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Discussion in 'Stock Market Today' started by bigbear0083, Mar 17, 2023.

  1. bigbear0083

    bigbear0083 Administrator
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    Here’s Why the Economy Has Defied Recession Forecasts
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    It’s not been a good couple of years for macro forecasters in general. First, they said inflation would be transitory, but it persisted longer than most people anticipated (including the Fed). The other big call was for a recession in 2023, which obviously hasn’t panned out. Granted, the year is not done yet, but safe to say a recession is highly unlikely in the next 3-6 months thanks to renewed economic momentum. Though don’t be surprised if a lot of 2024 outlooks are similar to 2023 outlooks, with predictions of a recession. The Carson Investment Research Team went the other way in 2023, and without giving too much away, we’re still in the camp that a recession is unlikely any time soon.

    The puzzle for a lot of economists’ is why the Fed’s aggressive rate hikes haven’t caused a recession. What’s really held up the economy is consumer spending. The traditional models say that if the Fed raises rates, companies will pull back hiring, and the unemployment rate will increase. And that’s going to pull down spending – beyond workers who are laid off and no longer have regular incomes, workers who have steady jobs become more fearful of losing them and decrease spending (dampened “animal spirits”).

    Obviously, none of that has happened. Consumers continue to spend, and since one person’s spending is another person’s income, businesses continue to hire to meet higher demand, which in turn leads to more income across the economy, and more spending.

    The big question then is why households haven’t really been fearful and pulled back spending, despite all the headlines of an impending recession. Simple answer: they’re worth a lot more now and feel less need to save.

    The Federal Reserve just released their triennial “Survey of Consumer Finances” (SCF) last week, which is the gold standard of data related to Americans’ financial condition. After adjusting for inflation, median net worth jumped by 37% between 2019 and 2022. Median “real” net worth (removing gains just from inflation) rose from $141,000 in 2019 to $193,000 in 2022. This is the largest 3-year increase since the survey began in 1989 and stands in sharp contrast to the 2007-2019 period when net worth fell 18%. No wonder that household savings rose during the last decade, which put a limit on economic growth. In fact, the 2019-2022 increase is actually larger than what we saw during the 12 years from 1989 to 2001, amid an economic boom.

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    Here’s another statistic which shows how this economy is different from the one we experienced over the last decade. Families in the lowest quartile of wealth, saw median real net worth jump 864% between 2019 and 2022, whereas the wealthiest 10% of families saw relative gains of 26%. This is not to say there’s a big shift in inequality, because the actual numbers show median real net worth for the bottom quartile rose from $400 in 2019 to $3,500 in 2022. Still, that’s a welcome change from the 81% decline we saw between 2007 and 2019.

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    Another Big Source of Net Worth Gains: Rising Home Prices
    For families that owned a home, the median net housing value, i.e. the value of a home minus home-secured debt, rose from $139,100 in 2019 to $201,000 in 2022 – a 45% increase. That was because home values increased significantly even as housing debt was flat.

    Now, only about 8% of households in the lowest quartile of wealth own homes. But that jumps to 70% for households in the 25th – 50th percentile, and above 90% for households in the top half of the wealth distribution. Households in the middle of the distribution, between the 25th and 90th percentile of wealth, are responsible for the majority of consumer spending in the economy. As you can see below, this group of families saw their home values increase significantly (the chart below adjusts for inflation).

