Posts tagged as Momentum

Friday Color - Lows Recede, Summation Rollover, Bad Ag, Bond Bulls (Again)

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200 Reasons Why The Hindenburg Omen Matters

Warning signsFor the first time since October 2018, there are hints of trouble brewing beneath the market. While major indexes have been at or near all-time highs, under the surface there are more and more stocks losing momentum, and there has been a split with many securities at 52-week highs ... [...]

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Friday Color - Gold Momentum, Internal Warnings, Mexico

Here's what's piquing my interest on this summer Friday that's having some issues trying to hold any buying interest.UnstoppableGold reacted very well to the newly renewed projections of a larger rate cut at the next Fed meeting, breaking out again to another new high. So far, it has managed to ... [...]

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Momentum Is Waning And Stocks Are Starting To Split

Six months of momentumThe McClellan Summation Index has now gone 6 months in positive territory.That’s a long streak compared to others since 1962. Momentum is very difficult to time, almost by definition, but by the time this measure of breadth momentum went this long above zero, forward ... [...]

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Thursday Color - Fading 'Mo, Energy Stock Drop, Titanic Signal, Cotton, Euro Junk

Here's what's piquing my interest on what's starting out to be a minor hangover from yesterday's pressure.Breadth ReviewAcross sectors and indexes, breadth underlying the recent rally has been ebbing, and most of the McClellan Oscillators we track are now below zero.This means that the ... [...]

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Monday Color - Discretionary Streak, Fund Exposure, Small Trader Enthusiasm, Earnings Season

Here's what's piquing my interest on a slow that, with some hints that buyers have reached exhaustion.On A RollThe WSJ notes that the consumer discretionary sector has risen for 12 straight days, one of its longest streaks ever. Indeed.Momentum doesn't die easily, and that was the case after ... [...]

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Tech Has Led - What That Should Mean For The Summer

Similar sector first halvesThe S&P 500 has enjoyed great gains through the first half of the year, as have most of its sectors. Looking at other years when the S&P gained at least 10% through June that had the most similar returns among sectors, the next couple of months tended to be ... [...]

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This Is One Of Tech's Quickest Recoveries

New highs, but...The S&P jumped to a record high along with several other indexes on Monday (and Tuesday) but fewer stocks were coming along for the ride both days. The percentage of stocks on the NYSE and within the S&P itself has shrunk from when the indexes moved toward new highs in June.That ... [...]

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

Here's what's piquing my interest as traders start to drift away ahead of what is likely to be an extended holiday weekend.Tech RecoveryThe WSJ notes that the S&P 500's tech components have reached a new high for the first time in months, erasing the 10% correction from May.This is one of the ... [...]

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Why Gold Bugs Shouldn't Fear A False Breakout

Risk-on hasn’t caught onMonday’s session was almost totally risk-on, even if the magnitude faded during the day. Most “risk-on” assets rose, which was the case on Friday, too. But over the past 200 days, risk-off sessions have dominated, reversing the trend that led up to the fall of 2018.Since ... [...]

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Best June In Decades Is Hated By Wall Street

A good monthThe S&P 500 enjoyed its best June gain since 1955, with 1999 being the only other year with more than a 5% gain. It also managed to hit a multi-year high during the month.Since 1928, this has had a strong tendency to lead to a good start to July, but not so much after that. For the ... [...]

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Monday Color - High Gap, Weekly Indicators, Sector Breadth

Here's what's piquing my interest as buyers try to push stocks to new highs to start the month.Back To HighsWith a (temporary? permanent?) relief to trade tensions, buyers are pushing stock futures to new highs. For S&P 500 futures, this is the largest positive opening gap that is above all ... [...]

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The Everything Rally

The everything rallyTotal return stock and bond indexes are hitting all-time highs at the same time. They cover an array of stocks and bonds, suggesting extreme breadth of buying interest, as noted by Bloomberg.When they’ve all hit records together, it has been an especially good longer-term ... [...]

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Friday Color - Massive Flows, Dollar Trend, Stock/Bond Rally, Whiplash, Sector Highs

Here's what's piquing my interest as markets meander on a post-breakout summer Friday.Sell Stocks, Buy BondsThat seems to be the mantra among fund investors, anyway. On Thursday, SPY, HYG, and LQD all hit new highs. Yet investors pulled more than $4 billion from SPY, and added nearly $2 billion ... [...]

