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Stocks with the strongest balance sheets have greatly outperformed those with weak balance sheets over the past couple of months. They've outperformed the broader market, too. An index of these strong stocks just hit a new all-time high.
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The Citigroup Panic / Euphoria Model shows that investors are disturbingly confident. Some of its component indicators don't agree.
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Over the past two weeks, an overwhelming number of issues on the NYSE have advanced. This kind of a broad-based rally, for this prolonged period, has led to consistently positive long-term returns. When we see it occur after an oversold reading as we have, it has a perfect record.
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Junk bonds continue to rally, pushing sentiment to the highest level in more than a decade.
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After crashing in March, silver has been on an epic run over the past 50 days.
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A proxy of the Citigroup Panic / Euphoria model shows some components in euphoria territory, but also some showing neutral or even panic-like conditions. The public model is firmly in euphoria territory, which has unnerved some investors. Historically, the record is mixed, especially when it's at this kind of extreme.
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A proxy of the Citigroup Panic / Euphoria model shows some components in euphoria territory, but also some showing neutral or even panic-like conditions. The public model is firmly in euphoria territory, which has unnerved some investors. Historically, the record is mixed, especially when it's at this kind of extreme.
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The Robinhood brokerage, catering to small individual investors, is seeing a jump in users trading leveraged ETFs.
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Over the past week, we've seen increasing signs of a long-term recovery, but there is still a disturbing amount of signals showing shorter-term speculative activity.
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Robinhood has become an increasingly popular outlet for stay-at-home investors - or more likely "gamblers" at this point. The growth in accounts holding leveraged long ETFs has risen quite a bit faster than those holding leveraged short ETFs though that's tapered in recent days.; An indicator that looks at sentiment in the AAII survey over a long time frame shows continued pessimism. The Farrell Sentiment indicator looks at a 10-week average of individual investor attitudes, and it's currently at a very low level, despite the rally in stocks. It doesn't have a perfect record and is acting strangely.
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>Sundial Capital Research is an independent investment research firm dedicated to the application of mass psychology to the financial markets. Sundial publishes the SentimenTrader.com website.
Our focus is not market timing per se, but rather risk management. That may be a distinction without a difference, but it's how we approach the markets. We study signs that suggest it is time to raise or lower market exposure as a function of risk relative to probable reward. It is all about risk-adjusted expectations given existing evidence.
