What I'm looking at - Chinese profits, Nikkei breadth, Germany breakout, VIX Put/Call, fund flows
With stocks still hovering near all-time highs, here's what I'm looking at:
Chinese corporate profits
As Bloomberg noted, Chinese corporate earnings are weak. The following chart illustrates the year-over-year % change in the Shanghai Index's 12 month trailing earnings per share. As of September 2019, this figure stands at -4.7% (and for October 2019 is currently tracking -4.8%).
But when trailing EPS was down this much year-over-year, it wasn't clearly bearish for Chinese equities going forward:
Nikkei
As Strategas noted, the % of Nikkei stocks above their 200 dma rose above 62% on Wednesday for the first time since October 2018:
This marks a resurgence in breadth after a long streak of weak breadth:
When breadth surged in the past, the Nikkei's returns over the next month were mostly pristine:
Germany
Similar to the Japanese Nikkei, the German DAX has broken out to a 1 year high:
When this happened in the past, the DAX usually went higher over the next 3 months:
VIX Put/Call ratio
As of Tuesday, the VIX Put/Call ratio had been above its 6 month average by more than 80% for 3 consecutive days:
When the put/call ratio remains elevated in the past, VIX's returns over the next 2-6 months were more bearish than random:
*This was not consistently bullish or bearish for the S&P 500 on any time frame.
Fund flows
Equity mutual funds and ETFs continue to experience outflows, prompting our Domestic-only Fund Flow indicator to fall below -10,000 for the 3rd consecutive week:
Heavy outflows in the past while the S&P was above its 200 dma were more bullish than random for stocks over the next month: