sentimenTrader Blog


2017-12-15 | Jason Goepfert | Comments

This is an abridged version of our Daily Report.

Record exposure

Active investment managers saw a record jump to record exposure and record aggressiveness toward stocks this week.

There is a tendency to think this is automatically a contrary sign, but it has not been a consistent signal in the past, with gains in stocks going forward after every time managers went leveraged long the stock market.

Where’s the cheer in small-caps?

The small-cap Russell 2000 has slid to a multi-week low as it has borne the brunt of recent selling pressure. When that has happened in bull markets during December, it rallied every time over the next several weeks.

Commodity apathy

Commodity funds are closing as assets leave amid persistent declines. The ratio of commodities to stocks has hit a generational low.

In the midst of the negativity, hedgers have been buying contracts, especially “soft” ones.

MLPs find some love

Over the past 5 days, the average Optimism Index for the master limited partnership fund AMLP has been above 80, the highest in almost a year. According to the Backtest Engine, when the 5-day average has been above 80, AMLP has struggled to hold any gains over the short-term.

For access to the full report, indicators, charts, screens, and Backtest Engine, log in or sign up for a free 30-day trial today.


2017-12-14 | Jason Goepfert | Comments

This is an abridged version of our Daily Report.

Good times

Low 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 returns, with the last two peaks in stocks triggering after the good times started to ebb.

Shrugging off financials

Financial stocks lost more than 1% on Wednesday, but the S&P 500 closed just off its all-time high. This is odd – usually, when financial stocks take such a big hit, the S&P suffers a larger negative impact, knocking the S&P more than 1% off its 52-week high on average.

When the S&P shrugged it off, it led to consistently poor returns for stocks.

FOMC seasonality

The Dow Industrials Average ETF, DIA, managed to close at a multi-year high on a day the Federal Reserve announced its position on interest rates. Its most consistent performance going forward was over the next 7 days.

Coffee is the most hated commodity

The Optimism Index on the contract has slid below 15, nearing its all-time low. According to the Backtest Engine, of the 59 total days since 1991 when the Optix was below 15, coffee showed a positive return over the next month 75% of the time.

For access to the full report, indicators, charts, screens, and Backtest Engine, log in or sign up for a free 30-day trial today.


2017-12-13 | Jason Goepfert | Comments

This is an abridged version of our Daily Report.

 

Near-record optimism (again)

Small business owners are showing nearly the highest optimism readings in 45 years, confirming other surveys that are showing somewhere between multi-year to multi-decade extremes in optimism.

High levels in the past led to mixed returns, with the Russell 2000 underperforming the S&P 500. Small value stocks performed the worst going forward, while large growth stocks did the best.

Buy the dip

Investors have been buying intraday dips in 2017 to a record degree. Since the inception of S&P 500 futures, there has never been a time that exceeded what we’ve seen this year, according to a comparison of intraday versus close-to-close changes in the futures.

The only real comparison is 1995, which has come up time and again in studies this year.

FOMC seasonality

The S&P 500 has closed at a 52-week high on the eve of a Federal Reserve decision on interest rates 10 times since the bottom in 2009. It added to its gains 5 times the days of the decision.

For access to the full report, indicators, charts, screens, and Backtest Engine, log in or sign up for a free 30-day trial today.


2017-12-12 | Jason Goepfert | Comments

This is an abridged version of our Daily Report.

 

Another 7% gain for 2018

Wall Street strategists are looking for a 7% gain for the S&P 500 in 2018. That’s slightly more optimistic than the Big Money poll a couple of months ago, and it’s about what they estimate every year. Actual results vary greatly, so using the average estimate for next year’s returns is next to useless.

It’s all relative (strength)

The weekly Relative Strength Index has reached its highest level in two decades. It has surpassed other readings since 2010, which led to immediate pullbacks. Similar readings led to a gain 6 months later 100% of the time.

It’s not just a weekly time frame, either – the RSI is in extreme territory on a daily, monthly, quarterly, and yearly time frame, too, for only the 3rd time in history.

Federal Reserve interest rate decision on Wednesday

The pattern over the past several meetings has been a drift higher in stocks into the release of the statement, then some quick weakness immediately after in the day(s) following.

For access to the full report, indicators, charts, screens, and Backtest Engine, log in or sign up for a free 30-day trial today.


2017-12-08 | Jason Goepfert | Comments

This is an abridged version of our Daily Report.

Bitcoin blow-off

Anecdotal evidence of a blow-off in Bitcoin has exploded over the last couple of days. That’s hard to incorporate, so using data related to price action and public interest, we see that a sentiment model has reached blow-off territory.

The few other times we’ve seen an extreme like this, further gains were erased in the week(s) ahead, especially once there was an initial sign that late buyers were getting scared.

Sector performance after plunge in correlation

Stocks have been at record highs then correlation among sectors plunged as we saw in Wednesday’s report. In general, stocks have performed poorly going forward, though among sectors, Tech and Health Care did fine.

Not so precious

The metals have been getting hit hard lately, and silver is starting to see signs of pessimism. The Optimism Index for SLV has averaged less than 20 over the last three days.

For access to the full report, indicators, charts, screens, and Backtest Engine, log in or sign up for a free 30-day trial today.


2017-12-07 | Jason Goepfert | Comments

This is an abridged version of our Daily Report. 

 

Sector correlations near all-time low

Over the past 3 months, the average correlation of each of the 10 major sectors to the S&P 500 has plunged to the 2nd-lowest level in history.

