Sentiment Snapshot: Bullish at the Margin

By Callum Thomas

Looking at the charts this week investors remain bullish, and judging by the margin debt and leverage charts – investors are clearly voting with their feet!  This article reviews the latest results of the weekly survey I run on Twitter.  The survey asks investors whether they are bullish or bearish for fundamental vs technical rationale and for both equities and bonds.  This week we actually saw a record broken, with the highest reading on “Bullish (Fundamentals)” for equities since the survey began.  As the sum of the charts below show, investors look to be very confident on the outlook for stocks.

The key takeaways from the weekly sentiment snapshot are:

-Equity investors are very bullish on the “fundamentals” outlook.

-Bond investors on the other hand remain bearish on the fundamentals.

-Equity investors are backing this confidence with substantial bets in leveraged ETFs.

-For that matter, stock market leverage overall remains around record highs in absolute terms and as a percentage of market cap.

1. Fundamentals vs Technicals Sentiment: Starting as usual with a look at fundamentals vs technicals sentiment for equities, the results were really interesting this week.  The general uptrend in the fundamentals bull/bear spread culminated in an all time high (now to be fair, the survey only commenced in July 2016, so take the words “all time high” with a grain of salt). But the bottom line is that investors still seem very optimistic on the fundamentals… although as I mentioned in the latest Weekly S&P500 ChartStorm, there remains a degree of mixed signals and clear indecision in the market.

Continue reading Sentiment Snapshot: Bullish at the Margin

The Battle of the Bulls and the Bears (video)

By Chris Ciovacco

Support 100% ad-free Biiwii.com by making a donation of your choice!

Subscribe to NFTRH Premium for an in-depth weekly market report, interim updates and NFTRH+ chart and trade ideas. You can also keep up to date with plenty of actionable public content at NFTRH.com by using the email form on the right sidebar. Or follow via Twitter @BiiwiiNFTRH, StockTwits or RSS. Also check out the quality market writers at Biiwii.com.

Crisis Watch

By Doug Noland

Where to begin? Contagion… The Argentine peso dropped another 5.0% this week, bringing y-t-d losses to 23.7%. The Turkish lira fell 3.9%, boosting 2018 losses to 15.4%. As notable, the Brazilian real dropped 3.7% (down 11.5% y-t-d), and the South African rand sank 4.0% (down 3.0% y-t-d). The Colombian peso fell 3.0%, the Chilean peso 2.7%, the Mexican peso 2.7%, the Hungarian forint 2.3%, the Polish zloty 2.1% and the Czech koruna 2.0%.

EM losses were not limited to the currencies. Yields continued surging throughout EM. Notable rises this week in local EM bonds include 54 bps in Brazil, 27 bps in South Africa, 34 bps in Hungary, 36 bps in Lebanon, 25 bps in Indonesia, 28 bps in Peru, 14 bps in Turkey, 20 bps in Mexico and 11 bps in Poland.

Dollar-denominated EM debt was anything but immune. Turkey’s 10-year dollar bond yields spiked 41 bps to 7.16%, the high going back to May 2009. Brazil’s dollar bond yields surged 29 bps to 5.58%, the highest level since December 2016. Mexico’s dollar yields jumped 18 bps to 4.64%, the high going all the way back to February 2011. Dollar yields rose 19 bps in Chile, 28 bps in Colombia, 19 bps in Indonesia, 14 bps in Russia, 14 bps in Ukraine and 167 bps in Venezuela (to 32.80%). Losses are mounting quickly for those speculating in EM debt.

Developed bonds were under pressure as well. We’ll begin with Italy:

Continue reading Crisis Watch

What Happened to the Presidential Cycle?

By Tom McClellan

Presidential Cycle Pattern

If this were a “normal” 2nd year of a presidential term, we would now be in a corrective period due to last until just before the mid-term elections.  But as many in the press have noted, we do not have a “normal” presidency, and the market is not tracing out a perfect normal pattern.

Years ago, I first constructed a Presidential Cycle Pattern by averaging together multiple years’ worth of data on the SP500.  One difference I chose to make in this process, versus the work of others, is that I started each year on the anniversary of the November federal elections.

The reason for that difference is that the investing public tends to react right away to the news of whoever gets elected, rather than waiting for January 1st, or January 20th when inauguration takes place.  So we might as well accept the political annual cycle for what it is.

Continue reading What Happened to the Presidential Cycle?

Semiconductor Canaries: Chirp, Warble… Soon a Croak and Silence?

By NFTRH

In light of earnings reactions in the Semiconductor Equipment sector, it’s time for an update of a theme we have had in play since November, 2017

The canary is no longer chirping in a healthy manner and the economy’s coal mine has a toxic gas leak. While the recent Lam Research (LRCX) earnings report was pretty good and there were positive aspects to that of Applied Materials (AMAT), these highly cyclical companies that have been at the front end of the entire economic cycle that had its beginnings in 2013 are showing signs of wear.

Business is still good but when you are talking about cyclical leaders, it is growth rate that matters. I have read article after article touting strong current business and future drivers that will change the typical Semiconductor cycle as next generation Fabs are needed for ever more dynamic specialty chips for higher-end devices.

Applied Materials Slides After Softer Q3 Forecasts on Weaker Smartphone Demand

“Smartphone sales have been below expectations, particularly for high-end models, and in response, both semiconductor and display suppliers have made adjustments to their capacity planning,” CEO Gary Dickerson told investors on a conference call. “With inventory rebalance that we’re seeing from smartphones, we’re going to see a sequential dip in the Q3. But from our guidance into Q4, you can see that it recovers nicely into Q4.”

Taking the pulse of the analyst community, from the large houses to the boutiques to the chattering blogosphere, the theme seems to be that a buying opportunity is developing for the likes of AMAT and LRCX, two excellent companies. If you take Applied CEO Gary Dickerson’s view at face value, a decline in these stocks would be exactly that, an opportunity.

But as someone from the real world (as opposed to the Armani wearing analyst community) I can tell you that these companies have no better visibility than you or I. How can they? The global macro economy is subject to many inputs and if future outcomes were that easy to read, we’d all be rich beyond our wildest dreams because we’d have already seen around every corner. The global economy, while healthy now is not immune to the business cycle.

So here is a corner to look around. In NFTRH we began using this chart in Q4 2017 after a major financial media outlet published an article touting these two companies as great values for great investment returns in 2018. Leadership by the Semi Equipment companies has flattened out.

Continue reading Semiconductor Canaries: Chirp, Warble… Soon a Croak and Silence?

Mining PRs and the Ottotrans™, Part 103

By Otto Rock

Our occasional series is back, as the attempt is again made to turn mining company news releases into something approaching the English language. The example today comes from Wealth Minerals (WML.v), that bag of special things out of the Henk van Alphen camp.

 

This is what they wrote:

May 16, 2018

Wealth Announces Engagement of Investor Relations Consultant and Comments on Promotional Activities

FOR IMMEDIATE RELEASE….Vancouver, British Columbia: Wealth Minerals Ltd. (the “Company” or “Wealth”) – (TSXV: WML; OTCQX: WMLLF; SSE: WMLCL; Frankfurt: EJZN) announces that it has entered into an agreement dated May 15, 2018 (the “FMT Marketing Agreement”), whereby it has engaged Future Money Trends, LLC (“FMT”) for a period of one year at the aggregate cost of $250,000 to provide financial publishing and digital marketing services to the Company.  Pursuant to the FMT Marketing Agreement, FMT will raise public awareness of the Company (including its social media presence) and will promote the Company’s business.

Continue reading Mining PRs and the Ottotrans™, Part 103

The Charts to Watch in 2018 [Updated]

By Callum Thomas

At the start of the year I posted an article on The Charts to Watch in 2018. It covered some of the key charts and indicators from my 2017 End of Year Special Edition and at the time attracted a lot of interest.  So I thought it would be a good idea to do an almost halfway point update as an eventful 2018 has so far seemingly rushed by.

The format of this article is the same as the original, but I will leave in the exact comments on the charts (in italics and quote marks) for the sake of transparency.  Aside from updating the charts, I have added my updated views and what has changed or become more apparent since then.

But before we get into the charts, here’s a quote from the introduction of original post:

“I’ve said it before and I’ll say it again: 2018 is going to be harder and more complex for investors than 2017.  The cross currents of rising valuations across asset classes, maturing of the business cycle at a global level, and the turning of the tides in monetary policy could make 2018 a watershed year.”

Yep. Sure looks that way!

1. “No more spare capacity in DM. (Next step = Inflation)”
Nothing to add to this.  If anything investors should be paying even more attention to this chart.

Continue reading The Charts to Watch in 2018 [Updated]

Globally Synchronized Asynchronous Growth

By Jeffrey Snider

Industrial Production in the United States rose 3.5% year-over-year in April 2018, down slightly from a revised 3.7% rise in March. Since accelerating to 3.4% growth back in November 2017, US industry has failed to experience much beyond that clear hurricane-related boost. IP for prior months, particularly February and March 2018, were revised significantly lower.

Continue reading Globally Synchronized Asynchronous Growth

Is The Russell Breakout Likely To Spark A Rally In The SPX?

By Rob Hanna

The new high in the Russell is notable, since it is the 1st major index to get there. But it does not necessarily mean the other indices will follow. In the study below I looked at SPX performance following instances of a fresh RUT breakout while SPX had still not broken out.

2018-05-17

Whether you are looking at % Profitable, Win/Loss Ratio, Profit Factor, or Avg Trade, the numbers here appear quite neutral, and do not suggest a strong edge. Looking out further did not change them much, either. The Russell 2000 may lead the way following Wednesday’s new high, and the SPX could soon follow, but history does not indicate a high likelihood of that.

Want research like this delivered directly to your inbox on a timely basis? Sign up for the Quantifiable Edges Email List.

Support 100% ad-free Biiwii.com by making a donation of your choice!

Buyback Top or Just Needless Worry?

By Kevin Muir

You had to know that last week’s Barron’s cover was too good for me to pass up. Come’ on. It’s just screaming at me to write a post.

It’s like Lindsay Lohan attending a celebrity vodka launch event – you know no good will come of it, but it will be entertaining, and most likely Lindsay (and myself) will end up making fools of ourselves.

So here I go.

Continue reading Buyback Top or Just Needless Worry?

S&P 500 Dividend Yield Is Now Less Than 3-mo Treasury Bill Yield

By Anthony B. Sanders

Last Time Was Before Lehman Bros, Bear Stearns, Fannie Mae and Freddie Mac Collapsed

The last time that the S&P 500 dividend yield was below the 3-month Treasury bill yield was back in February 2008, before both Lehman Bros and Bear Stearns collapsed.  And before Fannie Mae and Freddie Mac were placed into conservatorship on September 6, 2008.

But yes, for the last several trading days the S&P 500 dividend yield has been BELOW the 3-month Treasury bill yield once again.

sp5003mo

Oddly, Fannie Mae and Freddie Mac are STILL in conservatorship with their regulator, FHFA while Lehman Brothers and Bear Stearns are but a grim reminder of the financial crisis.

On a side note, the actor to the left of Ryan Gosling in the film “The Big Short” is a former student of mine.

1450730780-elle-january-2016-the-big-short-03.jpg

Support 100% ad-free Biiwii.com by making a donation of your choice!