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    American Households Are Less Financially Fragile
    The share of households with credit card balances was stable at around 45%, while the median value of card balances was unchanged at $2,700. Beyond this, the SCF also gives us various measures of financial fragility, and all of them have fallen below pre-pandemic levels.
    • The leverage ratio is debt as a percent of total assets (aggregate across all families with debt). This is now at 10.7%, down from 12.6% in 2019. That is the lowest in the history of this survey
    • The median ratio of debt payments to family income across all families fell to 13.4% from 15.3% in 2019. This measure is also the lowest in the history of the survey
    • The percent of debtors with debt-to-income ratio greater than 40% has also fallen from 9.7% to 8.4%, another all-time survey low.
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    All in all, the survey data explains why consumption has remained strong: household balance sheets are strong, which is why they’ve continued to spend and not save as much as they did before the pandemic. The last decade was a period when households were trying to recover from a massive housing crash and financial market crisis that crushed asset values. That’s not where we are today. Of course, this data is now dated but inflation has pulled back over the past year, and inflation-adjusted incomes have continued to rise. So, the overall picture of household balance sheets is unlikely to have deteriorated much since this data was collected, which is why we believe that the economy can remain resilient despite higher interest rates, and avoid a recession.
     
  2. bigbear0083

    bigbear0083 Administrator
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  3. bigbear0083

    bigbear0083 Administrator
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    A Slow Correction
    Mon, Oct 30, 2023

    On Friday, the S&P 500 joined the Nasdaq in officially entering a correction having fallen over 10% from its July 31st high without a 10% rally in the interim. That is the 55th correction since 1952 when the five day trading week began, and as shown below, it was one of the longer streaks for the index to officially hit that 10% threshold. The median number of trading days across all corrections since 1952 to reach that 10% decline has been 32 days. That puts current correction at nearly twice as long at 63 trading days. That is the slowest (for lack of a better term) correction since May 2015 and April 2011 when it took 65 and 67 trading days, respectively. However, looking further back, there were much longer periods like 1980 when it took half a year.

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    As we have noted in the past, the S&P 500 entering correction is not exactly as scary as it may sound with regard to performance going forward. While there is always the chance that a correction will extend further (potentially becoming a bear market), historically, returns have been solid once the index first enters correction. In the chart below, we show the average one and five-year annualized performance of the S&P 500 from the day the S&P 500 first enters correction territory (the day the S&P closes 10% from a high without having a 10% rally in between). As shown, whereas any normal one-year period has seen the S&P average a gain of close to 9%, after the first close down 10% from a high, it has averaged an even stronger 10.6% gain over the following year. As for five-year annualized performance, periods after a correction tend to outperform the norm albeit by a much smaller margin.

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  4. bigbear0083

    bigbear0083 Administrator
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    Typical November Trading: Solid Start, Some Chop & Strong Finish
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    Being a bullish month, November has seven bullish days based upon S&P 500, with four occurring in the first five trading days of the month. This bullish stretch is visible in November’s seasonal chart with solid gains spanning the first six trading days. Following a strong open, the market has tended to drift sideways with some chop through mid-month and into the Thanksgiving holiday before rallying strongly to finish the month. Although historically a bullish month, November does have weak points. NASDAQ and Russell 2000 exhibit the greatest strength at the beginning and end of November. In pre-election years, performance in November has been softer, but full-month performance remains positive on average.
     
  5. bigbear0083

    bigbear0083 Administrator
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    Net Short No More
    Tue, Oct 31, 2023

    In last night's Closer, we discussed the latest positioning data from the weekly Commitments of Traders report published by the CFTC. Released last Friday with data as of the prior Tuesday, the report would have captured October options expiration, and likely thanks to this, there were a number of significant changes to positioning across assets. As discussed last night, one key area that saw big changes was equities.

    Perhaps the most notable of these was in S&P 500 futures. Whereas this past summer saw positioning shift to the most net short (meaning a higher share of open interest is positioned short versus long) levels in over a decade, the past few months have seen those readings steadily unwind, and last week marked the first net long reading since June 14, 2022. Meanwhile, the small-cap Russell 2,000 still remains deep in net short territory, although there was some improvement. The Russell went from a recent low of 14.3% net short only five weeks ago to 8.53% net short last week. That was the highest reading since March.

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    As previously mentioned, the S&P 500 is back to net long for the first time in well over a year. In fact, the streak of net short readings concluded at 70 straight weeks. That is now the longest such streak in the record of the data dating back to the late 1990s. The only other streak that comes close in length ended at 60 weeks in April 2016.