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Gold Just Did Something For The 1st Time In 25 Years

Gold’s near-record streakGold broke out to a multi-year high for the first time in more than 2,000 days, which was nearly its longest streak in 40 years.The ends of other super-long streaks without a new high all saw the metal trade lower over the next couple of months. The dollar tended to be ... [...]

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Tight Range Following A Surge

As noted by the Wall Street Journal, prior to today, the S&P 500 hadn't moved more than 0.5% for 6 straight sessions. What’s especially notable about this streak is that the calm is occurring after a storm of buying pressure. In the prior week, the S&P had enjoyed a surge of more than 5% during ... [...]

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Monday Color - New Highs, Material Gain, Financials, Gold, Small Traders, 5 Straight

Here's what's piquing my interest so far today.High-LightOne of the most notable developments of the rally to end last week was the expanding number of securities that erased their May pullbacks. Nearly 10% of issues on the NYSE reached a 52-week high on Friday, the most since January ... [...]

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

Like Tuesday, I won't be publishing a Daily Report, but will instead send this as a Bulletin. This is typically what's sent out around midday as a Premium Note - it's a look at my notebook of things I'm watching throughout the day, some of which then make it into the Reports.The summary portions ... [...]

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Buyers' 1-2 Punch For Stocks

A one-two rallyThe S&P 500 fell to a 50-day low on Monday, and the charts didn’t look good, but they hid a lot of underlying potential. Both Monday and Tuesday saw eager buying pressure under the surface, and Tuesday’s one-day jump in the S&P was the largest in nearly six months.When the index ... [...]

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Wednesday Color - Gaps, Tuesday's Jump, Breadth Recovery, Bitcoin, Corn

Here's what's piquing my interest so far this morning. When there's a large or notable gap I prefer to get these out early, even if today's looks to be fading as we head into the open.GappyStock futures are on track to show a relatively large positive gap up this morning as traders show some ... [...]

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

Here's what's piquing my interest so far today.5 StraightWe saw at the end of last week that the Dow Industrials had just suffered its 5th straight negative week, a rarely-seen bout of selling pressure given the index is so near its high.It's not the only index. The Shanghai Composite also ... [...]

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5 Weeks Of Losses - What's Next?

Dow dingedThe Dow Industrials have lost ground for five straight weeks, its 2nd-worst stretch since the financial crisis and among its worst since 1900.It’s relatively unusual to see such a string of losses while relatively close to a 52-week high, and over the past 40 years that has led to ... [...]

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Friday Midday Color - Dow's 5th Loss, Energy Breadth, Utes, Social Negatives

Here's what's piquing my interest approaching a long holiday weekend and buyers seemingly anxious to hold.LosingIf the Dow continues to slide and closes out its 5th-straight week with a loss, it will be the first time in 40 years it's lost so consistently while still hovering within 5% of its ... [...]

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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

Here's what's piquing my interest so far on this waiting-for-the-Fed day.Momentum ShiftMarketwatch notes that there has been a long-term momentum shift in stocks that has had an unerring ability to lead to higher prices. This last happened in 2016, according to a popular technical indicator.If ... [...]

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This Has Happened To Tech Only Twice Before

From first to worstStocks have lost one of their biggest drivers. Tech stocks have powered much of the rally through April, and then fell hard. The sector was leading the S&P 500’s 11 major sectors, and then fell to the worst among them over the past few weeks.That does not happen often, and ... [...]

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Friday Midday Color - Bonds, Renewed Momo, Overseas Extremes

Here's what's piquing my interest as traders try to end the week on an up note.PanickyThe pre-market nerves are continuing. We've touched on this a few times this week, and traders continue to push futures down before the open of regular trading hours. Over the past 10 days, the average gap in ... [...]

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Traders Are Panicking The Most Since The Financial Crisis

More momentum miscuesSigns of waning momentum are everywhere. One of the more impressive signs of intense underlying buying was in the Dow Industrials, where the McClellan Summation Index held above 1,000 for nearly three months, until now.Other times that extreme momentum finally ended over the ... [...]

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Wednesday Midday Color - Big Outflows, More Hedging, Falling Momo

Here's what's piquing my interest so far today.FlowsOn Tuesday, there were outflows among a large number and variety of equity funds. A bunch of them lost more than $25 million in assets on the day, led by the two most popular.That continues a trend for both SPY and QQQ. Across all of the major ... [...]

