. This week, they made a complete recovery, now trading above the 200-day.Other times the commodity recovered from such a ...

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Dumb Money Does A 180

Full recoveryOver the past 50 days, Dumb Money Confidence has averaged 70%, the highest since early 2018. This marks a complete cycle from the extreme pessimism in December. When the 50-day average first breaches the 70% level, it has typically coincided with a temporary reprieve in unrelenting ...

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Tuesday Midday Color

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No Pessimism Even As Small-Caps Struggle

No pessimismOn Monday, the last of our core indicators that was showing a hint of pessimism dropped off. At the same time, 40% of them were showing optimism. The last two times that happened, the S&P formed a kind of rounded peak.Since 1999, many of the positive returns were clustered in 2017, a ...

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Tuesday Midday Color

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Wednesday Midday Color

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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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Wednesday Midday Color

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Extreme Greed As Utilities And Yields Forge Unholy Alliance

Extreme greedThe CNN Fear & Greed proxy model has moved further into optimistic territory, now showing Extreme Greed, pushed higher by most of the components in the model.Other times it has become this stretched in a downtrend, future returns were almost exclusively negative. There were 99 days ...

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Back To Greed; Low Exposure; Oscillator Streak

This is an abridged version of our Daily Report.Back to greedThe CNN Fear & Greed model has gone from extreme Fear in December to Greed now.It’s not unusual to see it swing this much, this quickly, but it is unusual when the S&P 500 still hasn’t made it above its 200-day averages. And those ...

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CNN Fear & Greed Back To Greed

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Narrowing Smart-Dumb Spread; 4 Straight Up Weeks

This is an abridged version of our Daily Report.Narrowing spreadAs stocks rally, Dumb Money has become more confident while Smart Money has increased their hedging activity. The spread between the two hit a multi-year extreme before Christmas and is now nearing zero for the first time in ...

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Smart - Dumb Money Spread Nearing Zero

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Studying The Studies

This is an abridged version of our Daily Report.Studying the studiesLike last year, we take an objective look at the studies posted to the site in 2018. Using a conservative estimate of their expected value, we can see that it still makes sense to observe the markets in this way. When we ...

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A Pre-Holiday Review

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Another Volatile Session

This is an abridged version of our Daily Report.Another volatile sessionSome early optimism on Thursday was quickly erased, and stocks dove to new lows for this move. In the process, it triggered several extremes:* The Nasdaq is on the threshold of a 20% decline.* The percentage of securities ...

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Oil And Energy Collapse; RSI Divergence; Smart-Dumb Money Extreme; Overwhelming Lows

This is an abridged version of our Daily Report.No energyCrude oil collapsed with a large loss and 52-week low on Tuesday. That’s not what the Energy stock sector needed right now but taking the chance that we’re whistling past the graveyard, the losses on Monday and Tuesday may just be bad ...

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Testing A Wide Disparity Between Smart And Dumb Money

With the volatility in stocks this week, the spread between Smart Money and Dumb Money Confidence rose to 55%, the widest since January 2016.Our Confidence indices use mostly real-money gauges - there are few opinions involved here. Generally, we want to follow the Smart Money traders when they ...

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Thanksgiving Selling; Heavy Pessimism; Monday Gaps

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A Bad Month; Wide Confidence Spread

This is an abridged version of our Daily Report.A bad monthThe S&P suffered 16 negative days in October, tied for 3rd worst since 1928 and the most since 1970.The pressure was enough to trigger a sell signal for a popular trend-following strategy, with a close below its 10-month average, that ...

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Stocks, Sectors In Correction; Nasdaq's Bad Day; S&P Negative YTD; Spike In Pessimism

This is an abridged version of our Daily Report.Stocks in correctionThe S&P still hasn’t suffered a correction, if we define it by a 10% decline from a 52-week high. With the severe loss on Wednesday, it has just barely missed the cut. Most of its stocks haven’t been so fortunate, however. With ...

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Major Reversal; Jump In New Lows; Dumb Money Purge

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Quick Change In Character; Smart Money Steps In; Emerging Stocks Rebound

This is an abridged version of our Daily Report.A quick change in characterThe S&P went from 52-week high to below its 200-day average in only 3 weeks. That ended a streak of more than six months above its 200-day average. Other times it underwent a quick change in character, from a 52-week high ...

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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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Most Shorted Stocks Surge With Optimistic Momentum

This is an abridged version of our Daily Report.Short squeezeThe most shorted stocks in the market have outperformed the S&P by a wide amount in recent weeks. An index of heavily shorted stocks has jumped nearly 10% to a new high.After similar short squeezes, the S&P outperformed heavily shorted ...

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Model Updates

We've had some requests to post updates on a few popular models from the site, so below are current snapshots of the spread between our Smart Money and Dumb Money Confidence, the Medium-Term Optimism Index, and a proxy of the CNN Fear & Greed model.All three reached modest levels of pessimism in ...

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Strategy Development with the STEM.MR model

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New Functionality: Threshold Returns for Models

This weekend we added Threshold Returns, a small (but important) new piece of data to our models.Threshold returns provide a view into the annualized returns for the underlying symbol while the model/indicator value is above / below / between the extreme values for that model/indicator. ...

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