SentimenTrader Blog - Page 2


2019-07-17 | Jason Goepfert | Study

Dumb Money Confidence has exceeded 80%, which is lower than where it was in April but still historically high, ranking in the top 2.3% of all daily readings since 1999.When it has been above 80%, the S&P 500’s annualized return was -4.5%, versus +35.1% when Confidence was below 25%. After Confidence crossed above 80% for the first time in a month. Returns were poor, especially over the next month, with only a 33% win rate. See the July 17, 2019 report for more detail.That has been even more ...

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2019-07-17 | Jason Goepfert | Premium

Here's what's piquing my interest as some of the negatives that have piled up start to take some effect.Sector BreadthIndustrial stocks have been chugging higher, and it has been enough that nearly every Dow Industrial stock is trading above their 50-day moving average. This is the best out of every sector and country we follow.More than 95% of stocks above their average is historically an extremely high figure, but other than the short-term, has not been a negative for returns.It's been ...

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2019-07-17 | Jason Goepfert | Lite

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 running into trouble several times, especially in recent decades. And when this has triggered in the 2nd quarter, the S&P has struggled to hold its gains over the next couple of months.Shipping up, gold ...

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2019-07-16 | Jason Goepfert | Daily Report

Earnings growth is expected to be flat or negative compared to Q2 last year, but stocks have been hovering at new highs, especially dangerous during this time of year; The Baltic Dry Index broke out to new highs, which has been especially negative for gold; Dumb Money Confidence is above 80%; Full moons in July have mostly led to declines

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2019-07-16 | Jason Goepfert | Study

Depending on the source, it looks like earnings for S&P 500 companies are going to be lower than they were in the same quarter last year. There was a hint of “whistling past the graveyard” in those rallies, as the S&P ended up running into trouble several times, especially in recent decades.Especially if it happened in July.Ignoring the earnings pattern, any time the S&P was at a new high a couple of weeks after Q2, it tended to suffer losses over the next two months.

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2019-07-16 | Jason Goepfert | Study

The Baltic Dry Index has broken out to a new multi-year high, typically assumed to be a positive sign of global economic growth. The more demand there is for shipping, the more the shippers can charge to transport goods.In reality, it's not that clear, and has been an inconsistent indicators for stocks. For gold, though, it has led to almost universally negative returns. See the July 16, 2019 report for more detail.

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2019-07-16 | Jason Goepfert | Premium

Here's what's piquing my interest as traders start to position themselves ahead of a deluge of earnings.Earnings ParadeMuch is being made of the potential slowdown in earnings as companies begin to report in earnest over the next couple of weeks. We've seen in years past that "earnings recessions" are not necessarily a sell signal, but it's still relatively unusual to see stocks hovering at or near highs when earnings growth is negative.That, too, hasn't been a clear sell signal, but it did ...

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2019-07-16 | Jason Goepfert | Lite

Funds buy inWe saw last month that equity hedge funds apparently have a low exposure to stocks on a longer time frame. We also follow macro and commodity-trading funds, which tend to be more aggressive, leveraged, and trend-following with a shorter time frame. And they have suddenly seen the light, going from 25% short exposure in March to more than 50% long exposure by late last week.This has tended to precede weak returns.Leveraged bets on a rallyThe smallest of options traders placed a ...

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2019-07-15 | Jason Goepfert | Daily Report

Exposure to stocks among macro trend-following funds has suddenly turned aggressive, with the highest reading since early 2018; The smallest of options traders bought speculative call options aggressively last week; The S&P hit a high two weeks after the end of a quarter; SPY hit a high on extremely low volume and small range

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2019-07-15 | Jason Goepfert | Study

Small options traders are now scrambling to make up for their May/June panic and have suddenly turned to speculative call options.They bought more than 4.4 million of them last week, the most since May and the 12th-most in any week since 2000. It amounted to 40% of their total options volume, enough to be considered extreme. We can see that over the past couple of years, high levels of speculative activity have preceded at least short-term hiccups in the S&P. See the July 15, 2019 report for ...

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