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Momentum Traders' First Real Test

Testing momentumIn early January, stocks registered a Zweig Breath Thrust when Up Volume quickly swung from oversold to overbought. This week, the indicator hit an oversold level for the first time, testing momentum traders’ conviction.Other times that months passed between a thrust and the ... [...]

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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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Friday Midday Color - Pre-Market Fear, Failures, Overseas Extremes, Momentum Drops

Here's what's piquing my interest so far on this edgy Friday.Pre-Market FearThe uncertainty surrounding the trade posturing has triggered quite a bit of nervousness ahead of regular trading hours. By 8:30am EST, futures have shown relatively large losses each of the past six days. During the ... [...]

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4 Energetic Extremes

Energy extremesThe selling pressure earlier this week in the energy sector triggered several shorter-term extremes in breadth. Most of those stocks fell to their lowest in a month, below their volatility bands. Few held above their short-term moving averages.When the sector had rebounded more ... [...]

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Friday Midday Color - Momentum Market, Energy Washout, Russell Breakout

Here's what's piquing my interest on yet another positive Friday. This marks the S&P's 14th rally out of 16 Fridays since the beginning of the year.Momentum MarketHere's a question I got the other day, reflecting some version that's been asked several times essentially asking the same thing:So ... [...]

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Why Beans Should Bounce

No oomph in OscillatorThe McClellan Oscillator hasn’t been able to get above zero even as the S&P 500 and other indexes tick to new highs on multiple days.Over the past 57 years, this has been a negative sign of underlying weakness for stocks, though the sample is small, and the most recent ... [...]

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Wednesday Midday Color - Sagging Summation, Missing MoMo, Strategist Switch

Here's what's piquing my interest as traders await the latest guidance from the Fed.Breadth ReviewUtilities have picked up again. Most of the breadth measures are meandering around neutral or slightly stretch. The big move yesterday, though, pushed nearly 60% of those stocks outside of their ... [...]

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Tech Tour De Force, Even With Big Money On Sidelines

A tech tour de forceThe tech sector has been on a record run over the past 18 weeks.Going back 93 years, the only other time it had a run like this was in June 1957. There were slightly lesser streaks, including near the peak of the bubble years in 2000 and prior to the 1987 crash. While not a ... [...]

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Breadth Breathes As A Bearish Candle Engulfs Oil

Breadth takes a breatherIn January, breadth momentum was so impressive that the McClellan Oscillator held above 50 for over a month. Since then, it hasn’t climbed above that level even as stocks made great gains.This is a divergence that has triggered near several important market peaks, but the ... [...]

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A Most Excellent Recovery

An excellent recoveryThe S&P 500’s new high marks an end to the correction, one of the S&P’s most impressive recoveries from a major decline from a prior all-time high. Other times it made a somewhat similarly-sized recovery over a quick- to moderate time frame, it tended to keep going, but it ... [...]

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Tuesday Midday Color - S&P Recovery, Pound Probabilities, Mixed Breadth

Here's what's piquing my interest so far on a curiously strong day.RecoveryIn spite of overwhelmingly optimistic sentiment in some models, buyers continue to persist. For months, the most positive thing about stocks was the price activity (and breadth from December through February), and that ... [...]

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Uh-Oh, Options Speculators Are Back

Sector battleThe ratio between the S&P 500’s technology and health care sectors has swung by an extreme amount. The 50-day rate of change in the ratio between the two has cycled from negative to a 10-year high.Since 1990, other times it swung like this, tech suffered, while health care held up ... [...]

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Investors Cycle Into Cyclicals, Tech

Cyclical reboundCyclical stocks got hit hard late last year, especially relative to defensive stocks. They’ve made an impressive rebound. The rate of change on the ratio of cyclical to defensive stocks has cycled from an extreme low to an extreme high.Over the past 20 years, a cycle like this ... [...]

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Wednesday Midday Color - Tech Breakout & Breadth, Screens

Here's what's piquing my interest so far on yet another potential reversal day.BreakoutEven if the rally in tech fades, on an intraday basis the Nasdaq 100 has bested its prior multi-year high by at least 0.5%. The most bullish aspects about this market aren't fundamental, and they're certainly ... [...]

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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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Does The Low Volume Really Matter?

Low-volume rallyEach of the past three weeks has seen the S&P 500 inch ever closer to a new high. At the same time, investors have grown increasingly comfortable, as volume continues to decline and is now more than 10% below its yearly average.It’s entirely normal for volume to ratchet higher ... [...]

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Friday Midday Color

Here's what's piquing my interest so far today.GapDumb Money Confidence is holding above an extreme of 80%, and buyers were enthusiastic enough to push a pre-market gap more than 0.5% above the prior close. That's only happened five times before, all of which pulled back during the next week.If ... [...]

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Thursday Midday Color

Here's what's piquing my interest so far on this potential bearish-engulfing day.Emerging EmergingPretty much every study we've looked at for emerging markets since last fall has been bullish, and those markets continue to plug along. The MSCI Emerging Markets Index has now rallied for its 10th ... [...]

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Wednesday Midday Color

Here's what's piquing my interest so far on this waiting-for-the-Fed day.Mexican MomentumIn Friday's report, we saw that "The MSCI Mexico Index closed above its 200-days for the first time in six months on Friday. Other times it went this long before ending a downtrend, it added to gains over ... [...]

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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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Tuesday Midday Color

Here's what's piquing my interest so far on yet another day with buyers stepping in on the smallest downtick.RecoveryAmong the major S&P 500 sectors, the first to entirely erase its decline was information technology, scoring its first new all-time high since last fall. That is a quick ... [...]

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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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The Curious Case Of Ebbing Momentum

No mo’ mo-mo?Even as the S&P 500 index trades at a fresh 100-day high, the ratio of the S&P 500 Momentum Index to the S&P itself is struggling, and just hit a 30-day low.This divergence is like what happened last August. Longer-term, failing momentum wasn’t a consistent negative, but three of ... [...]

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Friday Midday Color

Here's what's piquing my interest so far today.Nice RunBulls have been pushing things, with a long streak of up days and new 100-day highs. For the past 7 sessions, the S&P 500 fund, SPY, has gapped up at the open. We haven't seen that kind of pre-market enthusiasm since January 2018.It's ... [...]

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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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Shanghai Rally Bodes Well Long-Term

The Shanghai Composite has managed to sustain its initial thrust off the low, and it has broadened out. More than 90% of stocks on the exchange are now trading above their 200-day averages.Historically, a rally of this magnitude, and with this kind of broad participation, has continued ... [...]

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Wednesday Midday Color

Here's what's piquing my interest so far today.Gap And Go?The gap up this morning faded a bit right before the open, but SPY still managed to add nearly half a percent before regular trading opened. This comes on the heels of a 100-day high during a major uptrend. That's triggered a few times ... [...]

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Why The Price Surge Is A Good Sign

GoldenThe concept of a Golden Cross is over-hyped, but it’s still a popular question. Putting some context to it, when the S&P’s 50-day average crosses above its 200-day after a medium-term decline, forward returns were okay, but nothing special. Over the next three months, an investor's average ... [...]

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Surge In S&P For The Quarter, Off A Low, And With Bonds

We've looked at several studies related to the surge in prices over the past couple of reports, so this is just a summary that we can track in the Active Studies. All of them have been shown in a report already - we're just putting them here for tracking purposes.Instead of posting them as ... [...]

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Monday Midday Color

Here's what's piquing my interest so far today.Gap And Go?The S&P is trying to put in a runaway gap to start the month. It has mostly struggled, with the only true successes being in February '98 and '12. The others settled back as the months progressed.Good TrendJust because it's going to be ... [...]

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Who's Afraid Of An IPO Surge?

New issuesThe IPO market is thawing, and we could be on track for a record-breaking year. The only other years that investors absorbed this much in new issues, stocks stumbled the next year. But when accounting for inflation and the growing market value of all equities, it’s not such a worry.If ... [...]

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Stocks, Bonds Rise As Volatility Diverges

A balanced investor’s dreamThe S&P 500’s total return over the past three months is well over 10%. The total return in an aggregate bond index is up over 3% at the same time, a large move for that market.When both markets enjoyed such large total returns over a multi-month period, it tended to ... [...]

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Catching Up

I'm taking some time for spring break with our kids, but here are some things that are piquing my interest right now.Nothing has really changed the past few days. We're still seeing mostly mixed equities with the rebound so far today, and a relatively poor risk/reward profile over the ... [...]