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    As for the Russell 2,000, its streak of net short positioning has also bene impressive at 135 weeks long. However, that is not even half the length of the previous record that lasted from the back half of the 2000s through the early 2010s. Put differently, positioning in Russell 2,000 futures has historically held a more pessimistic tilt with net short readings 72.5% of the time since data for the index begins in August 2002. Although current readings indicate there continue to be more speculators betting against rather than for the index, the recent rise also indicates there has been some improvement in optimism towards small caps.

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  6. bigbear0083

    bigbear0083 Administrator
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    First Trading Day of November: DJIA, S&P 500 and NASDAQ Up 8 of Last 11
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    From data in the 2024 Stock Trader’s Almanac on page 90, the first trading day of November is the fifth best of all monthly first trading days since September 1997 based upon total DJIA point gained. DJIA, S&P 500 and NASDAQ have all advanced 13 times over the last 21 years. Average performance on the day ranges from a low of 0.08% by S&P 500 to 0.16% by NASDAQ over the last 21 years. Following a bearish streak from 2005 through 2011, all three indexes have been up 8 of the last 11 years.
     
  7. bigbear0083

    bigbear0083 Administrator
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  8. bigbear0083

    bigbear0083 Administrator
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    Stocks in a Correction and the Best Month of the Year Is Here
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    “If there were ironclad rules, we would all be following them.” -Josh Brown of Ritholtz Wealth Management

    Although we saw a late October bounce, the S&P 500 officially moved into correction territory last week. By definition, a correction is when stocks are down more than 10% from a recent peak, in this case, down more than 10% from the late July peak.

    Yes, the past three months haven’t been very fun for bulls, but let’s put some context around market corrections. Going back to 1980, the average calendar year has experienced an average drawdown of 14.3%.22 out of 44 years saw stocks experience a peak-to-trough correction of 10% or more. Out of those 22 years that had a correction we found 12 years still managed to finish higher. So it is quite possible to see a correction and stocks still finish green on the year. Lastly, for the 12 years that saw a correction and still finished higher, the S&P 500 gained 17% on average for the year. So the bottom line is a correction is quite normal and a solid year, when all is said and done, is also quite normal when we have one.

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    According to our friends at Ned Davis Research, there are 1.1 corrections per year on average, again suggesting that while corrections aren’t fun, they’re not abnormal.

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    We will be the first to admit the depth of the weakness in October surprised us, but we also didn’t expect to see a major war break out in the Middle East. We remain optimistic for a year-end rally though, as the economy is showing very few signs of weakness, stock valuations are getting quite attractive, and overall sentiment is very negative.

    Let’s talk about November for a second. Did you know this has been the best month of the year for the S&P 500? And it has been quite strong the past 10 and 20 years as well? Yes, you should never blindly invest based on just the calendar, but we wouldn’t ignore this information either.

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    We will end with two interesting studies increasing the odds of a year-end rally. The S&P 500 was down in each of the past three months, heading into the normally bullish month of November. It turns out persistent weakness ahead of November could be a positive sign for the remainder of the year, with November higher every time (back to 1950) and the final two months together tended to do well also. The last two times we’ve seen this were in 1990 and 2016, with both years experiencing big end of year rallies the final two months.

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    Lastly, stocks were lower in October, but still up on the year. October has seen some spectacular crashes, but this year saw more modest weakness, with stocks still up nicely for the year. We found that under this scenario stocks have been higher the past 7 times in November and the final two months together have been strong overall as well.

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  9. bigbear0083

    bigbear0083 Administrator
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    Continuing Claims Keep On Rising
    Thu, Nov 2, 2023

    Following up on yesterday's slowing ADP and JOLTS numbers, today's release of weekly jobless claims likewise showed a cooling labor market. Initial claims were revised up by 2K last week to 212K, and this week's number came in higher at 217K. That was 7K above expectations which would have assumed no change to claims. With the rise over the past two weeks, claims have now rounded out a bottom but still have significant headroom until reaching the highs from earlier this year.