The only time sectors moved more independently than now was in the year 2000. When stocks were at a high then correlations plunged, long-term stock returns were muted, with only one leading to sustained gains.

Volatility bets

There is $2.6 billion in ETFs that bet against a rise in volatility, near an all-time high. But there is also $1.7 billion in funds that bet on a rise, so the net isn’t as extreme.

Small-cap troubles

The Russell 2000 has dropped for four straight days after setting a new high.

That has led to further losses over the next couple of weeks almost every time, though this time at least it has positive seasonality in the last two weeks of the year.

From Discretionary to Staples

We saw on Tuesday how much buying interest there has been in Discretionary stocks. Now the Optimism Index for Staples stocks is the highest among the most popular ETFs we track. According to the Backtest Engine, when the 5-day average of the Optix crossed above 80, it tended to fall back over the next week.

For access to the full report, indicators, charts, screens, and Backtest Engine, log in or sign up for a free 30-day trial today.


2017-12-06 | Jason Goepfert | Comments

This is an abridged version of our Daily Report. 

Closing on the lows (WHAT?!)

The S&P 500 fund, SPY, has closed near the day’s intraday low for the past two days, an unusual sight during this strong uptrend that has seen so many intraday dip-buyers. It hasn’t closed on the low on consecutive days in nearly two years. When stocks have been doing well, back-to-back closes near the low have been a good medium-term sign.

Consumer extrapolation

Investors seem to be projecting high consumer confidence to mean good sales of discretionary items. The Consumer Discretionary sector had been up 17 of the past 18 days, a streak not seen in 65 years.

Other bouts of persistent buying indicated some short-term exhaustion, but good long-term prospects.

Copper gone to pot

Copper suffered its largest loss in well over a year, but remains above its long-term 200-day average. Of the 13 other times it has suffered such a large relative loss in an uptrend, it went on to a further loss over the next two months 62% of the time.

Multiple losses

The S&P 500 has dropped for three sessions yet still remains above its 10-, 20-, 50- and 200-day averages. Prior to 1993, this led to rebounds over the next two weeks only 47% of the time and an average return of -0.2%. Since then, it has rebounded 72% of the time.

For access to the full report, indicators, charts, screens, and Backtest Engine, log in or sign up for a free 30-day trial today.


2017-12-05 | Jason Goepfert | Comments

This is an abridged version of our Daily Report. 

Shades of 2000 for mom and pop

Individual investors haven’t had this small of a cash cushion since 2000. In November, their cash holdings dropped below the prior recent lows in 2015 and August of this year.

At the same time, they are heavily allocated to stocks. The difference between their stock and cash allocations is among the widest in 30 years.

Foreign buyers come back

There has been a big surge in foreign buyers of U.S. stocks. The latest month of inflows was among the largest in 30 years. But as a percentage of total market cap, it was relatively small and comes after months of outflows.

Options traders large and small are betting big

Small and large options traders alike are betting aggressively on the rally continuing. They haven’t had this much riding on bullish options strategies in almost four years, with an average of almost 2 bullish positions for every bearish one over the past two weeks.

Big reversal

Monday ranks as the largest negative reversal in S&P 500 futures since January 3, 2000. This is including times when they gapped up at least 0.5% at the open, traded to a new all-time high, then closed in negative territory.

 

For access to the full report, indicators, charts, screens, and Backtest Engine, log in or sign up for a free 30-day trial today.


2017-12-04 | Jason Goepfert | Comments

For those who don’t follow the premium Twitter account, which you have access to if you’re receiving this message, following are some of the studies and indicators that were posted today. If you’d like to follow the Twitter account, please request to follow @SenTrader_Prem on Twitter then send an email to admin at sentimentrader dot com […]

This post is available to sentimenTrader members only.

Please login to to view this content.

Don't have an account?

Sign up to get RISK-FREE access to all of our indicators, models, commentary and award-winning research.

If you've never tried the service before, then there is no charge for the first 30 days. Then pay as little as $1.59 per trading day for access to our award-winning research. There are three convenient billing options: $39/month, $109/quarter or $399/year.


2017-12-02 | Jason Goepfert | Comments

This is an abridged version of our Daily Report. 

 

Can’t get enough of the Dow

The Dow Industrials enjoyed the best weekly gain in nearly a year. Even with Friday’s scare, it rallied nearly 3%, the most since last December. It also closed at a new all-time high, raising worries about a blow-off move this week. Similar moves since 1900 don’t support that worry.

Nothing but positive surprises

Economic surprises over the past three months have been consistently positive. The Citigroup Economic Surprise Index is nearing a maximum level since climbing above zero in September..

Among the most popular ETFs, bonds did okay, commodities were questionable, and energy and health care did well.

Industrials get the spotlight

Nearly half of Industrial stocks in the S&P 500 hit a 52-week high late this week, for mostly the same reasons the Dow had such a good week. Seeing more than 40% of Industrial stocks hit a 52-week high at the same time is among the highest readings in history.

A spike in fear, then…not

The VIX “fear gauge” spiked nearly 30% on Friday before reversing nearly all of that. That’s the 22nd time in 30 years that it has rallied at least 20% during the day and reversed more than -20% by the close.

For access to the full report, indicators, charts, screens, and Backtest Engine, log in or sign up for a free 30-day trial today.


next page →


RSS Feed

Subscribe to the Blog RSS feed

Recent Blog Posts


As mentioned in...

Brought to you by:

Sundial Capital Research Logo