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Hedgers Are Hedging As Transports Lag Amid Momentum Ebb

Hedgers actually hedgingHedgers in the major index futures pared their positions by more than $10 billion at the end of February. That’s one of their larger one-week increases in hedging activity.When they’ve made such big changes in the past, it has been a bit of a negative for stocks.Dow ... [...]

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Wednesday Midday Color

Here's what's piquing my interest so far on this weak day.Ebbing MomentumThe S&P 500 has finally closed below its 10-day moving average for the first time in at least 40 sessions. That's one of its most persistent short-term trends since 1928.At the same time, it has flattened out. Over the past ... [...]

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Options Bulls Return As Investors Get Whipsawed

Options bulls returnThe smallest of options traders spent nearly 60% of their volume last week on bullish strategies, either buying call options or selling puts to open. That’s among the most aggressive bullishness using real money since the financial crisis.There were some weeks that showed ... [...]

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Mystery Buyers As Breadth Momentum Hits Epic Proportions

Mystery buyerThere are many remarkable aspects to the rally over the past two months, including who’s buying. Large speculators in index futures continue to sell. So do small speculators.Hedge funds don’t seem to be buying. And neither do mutual fund or ETF investors. All of these are a change ... [...]

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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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Thursday Midday Color

Here's what's piquing my interest so far today.SlickThe WSJ notes that it's not only stocks enjoying a good start to the year. For oil, it's the best-ever, unless it takes a massive hit today. With a gain through yesterday of more than 25%, it's by far the best YTD return through February since ... [...]

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Big Rally In Small Stocks, With Smart Money Buying

Small stocks, big rallySmall-cap stocks have rallied 24% in only two months, ranking among the best rallies since 1926.Other times they jumped to this degree, small stocks tended to rise in the months ahead, but there were some failures. The overall bias was positive, especially in terms of risk ... [...]

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An Industrial-Led Rally As Shanghai Surprises

The rally’s workhorsesThe Industrials sector has led all major S&P 500 groups since the December 24 low, while defensive ones like Utilities have lagged.Going back to 1928 and looking at all two-month, 10% rallies from a low, we see that the rallies with the highest sector correlation to our ... [...]

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Friday Midday Color

Here's what's piquing my interest so far today.Looking through long-term breadth momentum for sectors and indexes, it's remarkable how many are showing a McClellan Summation Index above 1,000.If we use the Backtest Engine, we can see that these extremes are getting to the point that typically ... [...]

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A Remarkable Run, As Bulls Return And Dow Stocks Are Above Average

A remarkable runBoth the S&P 500 and Russell 2000 have enjoyed a near-historic run from their Christmas Eve lows. The magnitude of their gains, interrupted by only a few large daily losses, have been matched only a few times.The sample sizes are tiny, but the implications are mostly positive, ... [...]

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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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Sustained Momentum Even As Cumulative Net New Highs Barely Budge

Sustained momentumThe McClellan Summation Index continues to power higher, showing impressive and sustained momentum. After being below -500 for at least 10 consecutive days, it is now above +500 for 10 straight, flipping its momentum.When it has been able to maintain a high level after flipping ... [...]

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Cumulative New High / New Low Lagging

One of the most popular ways to view the breadth of a market is by watching the Cumulative Advance/Decline Line. And the most popular among the various versions is the one tracking all NYSE securities, or the one using common stocks only. A much lesser-known version of the Cumulative Line uses ... [...]

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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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U.S. Dollar Shows Short-Term Momentum

One of the best performing assets lately has been the U.S currency, and while intermarket relationships are always in flux, a rising dollar has been a concern for investors across many asset classes. The U.S. Dollar Index just managed its 7th straight gain, one of its best streaks in 40 ... [...]

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Nasdaq Escapes Bear Market As Investors Pull Out

Escaping the bearThe Nasdaq Composite has ended its bear market, at least according to two metrics. Unlike its rallies during the 2001 and 2008 bear markets, this time it has managed to exceed the 61.8% retracement of the decline. And it has rallied 20% from its low, the accepted definition of a ... [...]

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Nasdaq Escapes Its Bear Market

After falling into bear market territory, the Nasdaq Composite has ended it, at least according to two subjective metrics. The tech-heavy index has rallied 20% (rounded) from its low, and it has exceeded the 61.8% Fibonacci retracement of the decline, which it was not able to do in 2001 or 2008. [...]