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    Before seasonal adjustment, claims were slightly higher at 196.8K. That increase is consistent with seasonal patterns as claims tend to rise throughout Q4. For example, the current week of the year has historically seen claims rise week over week 83.9% of the time; one of the most consistent weeks of increases of the year. Granted, claims are experiencing the usual seasonal increase and have bottomed after seasonal adjustment, but current levels remain historically strong. For instance, this week's NSA number is right inline with those readings of the comparable week of the couple of years before the pandemic and 2022.

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    Continuing claims are a less rosy picture with a much greater and more consistent increase over the past several weeks. Since the recent low of 1.658 million put in place in early September, continuing claims have risen 9.65%. As shown below, that is certainly on the large side of historical increases in such a time span. In fact, most other times (though not always) claims have risen that rapidly, the economy has been in recession. Given that rise, seasonally adjusted continuing claims topped 1.8 million this week, which is the most elevated reading since April 15th and is only 43K below the recent high from the spring. Zooming further out, though, claims remain at historically strong levels.

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  10. bigbear0083

    bigbear0083 Administrator
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    Bears Shrug Off a Rally
    Thu, Nov 2, 2023

    Even though the S&P 500 has moved decisively higher over the past week, sentiment has entirely shrugged off price action. The percentage of respondents reporting as bullish to the AAII's weekly sentiment survey dropped back below 25% versus a reading of 29.3% last week. Bullish sentiment has now dropped for three straight weeks, having fallen 15.7 percentage points in that span for the largest three-week decline since August 24th. That has also resulted in the lowest bullish sentiment reading since May 18th.

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    That was matched with a rise in bearish sentiment back above 50%. That was the first time a majority of respondents reported as bearish since last December. As shown in the second chart below, the 44 consecutive weeks weeks without such a reading is sizeable, but far from any sort of record.

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    With new near-term lows in bulls and highs in bears, the spread between the two widened to 26 points in favor of bears. That is the most negative bull-bear spread reading since March

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    Other sentiment surveys echoed that negative tone among investors. The NAAIM Exposure Index was actually slightly higher week over week, although it continues to show low levels of long equity exposure. Meanwhile, like the AAII Bull-Bear spread, the Investors Intelligence survey also indicated the most bearish reading since March. Put together, our sentiment composite is now back below -1. That means the average sentiment reading is a full standard deviation more bearish than its historical average for the weakest reading since the first week of the year. Although current readings are rather pessimistic, due to the timing of data collection, the results would not have captured any response in sentiment following the FOMC on Wednesday. In other words, next week we will get a read if the latest updates on monetary policy had any effect on investor pessimism.

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  11. bigbear0083

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    A Boomerang Bounce for US Stocks
    Fri, Nov 3, 2023

    It has been a great week for the US stock market with the S&P 500 ETF (SPY) up 5.9%. Unfortunately, that only gets the market back to where it was trading just over two weeks ago on October 17th! That's because SPY fell 5.9% from 10/17 through last Friday (10/27).

    Right now SPY is stuck in a short-term downtrend after making a series of lower highs and lower lows since the end of July. From a technical perspective, SPY needs to make a "higher high" for things to look more positive. Today, the ETF got stuck as it approached its highs from mid-October, so it's not going to be easy.

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    The rally this week has been broad based, but the best performing stocks have been the names that did the worst in the 10 days prior. Below we've broken the large-cap Russell 1,000 into deciles (10 groups of 100 stocks each) based on stock performance during the market's decline from 10/17 to 10/27 (last Friday). As shown, the decile of the worst performing stocks during the 10/17-10/27 pullback is averaging the strongest gains during this week's rally.