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Good Overbought; Dow Leads Above 200-Day

Good overboughtAfter reaching an extreme oversold reading in December, the long-term McClellan Summation Index has cycled back to an overbought reading. What’s notable about this is just how quickly the Summation Index has cycled up to 500 after being so depressed just a month ago. The only time ... [...]

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McClellan Summation Crosses 500

With the surge in many breadth-related indicators that we've looked at in reports over the past few weeks, it's no surprise that the long-term McClellan Summation Index has finally made it to its upper threshold level of +500. The originators of the McClellan indexes, especially their son Tom, ... [...]

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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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McClellan Oscillator Above 50 For 3 Weeks

After dipping close to 50 earlier this week, an improvement in breadth to end the week pushed the McClellan Oscillator higher once again. It has now spent three straight weeks (15 consecutive trading days) above its overbought level of 50.It has been 27 years since it went this long above 50. We ... [...]

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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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S&P Gains 1% Four Weeks In A Row

The S&P 500 has managed to gain more than 1% four weeks in a row following its drop to a 52-week low. It has also gained more than 1.5% four weeks in a row, regardless of whether if following a low. Both have led to consistently higher prices, especially in the longer-term. [...]

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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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Unshakable Confidence; Immense Last-Hour Selling Pressure

This is an abridged version of our Daily Report.UnshakableConsumer Confidence rose in October despite a bad month for stocks. The S&P dropped more than 5%, and not only did Confidence hit more than a 1-year high, it’s well over 100. Forward returns here were decent in the medium- to long-term, ... [...]

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Massive Sell Programs; Hard, Fast Pullback, Near-Record Negative Momentum

This is an abridged version of our Daily Report.Everybody outDuring the past 3 weeks, we’ve seen a near-record amount of sell programs at some point during the trading day.The lowest NYSE TICK during that stretch is now the 2nd most extreme in history, with an average of more than a net 40% of ... [...]

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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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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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Momentum Shift As Bonds Have Big Move

This is an abridged version of our Daily Report.Momentum shiftThe McClellan Summation Index is below zero for the first time in a half-year.It’s also turning negative while stocks are still relatively close to their recent highs, and that has been more of a negative shorter-term.Bonds’ biggest ... [...]

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Options Bulls Reign As New Lows Rise Even Amid Good Price Momentum

This is an abridged version of our Daily Report.Calling all bullsOptions traders are showing a historic preference for speculating on the upside. In recent weeks and months, they’ve spent most of their options volume on buying speculative calls.At the same time, they don’t want to risk a large ... [...]

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Dow Theory Buy Signal Even As Homebuilders Slip

This is an abridged version of our Daily Report.Dow theory buy signalBoth the Dow Industrials and Transports have reached new highs. This is the first new high in the Industrials in months, following the previous breakout from Transports. Similar buy signals according to trend-following theory ... [...]

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An August High As Option Speculation Ramps Up

This is an abridged version of our Daily Report.Summer highStocks ended August at their highest monthly close in at least 36 months. A new high in August has preceded poor returns during the next 1-4 weeks as September lived up to its reputation. The S&P struggled to hold its gains, especially ... [...]

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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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Dollar Fails As S&P Momentum Stalls

This is an abridged version of our Daily Report.A dollar failureThe U.S. dollar ended a long streak without a new high in early August by closing at its first 52-week extreme in more than 400 sessions.Since then, it rallied more than 1%, then failed by closing below its breakout price, which has ... [...]

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Record Positive Divergence As We Near An August High

This is an abridged version of our Daily Report.A near-record positive divergenceThe S&P 500’s Advance/Decline Line is more than 5% above its high from January, showing that even as the index itself has struggled to hit a new high, a majority of stocks in the index have consistently climbed ... [...]

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High-Yield Bonds Overbought As U.S. Stocks Beat The World

This is an abridged version of our Daily Report.Junk bonds are anything butHigh-yield bonds have been among the best performers short- and long-term. That has led to an extreme overbought reading in the Relative Strength Index as well as a 52-week high in the iBoxx Liquid High Yield Index.That ... [...]

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Breadth Divergences Not Much Of A Concern As Staples Recover

This is an abridged version of our Daily Report.Few highs as indexes rallyThe S&P 500 has rallied close to its prior highs, but there is a divergence. Relatively few stocks are registering 4-, 12-, and 52-week highs as the index rallies.It’s a concern among technicians but has not been a ... [...]

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Risk Appetite Wanes As Small-Caps' Trend Ends And Funds See Outflows

This is an abridged version of our Daily Report.Lack of risk appetiteDiscretionary stocks are at a multi-month low relative to defensive Staples.That sign of risk-off behavior is unusual with the S&P near a high but has not been a good excuse to sell stocks.Another trend endedThe small-cap ... [...]

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Momentum Worries As Emerging Stocks Start Uptrending

This is an abridged version of our Daily Report.Momentum worriesAs the S&P hit a 100-day high, a very low % of stocks are showing momentum. An almost record low % of stocks are above their 10-day avg or have an RSI > 70, which has preceded weak shorter-term returns or failed rallies.Emerging ... [...]

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Copper Drops To 200-Day Low As Value Lags And Gold Sinks

This is an abridged version of our Daily Report.Copper slides to 200-day lowCopper closed at its lowest level since last July, a worry for believers in “Dr. Copper.”Its record for stocks is mixed, but for copper itself, it wasn’t a good sign.No valueOverseas investors have favored Momentum over ... [...]

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Dow's Streak Snapped As China ETF Nears Bear Market

This is an abridged version of our Daily Report.Had to happen sometimeThe Dow Industrials Average ended its 2-year streak of holding above its 200-day average, its 7th-longest streak in an uptrend since 1900.It wasn’t a death knell for the index, especially when the Leading Economic Indicators ... [...]

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GE Booted From Dow As Russell And Nasdaq Hit Highs

This is an abridged version of our Daily Report.Somebody turn on the lightsGE got booted from the DJIA after 100 years, after a similar stretch of poor returns from Alcoa when it was removed…and before it doubled during the next year.Other stocks that got removed from the Dow did fine going ... [...]

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Gold Bugs' Bad Day As Cap-Weighted Indexes Take Over

This is an abridged version of our Daily Report.Gold bugs’ ruined weekendHeading into the weekend, gold futures suffered their largest loss in over a year, to a multi-month low. When it happened it May, the selling marked an exhaustion and gold worked higher. Most times it did something similar, ... [...]

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Breadth Momentum Picks Up As Value Lags Growth And Homebuilders Turn Up

This is an abridged version of our Daily Report.Momentum is picking upMomentum in breadth figures is returning, with the McClellan Summation Index climbing. When it reaches 500 for the first time in months, it has led to an excellent risk/reward skew for stocks.The S&P 500’s annualized return ... [...]

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Energy ETF Traders Rush In As Animal Spirit Indicator Hits A High

This is an abridged version of our Daily Report.ETF traders rush into EnergyAssets in the primary ETFs focused on the Energy sector have reached $32 billion, a new all-time high. That’s up 20% in just 30 days, among the most rapid increases since at least 2010.Similar surges led to declines for ... [...]

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S&P Jumps Multiple Days As Volatility Halves

This is an abridged version of our Daily Report.What a difference a week makesThe S&P 500 has jumped more than 1% on 3 out of the past 4 sessions. That buying thrust comes on the heels of a multi-month low during a bullish long-term trend.Future shorter-term returns were skewed positive, a stark ... [...]

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Gaps Galore As Another Streak Ends

This is an abridged version of our Daily Report.Gaps galoreHeading into the peak in January, stock futures were gapping up almost every day. Now, they’ve gapped down at the open almost every day, tied for the most in history over an 8-day span.Other tight clusters of gap down opens led to ... [...]

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Fund Managers Ignore Cash As Streaks End

This is an abridged version of our Daily Report.Fund managers still hate cashMutual fund managers are holding a near-record low amount of cash according to the latest figures. That was easier to justify when interest rates were nearly zero but gets harder as rates rise.Their cash deficit is now ... [...]

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Options Traders Pour Into Calls As Breadth Lags

This is an abridged version of our Daily Report.Forget stock, call options have more oomphRetail traders have returned in a big way. We saw on Friday the surge in brokerage transactions, and that has bled over into the options market. The smallest of options traders put on a skyrocketing number ... [...]

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Doubling Up Moving Average As S&P Members Get Overbought

This is an abridged version of our Daily Report.Doubling up the averagesThe S&P is 3% above its short-term moving average, 6% above its medium-term and 13% above its long-term.It hasn’t managed to “double up” its gains above each successive moving average in 20 years. Similar bouts of momentum ... [...]

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Gapping Up And Nasdaq New Highs

The remarkable run in stocks is set to continue this morning, with the futures indicated to gap up again this morning.In yesterday's report, we took a look at the 3-week rise in the S&P, totaling more than 6% as of Monday's close. And, of course, it also reached a new 52-week (and all-time) ... [...]

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All-Day Trading As Shorts Flee

This is an abridged version of our Daily Report.With overnight gains, why not trade all day?Most of the gains in stocks come overnight, and mom and pop traders have taken note. TD Ameritrade is trying to meet that need by rolling out 24-hour trading. That rhymes with the 1999-2000 period when ... [...]

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Momentum's Dominant Even As Biotech Turns

This is an abridged version of our Daily Report.Momentum is enjoying its turnThe highest momentum stocks have nearly doubled the gains in the S&P 500 over the past year. That’s among their best relative performance in 20 years.If we zoom out and look at the past 90 years, there were periods with ... [...]

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Persistent Trend As Stocks Become Stretched

This is an abridged version of our Daily Report.The most persistent trendThe persistence of the S&P’s uptrend over the past year is among the highest in its history. Same goes for the past 3, 5, and 10 years.When we look at the 5 comparable trends, using the 200-day average as a guide was ... [...]

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The S&P's Momentum Streak Aided By Industrials

This is an abridged version of our Daily Report.The S&P’s consistent, rapid rallyThe most important index in the world has rallied consistently for the past 1, 3, and 6 months. It has also picked up its gains, nearing or exceeding its upper Bollinger Band on daily, weekly, and monthly time ... [...]

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Global Momentum Spurs Melt Up Chatter

This is an abridged version of our Daily Report.Global synchronized momentumMost major stock markets are not only rallying, they’re showing extreme momentum. The weekly Relative Strength Index across 6 major global indexes is now the highest in history.High readings in that indicator suggest ... [...]

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January's Prediction Record, Soaring Materials And The "Not Too Hot" Streak

This is an abridged version of our Daily Report.So goes January…or AugustA popular rule of thumb suggests that how stocks start a New Year means something for the full year. It correctly predicts the return over the next year about 60% of the time.That’s likely a statistical fluke, and other ... [...]

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A Historic Streak As Investors Wade In

This is an abridged version of our Daily Report.A(nother) historic streakAfter setting so many different records last year, 2018 is on track to score even more. Among them, the major indexes haven’t been more than 5% from a 52-week high for nearly 400 days (more than 450 days if we exclude a ... [...]

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Happy New Year As Investors Go All In

This is an abridged version of our Daily Report.Happy New YearThe S&P has enjoyed a record start to the year, with back-to-back gains and new highs. It has never before managed to climb more than 0.5% with 52-week highs on the first two sessions. Similar years saw pullbacks, with the short-term ... [...]

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Dollar Doldrums Leads To Commodity Streak

This is an abridged version of our Daily Report.Dollar doldrumsThe dollar has only been able to rise twice in nearly three weeks, tied for its worst streak since it entered its trading range in 2015.Similar selloffs since then have led to quick rebounds, but longer-term history is mixed and not ... [...]

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Mining Momentum And Gas Rally

This is an abridged version of our Daily Report.Mining momentumThe Metals & Mining industry is in the midst of a historic run. Over the past 30 days, it has enjoyed a cluster of up days seen only 4 other times since 1990.Each of the others led to short-term weakness.Gas powered rallyNatural gas ... [...]

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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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Record Small Business Optimism As Investors Buy The Dip

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 ... [...]

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Strategists' 2018 Estimates; S&P's Relative Strength

This is an abridged version of our Daily Report. Another 7% gain for 2018Wall 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 ... [...]

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Quiet Market No More

As the rally not only holds but builds during the day, and with the recent pattern of closing at or near the high of the day, it looks like stocks will finally break the streak of more than 50 days without a 1% move, up or down.We've looked at streaks like this before, with mixed returns going ... [...]

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All Four Major Indexes At New Highs

I'm not really in the office this week, but we had quite a few questions about the simultaneous new highs in all of the major indexes on Monday. Buyers are following through on their normal pre-holiday binge, and managed to close the S&P 500, Dow Jones Industrial Average, Nasdaq Composite, and ... [...]

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