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    Looking at individual stocks, below are the 30 best performing names this week in the Russell 1,000. At the top of the list is Roku (ROKU), which is up more than 50%! Another eight stocks are up more than 25% this week, including names like DoorDash (DASH), DraftKings (DKNG), Pinterest (PINS), Paramount (PARA), and Palantir (PLTR). Other noteworthy stocks up big this week include Wayfair (W), Block (SQ), Avis (CAR), Warner Bros. (WBD), Coinbase (COIN), TopBuild (BLD), and even Peloton (PTON).

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  12. bigbear0083

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    Why We Think the October Payroll Report Was Just What the Doctor Ordered for Markets and The Fed
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    The October payroll report was weaker than expected on several fronts:
    • Monthly job growth came in at 150,000, below expectations for a 180,000 gain.
    • The unemployment rate ticked up from 3.8% to 3.9%
    • Average hourly earnings growth rose at an annualized pace of 2.5% in October, well below expectations for close to a 4% increase.
    But here’s some perspective on those numbers:
    • Job growth was impacted by the United Auto Workers strike, which pulled manufacturing employment down by 33,000, and those are going to come back next month.
    • Monthly job growth numbers can be noisy, and so the 3-month average is helpful to look at – that’s running at 204,000, which is above the 100,000 – 125,000 required to keep up with population growth.
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    • The unemployment rate doesn’t stay steady, nor does it keep going down in a straight-line during expansions. Between 1996 and 1999, the unemployment rate averaged 4.8%.
    • A few days back the Bureau of Labor Statistics reported that layoffs are running around 1.5 million a month, which is well below the average 1.8 million in 2019.
    • As a percent of employment, the layoff rate is now at 1% – before the pandemic, this averaged 1.2-1.3%. I’ve cut off the y-axis in the chart below to show what’s happening more clearly (layoffs surged in March-April 2020 during the pandemic).
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    The October payroll report tells us that the economy is slowing from its red-hot pace. However, we believe that’s just normalization rather than anything recessionary, for now.

    But as the title of the blog says, this normalization is just what the doctor ordered for markets, and especially the Federal Reserve (Fed).

    Good News: Fed Rate Hikes Are Probably Done
    Here’s how markets reacted to the payroll report:
    • Equity markets surged, rising more than 0.5% in the morning.
    • The 10-year yield fell to 4.5% – it was around 5.0% 10 days ago.
    • The probability of a Fed rate hike in December collapsed to under 10%, and the probability of one in January is now under 15%.
    Safe to say, investors think the Fed is done with rate hikes, and they’re taking that as a big positive for equity markets. The 10-year yield had been rising for a few months now on the back of one strong economic data point after another, culminating in the Q3 GDP report which showed the economy growing at 4.9% last quarter. Things were bound to turn sooner rather than later – the economy certainly wasn’t going to grow anywhere close to that going forward. But we believe the underlying speed of the economy is close to trend, around 2.5%, versus falling into a sharp slowdown, or even a recession.

    The Fed kept interest rates steady at 5.25-5.5% at their November meeting, pausing for the second meeting in a row. At their September meeting, members had penciled in one more rate hike for 2023. However, in his press conference, Fed Chair Powell brushed this away, saying the efficacy of those projections deteriorates within three months, and that Fed members could change their views at their December meeting.

    Powell went on to say that risks are more balanced now, unlike last year. Last year the risk was that they wouldn’t do enough to curb inflation, and so they moved aggressively. However, right now, there’s also a risk of doing too much, and unnecessarily sending the economy into a recession. They believe that the cumulative impact of everything they’ve done so far is yet to impact the economy.

    Moreover, if inflation continues to head lower, which is likely with wage growth cooling, we could see the Fed pivot to rate cuts by the middle of next year. Average hourly earnings are running at a 3.2% annualized pace over the past three months, almost matching what we saw pre-pandemic. That’s still strong, but something the Fed can live with.

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    If inflation looks to be on a sustainable path to their target of 2%, we could see them pivot sooner rather than later. By itself, keeping rates where they are when inflation is falling means policy is implicitly getting tighter. Powell doesn’t sound like someone who wants that. And if economic growth is at risk, they could act even more aggressively.

    One thing we’ve seen with the Powell-led Fed is that they’ve been quick to pivot and act aggressively when they realize they’re behind the curve.
    • In 2018-2019, financial stresses and a slowdown prompted an about-face and led them to eventually cut rates.
    • In 2020 March, facing a deep recession, they didn’t hesitate to take rates to zero and took a series of aggressive measures to ease stresses in financial markets.
    In 2022 June, facing a 40-year high in inflation, they pivoted to a much more aggressive pace of tightening. Looking ahead, what’s interesting is that a normalizing economy could result in looser financial conditions, which could boost cyclical activity. A lower 10-year interest rate will push mortgage rates lower and that could spur more activity in the housing market. Business investment will also likely rise.

    Lower inflation will translate to consumers having more in their wallets as well, not to mention the fact that some household real estate wealth could be unlocked if there are refinancing opportunities. Think of someone who bought a mortgage at 8% but can now refinance at 6.5%. My colleague, Barry Gilbert, recently wrote about how there’s a lot of pent-up strength in the economy, despite all the pessimism.

    Throw potentially easier monetary policy into the mix of an already resilient economy, and we may have a strong catalyst for equity markets to gear shift higher.
     
  13. bigbear0083

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    FAANG+ Flatline
    Mon, Nov 6, 2023

    Earlier on X/Twitter, we highlighted the changing dynamics among the charts of the mega caps with Microsoft (MSFT) pressing towards a new all-time high, leaving the likes of Apple (AAPL) in the dust. Looking more broadly at the mega caps, below we show the relative strength of the mega caps proxied by the NYSE FAANG+ Index versus the S&P 500 over the past five years. As shown, the early days of the pandemic were a boon for these mega caps, however, that faded from late 2020 through about a year ago. While mega caps have outperformed again this year—and as a result have been the stocks to thank for the bulk of the S&P 500's gains year to date—the past few months have seen that relative strength wane with the line fairly flat since the late spring.

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    Below, we show the relative strength line of the NYSE FAANG+ Index members versus the index itself. In other words, these charts show how mega-cap has performed relative to its peers. Similar to what we noted in our aforementioned post, Apple (AAPL) has been underperforming with a downtrend in its relative strength line throughout the past year. Meanwhile, Microsoft (MSFT) has seen its relative strength rip higher. The opposite has played out for Alphabet (GOOGL) whose relative strength line has plummeted in the wake of its earnings.

    As for the other FAANG+ stocks, there has not been the same sort of dramatic moves of late. That said, Amazon's (AMZN) relative strength has been consistently declining for a multiyear span now. Meta Platforms (META) would have been in a similar boat, but its relative strength turned around and began trending higher over the past year. Similarly, two semiconductor giants, NVIDIA (NVDA) and Broadcom (AVGO) have had long-term rising relative strength lines with a dramatic acceleration in NVDA's over the past year. Finally, we would note that Tesla (TSLA), which once boasted the highest degree of outperformance of the FAANG+ stocks, has recently seen its relative strength line move sideways in a choppy manner.

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  14. bigbear0083

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  15. bigbear0083

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  16. bigbear0083

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  17. bigbear0083

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    S&P 500 Gains Despite Bad Breadth
    Wed, Nov 8, 2023

    The S&P 500 is fighting (unsuccessfully at this point) for its eighth positive session in a row today (the longest winning streak for the index in exactly two years). But looking under the hood at the past two sessions, there has been some underlying weakness. Although Monday and Tuesday saw the S&P 500 rise 17.5 bps and 28.4 bps, respectively, net daily breadth (advancers less decliners) was negative on both days. Whenever we hear talk of weak breadth on market up days, comparisons are usually made to the 1999/2000 period right before the Dot Com bubble's peak. While it has been very uncommon for the S&P 500 to be up on back-to-back days when breadth was negative, not all (or even most) of the prior occurrences were isolated to just the period leading up to the Dot Com peak.

    In the table below, we show 19 prior times that the S&P 500 rose in back-to-back sessions with negative daily breadth readings on both days and no other occurrences in the prior three months. The most recent occurrence was back in June 2021, and one thing that stands out is just how bad breadth has been in this period. On Monday and Tuesday, cumulative breadth was at -267, and the only prior instance with worse breadth over the course of the two up days was in July 2015. While returns were outright negative for the following six months after that July 2015 occurrence, as a whole, these past occurrences with gains on negative breadth have not been an especially bearish or bullish signal. On both an average and median basis, performance was generally in line with the S&P 500's performance for all periods since 1990.

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    In looking at the table above, on most of the days when the market was up and breadth was negative, the magnitude of the gains was very small, and in many cases, the S&P 500 didn't even move a tenth of one percent (10 bps) on either day. With that in mind, we filtered the table above to show only days when the S&P 500 was up at least 10 bps on each of the days when breadth was negative. Adding in that criteria, the 19 prior occurrences get whittled down to just six, and in this case, four of the six occurrences were in the months leading up to and after the Dot Com peak. While forward returns over the next week were positive all six times, average and median returns over the next one and three months were actually negative. Longer-term, six and twelve-month returns were split with a wide variance between average and median performance. These past examples suggest that while weak breadth on back-to-back positive days for the S&P 500 is not an outright negative, it's hardly a positive indicator either.

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  18. bigbear0083

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    Still Bullish – Even After S&P 500 Daily Winning Streak Ends
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    Including the current S&P 500 daily winning streak there have been 233 six-day (or longer) Winning streaks by S&P 500 since 1950. The current 8-day streak has added 6.4% to the S&P 500 since it began on October 30. This is better than the average performance of the past 34 times that S&P 500 has been up eight days in-a-row, but well below the 11.9% S&P climbed in an eight-trading-day streak from March 12 to March 21, 2003.

    History cannot tell us when this current streak will end. However, it does indicate increasingly longer streaks are infrequent. Although S&P 500 has gone as long as 14 days without a decline (March 26 to April 15, 1971), it has done so just once in nearly 74 years. When the streak does end, all is not lost. As you can see in the following chart of the 30 trading days before and 60 trading days after the past 7-, 8-, and 9-day daily winning streaks ended, S&P 500 continued to move higher on average over the next 60 trading days.
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  19. bigbear0083

    bigbear0083 Administrator
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  20. bigbear0083

    bigbear0083 Administrator
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    Historic Sentiment Shift
    Thu, Nov 9, 2023

    The S&P 500 and Nasdaq have extended their impressive winning streaks and that has resulted in a surge in bullish sentiment. The latest weekly AAII sentiment survey showed that 42.6% of respondents reported as bullish this week. That is now the highest level of bullish sentiment since the first half of August and perhaps more notably, a major turnaround from last week's multi-month low of 24.3%.

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    As shown below, bullish sentiment's 18.3 percentage point rise week over week is a historically large jump in optimism, especially in more recent years. That week-over-week increase ranks as the 22nd largest in the survey's history. It also just barely edged out the 17.88 percentage point increase in November 2020 for the largest one-week increase since July 15, 2010, when it had risen 18.43 percentage points.

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    The surge in bullish sentiment borrowed heavily from those formerly reporting as bearish. Bearish sentiment jumped above 50% last week, the highest reading since last December, but was nearly cut in half this week as it came in at only 27.2%

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    Whereas the jump in bullish sentiment was historically large, the resulting drop in bearish sentiment is even more significant ranking as the fourth largest on record.

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    Given there were historic moves across both bullish and bearish readings, the bull-bear spread in turn has experienced a top 1% week-over-week move. Only one week ago, the spread indicated that bears outnumbered bulls by a wide margin of 26 percentage points. Rising an astounding 41.4 points week over week, that spread is back in favor of bulls at 15.4.

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