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77% of S&P 500 stocks are now trading above their 200D moving average, one of the highest levels in the last 2 years
By: Barchart | May 13, 2024
• 77% of S&P 500 stocks are now trading above their 200D moving average, one of the highest levels in the last 2 years.
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Weak May Monthly OpEx Week - DJIA Down 12 of Last 15
By: Almanac Trader | May 13, 2024
Since 1990 May’s monthly OpEx week has a slight bearish bias with DJIA and S&P 500 down 18 and up 16. More recently, DJIA has suffered declines in 12 of the last 15, monthly expiration weeks. S&P 500 has one additional weekly gain since 2009, down 11 of the last 15. NASDAQ has declined in 9 of the last 15.
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$SPX $Millions of Calls Flow
By: Cheddar Flow | May 13, 2024
• $SPX & $SPXW Flow
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With a current value of 68.22, the Market Greed/Fear Index still indicates a prevailing sentiment of greed among investors, revealing their appetite for higher risk-taking in the US stock market
By: Isabelnet | May 13, 2024
• Sentiment
With a current value of 68.22, the Market Greed/Fear Index still indicates a prevailing sentiment of greed among investors, revealing their appetite for higher risk-taking in the US stock market.
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S&P 500: Three consecutive days NYSE advancers of 74% or greater suggest a bullish outlook for the S&P 500 over the next 12 months, with an average gain of 22.7% since 2000
By: Isabelnet | May 13, 2024
• S&P 500
Three consecutive days NYSE advancers of 74% or greater suggest a bullish outlook for the S&P 500 over the next 12 months, with an average gain of 22.7% since 2000.
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S&P 500 futures book depth is back to very healthy levels, improving intraday dynamics for futures traders. Reducing the chance of large, gappy moves provided liquidity stays abundant
By: Markets & Mayhem | May 13, 2024
• S&P 500 futures book depth is back to very healthy levels, improving intraday dynamics for futures traders. Reducing the chance of large, gappy moves provided liquidity stays abundant.
Chart: Goldman Sachs
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$QQQ Large $658 Million Dark Pool Print
By: Cheddar Flow | May 13, 2024
• $QQQ Large $658M Dark Pool Print
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The 10 Top/Bottom S&P 500 Index percent net change performers
By: Thom Hartle | May 13, 2024
• Today (8:34 CST), the 10 top/bottom percent net change performers in the S&P 500 Index.
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The 10 Top/Bottom NASDAQ 100 Index percent net change performers
By: Thom Hartle | May 13, 2024
• Today (8:34 CST), the 10 top/bottom percent net change performers in the NASDAQ 100 Index.
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Equity Bulls Probably Eyeing Wed’s CPI To Give Additional Boost To Weary Indices
By: Hedgopia | May 13, 2024
If Wednesday’s CPI for April cooperates, equity bulls will try to use it to build on last three weeks’ momentum. Major US equity indices have rallied back to just under their all-time highs from March but are giving out signs of fatigue.
The S&P 500 rallied 1.9 percent last week to 5223. From the low of April 19th through last Friday’s high, it is up 5.8 percent, which just about recovered the 5.9-percent drop from the March 28th peak of 5265.
The large cap index has now rallied for three consecutive weeks. At Friday’s close, it is 0.8 percent from the March peak. In late March and early April, bulls were rejected at 5260s in three sessions over seven before coming under pressure (Chart 1). They would obviously try hard to test those highs again, even as signs of fatigue are showing up.
Last week, on the daily, a couple of sessions ended with a doji, and volume has been nothing to write home about.
At this point, with handsome gains the last three weeks, bulls are desperate for a catalyst. It is most probably not going to be earnings.
The March-quarter earnings season is just about done. As of last Tuesday, 85.6 percent of S&P 500 companies had reported their numbers, with blended operating earnings coming in at $55.41 (Chart 2), which witnessed a nice bump from mid-April’s $53.18, aided primarily by big tech. That said, when the March quarter began, the sell-side was expecting $55.92, and $57.45 last May.
Speaking of which the consensus this year is $241.74, which will have registered a growth rate of 13.2 percent from last year. In 2023, earnings grew 8.4 percent and fell 5.4 percent in 2022. Next year, for whatever it is worth, this year’s momentum is expected to continue with growth of 13.9 percent. If past is any guide, these analysts customarily bring out the scissors as the year progresses. At its height in September 2022, earnings were expected to jump 14.7 percent in 2023.
Bulls are probably eyeing something else to potentially provide a fillip to the latest momentum in equities.
The consumer price index for April is due out Wednesday. Going into this, both headline and core CPI are meaningfully lower from four-decade highs recorded nearly two years ago but are showing signs of stalling in recent months.
In the 12 months of March, headline and core CPI grew 3.48 and 4.80 percent respectively. In 2022, they were rising at 9.06 percent and 6.63 percent in June and September, in that order (bars with blue border in Chart 3). This is a tremendous progress toward the Federal Reserve’s two-percent goal.
However, the disinflation trend has stalled recently. Headline CPI has risen since recording 3.09 percent this January, while the core grew 3.75 percent in February. Further, the core has been above the headline since March last year. Any relief in these trends is likely to ignite risk-on. It remains to be seen if this should to enough to push the indices to new highs.
Equity bulls have two potential problems currently: (1) overbought condition and (2) vanishing bears.
On the daily, the Nasdaq 100, for instance, is way extended, having rallied 7.5 percent in the last three weeks. Of course, it gave back 8.1 percent over four weeks after peaking at 18465 on March 21st – peaking a week before the S&P 500. The tech-heavy index, in fact, failed to sustainably break out of 18300s for seven weeks before going the other way.
Last Friday – a spinning top session – tech bulls rallied the index to 18248 before they ran out of steam (Chart 4). This is taking place just above the 50-day (17943), with the index staying above the average in all five sessions last week; earlier, the Nasdaq 100 remained under the average for 15 consecutive sessions.
Irrespective of what happens post-CPI Wednesday, odds favor a breach of the average in due course – if nothing else just to unwind the overbought condition the index finds itself in.
The Nasdaq 100 is up 7.9 percent year-to-date. Last year, it surged 53.8 percent. This was facilitated by the non-believing bears, among others.
At the end of September 2022, short interest in QQQ (Invesco QQQ Trust) stood at 90.1 million. It ended last year at 60.1 million. By the end of April (this year), this had further shrunk to 49.5 million, which is the lowest since end-July 2020 (Chart 5).
Persistent covering by the bears provided a sustained tailwind to QQQ/Nasdaq 100 in the past. This is disappearing fast, as short interest languishes at a multi-year low. This is also a reason why a post-CPI rally – should there be one – is unlikely to sustain itself.
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3 Sentiment Indicators That Turned Bullish Last Week
By: Schaeffer's Investment Research | May 13, 2024
• The S&P 500 is rallying into last year's closing high
• Another round percentage level could act as a pivot/hesitation point this week
“…the SPX bounced off the supportive 80-day moving average, reaching potential resistance levels again. The first was the trendline connecting highs at the start of the current decline, which the index breached on Friday. It comes into the week at 5,102 and will be at 5,077 at the end of the week, meaning it's sloping five points lower each day. However, the convergence of the 30- and 50-day moving averages at 5,130 should be on your radar as a point of potential resistance to watch, if the see-saw action continues. The SPX closed under this level on Friday, putting the trendline breakout in an awkward position heading into next week. Early price action may determine if the SPX breaks out or re-enters the choppy environment.”
-Monday Morning Outlook, May 6, 2024
The S&P 500 Index’s (SPX—5,222.68) converging 30-day and 50-day moving average “resistance” met nothing last week, as the index sliced above them to begin last week’s trading. The 50-day moving average has not been significant in months, so little surprise that it was not significant last week. But the unpopular 30-day moving average proved supportive at the mid-January low and marked resistance in mid-October, and therefore the quick crossover above this trendline was impressive.
As is the case whenever the SPX experienced a healthy pullback or lengthy corrective or bear market action, it claws its way back and there are multiple potential resistance points. In the week prior, it closed above potential trendline resistance connecting lower highs since its peak. While last week, it crossed above the convergence of two important moving averages.
To that point, after three weeks of rally mode, the SPX is again approaching potential resistance from the index's all-time closing high of 5,254. Note that this closing high in late March occurred just above 5,235, or exactly 10% above the 2023 close. Long-time readers of this commentary are very much aware of how round percentage levels like this have a way of acting as hesitation and/or pivot points. In fact, this area was even around Friday’s intraday high.
Also of interest is a line segment that is the site of the breakdown below the lower trendline of a channel in early April at 5,220. The SPX closed just above this level on Friday.
If looking for an entry point on the SPX, await a breakout and close above the all-time closing high with a stop just below it, or await a pullback to the 30-day moving average in the 5,100 area, which is where the SPX broke above the short-term trendline connecting lower highs. Moreover, a trendline using higher lows since last month’s bottom is currently in this area.
“If you are aggressive and anticipate the SPX breaking out above resistance, the one indicator that is giving you permission to do so is the CBOE Market Volatility (VIX – 15.03). In early April, the VIX hinted at higher volatility ahead when it closed above 15.40, or half the 2023 high. It then closed above 18.68 at the start of April expiration week, further hinting at weakness. Since peaking just below the October high point on April 19, it has come down sharply.”
-Monday Morning Outlook, April 29, 2024
“One sentiment indicator that moved in options bulls' favor last week was the 10-day, buy-to-open put/call volume ratio on SPX components. It is now showing hints of rolling over from a relatively high level. This type of behavior typically comes up as the market begins a basing period around the eventual lows, withs some rollovers in the ratio coinciding with bottoms. If the SPX moves above the technical levels discussed above, this indicator will be more valid”
-Monday Morning Outlook, May 6, 2024
Per the excepts above, one by one sentiment indicators are turning more in the bulls’ favor. First it was the Cboe Market Volatility Index’s (VIX—12.55) move back below the important 15.40 level in late April. The advance above 2024’s resistance at 15.40 in early April hinted at increasing volatility and lower equity prices, and the move back below it foreshadowed the decreasing volatility and advance in stocks so far this month.
Last week, option buyers on SPX components began buying less puts relative to calls compared to prior weeks, which created less of a coincidental headwind and foreshadowed a trough and/or bottoming process at hand.
A third indicator turned bullish last week, with the release of short interest data from the exchanges late last week. This data is as of the last day of April trading, so technically this indicator turned bullish in late April. But it wasn’t apparent to us until the exchanges released the data last week.
Per the SPX component short interest graph with SPX overlay below, short interest rolled over after a steady build to a multi-year high. The bottom line conclusion when looking at this graph is bullish, with the SPX trading around its all-time high. The absolute level of SPX component short interest in context of the index itself being near an all-time high suggests that many short positions are underwater. This implies that at a minimum, shorts will not continue to build position, while the possibility of forced short covering would be supportive of a rally.
One sentiment indicator that was in neutral mode last week was the National Association of Active Investment Manger’s (NAAIM) weekly exposure survey. The active managers surveyed in the prior week had roughly 50% exposure but as of last week moved closer to full exposure. This suggests little left in the fuel tank if you are depending on this group to support the market.
Stay in tune with the levels mentioned earlier in this commentary as various sentiment indicators improve for bulls.
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10 Most Oversold Stocks in the S&P 500 - $CVS $INTC $SBUX and $ULTA making the list
By: Barchart | May 11, 2024
• 10 Most Oversold Stocks in the S&P 500 - $CVS $INTC $SBUX and $ULTA making the list.
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Market performance by sector so far in 2024
By: Evan | May 11, 2024
• Market performance by sector so far in 2024
1 Comm Services +16%
2 Technology +11%
3 Utilities +10.7%
4 Energy +9.9%
5 Financial +9.7%
6 Industrials +9.4%
7 Consumer Defensive +7.6%
8 Healthcare +5.4%
9 Basic Materials +3.2%
10 Consumer Cyclical +2.9%
11 Real Estate -5.9%
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Eyes on the $437 area for support if we see a pullback on the Nasdaq this week
By: TrendSpider | May 12, 2024
• Eyes on the $437 area for support if we see a pullback on the Nasdaq this week
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Tech trouble on deck? $NQ $QQQ
By: TrendSpider | May 12, 2024
• Tech trouble on deck? $NQ $QQQ
This week holds the lowest win rate for Nasdaq 100 Futures over the last two decades, closing green just 37% of the time.
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The best performing stocks in the S&P 500 over the last 30 years...
By: Charlie Bilello | May 8, 2024
• The best performing stocks in the S&P 500 over the last 30 years...
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Flow: Investors' optimism and appetite for potential returns in the US stock market resulted in inflows of $7.72 billion into US equity funds over the past week
By: Isabelnet | May 11, 2024
• Flow
Investors' optimism and appetite for potential returns in the US stock market resulted in inflows of $7.72 billion into US equity funds over the past week.
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Big US Stocks’ Q1’24 Fundamentals
By: Adam Hamilton | May 10, 2024
The big US stocks dominating markets and investors’ portfolios continue to thrive. They are finishing up another earnings season covering a record-breaking quarter, reporting some fantastic results. Still these fat underlying profits are growing far slower than major companies’ soaring stock prices. That has forced valuations deeper into dangerous bubble territory, fueling mounting risks for awakening a new bear market.
Prevailing stock prices are mostly driven by herd psychology, popular greed and fear. That often masks how companies are actually faring fundamentally. But those obscuring sentiment fogs are dispelled once a quarter when new results are released. Companies listed on US stock exchanges have 40-calendar-day deadlines after quarter-ends to file these reports with the US Securities and Exchange Commission.
These comprehensive quarterlies include full financial statements, and management’s discussion and analysis on them. MD&As are often more valuable than financials, illuminating material developments and sharing strategies to achieve future growth. These essential quarterly reports offer the best-available fundamental data on individual stocks, yielding excellent insights into how companies are likely to perform.
By the look of the stock markets, big US stocks must be crushing it. In Q1’24 the flagship S&P 500 stock index dominated by these elite companies blasted 10.2% higher in a powerful one-sided advance. While the SPX achieved fully 22 new record closes last quarter, those relentless gains stretched it to extremely-overbought levels. By late March the S&P 500 had soared 14.1% above its baseline 200-day moving average!
Q1’s strong surge naturally fueled serious greed and euphoria, a warning sign flagging major toppings. Couple hyper-bullish popular sentiment with extreme overboughtness and bubble valuations, and stock investors ought to be wary. That includes all Americans with retirement accounts, which are heavily invested in big US stocks! With the SPX mostly grinding lower since Q1 ended, the reckoning may be underway.
As always big US stocks’ latest Q1’24 results are important for gaming stock markets’ likely direction in coming months. For 27 quarters in a row now, I’ve analyzed how the 25 largest US companies that dominate the SPX fared in their latest earnings seasons. Exiting Q1, these behemoths commanded a stunning record 46.8% of the SPX’s total market cap! Their latest-reported key results are detailed in this table.
Each big US company’s stock symbol is preceded by its ranking change within the S&P 500 over the past year since the end of Q1’23. These symbols are followed by their stocks’ Q1’24 quarter-end weightings in the SPX, along with their enormous market capitalizations then. Market caps’ year-over-year changes are shown, revealing how those stocks performed for investors independent of manipulative stock buybacks.
Those have been off the charts for years, long fueled by the Fed’s previous zero-interest-rate policy and trillions of dollars of bond monetizations. Stock buybacks are deceptive financial engineering undertaken to artificially boost stock prices and earnings per share, maximizing executives’ huge compensation. Looking at market-cap changes rather than stock-price ones neutralizes some of buybacks’ distorting effects.
Next comes each of these big US stocks’ quarterly revenues, hard earnings under Generally Accepted Accounting Principles, stock buybacks, trailing-twelve-month price-to-earnings ratios, dividends paid, and operating cash flows generated in Q1’24 followed by their year-over-year changes. Fields are left blank if companies hadn’t reported that particular data as of mid-week, or if it doesn’t exist like negative P/E ratios.
Percentage changes are excluded if they aren’t meaningful, primarily when data shifted from positive to negative or vice-versa. Collectively these latest quarterly results from the leading US companies shed light on crucial questions. Are the US stock markets still fundamentally-sound enough to keep rallying on balance, or are they threatened with a major selloff? If the latter, is it likely to be a correction or new bear market?
The US stock markets have grown increasingly top-heavy, which is a serious risk. Exiting Q1, the SPX’s 25 largest component stocks again represented 46.8% of its entire weighting! Dramatically soaring since the 34.8% in Q3’17 when I launched this deep quarterly research thread, that extreme concentration is troubling. The fewer stocks any bull market depends on to drive it, the more fragile and precarious it is.
These US stock markets are heavily reliant on the beloved Magnificent 7 mega-cap technology stocks. Together mighty Microsoft, Apple, NVIDIA, Alphabet, Amazon, Meta Platforms, and Tesla now account for a staggering 29.1% of the SPX’s total market cap! The Mag7’s gargantuan total $13,587b exceeded the total of the SPX’s bottom 403 components. These market darlings essentially are the US stock markets.
Their outperformance remains dramatic, with the Mag7’s market cap skyrocketing 50.6% over the year ending Q1’24! That almost doubled the entire S&P 500’s 27.9% gain, which means the vast majority of its other 493 stocks seriously underperformed. While these mega-cap-tech giants are fantastic American companies with amazing fundamentals, their stocks are still exceedingly overvalued as we will soon discuss...
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CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | May 11, 2024
• Following futures positions of non-commercials are as of May 7, 2024.
E-mini S&P 500: Currently net short 9.7k, up 52.8k.
Equity bulls put up another week of strong show, with the S&P 500 rallying 1.9 percent to 5223. This was the third up week in a row. From the April 19th low of 4954 to Friday’s intraday high of 5240, the large cap index is up 5.8 percent, which just about offsets the 5.9-percent decline between last month’s low and the March 28th high of 5265. At Friday’s high, the index was less than 0.5 percent from the March peak.
Amidst this, signs of fatigue are showing up. Volume was anemic this week, and two of the five sessions ended in a doji. If non-commercials are to be believed, it will be a tough sled from here on. These traders, having switched to net long four weeks ago, are now net short e-mini S&P 500 futures.
Nasdaq (mini): Currently net long 4.4k, up 1.6k.
The Nasdaq 100 trudged higher 1.5 percent this week – its third consecutive up week. From the April 19th low of 16974 through Friday’s high of 18248, it rallied 7.5 percent. Before that, the tech-heavy index peaked at 18465 on March 21st, failing to sustainably break out of 18300s for seven weeks before rolling over; from that high through last month’s low, it swiftly gave back 8.1 percent.
Friday – a spinning top session – tech bulls could not quite muster strength enough to test 18300s. The index began the week with a rally past the 50-day on Monday, then struggled to keep up the momentum. The daily RSI is below 59. Ahead, bulls are likely to struggle to save the 50-day.
Russell 2000 mini-index: Currently net short 38k, down 2.3k.
Small-cap bulls Friday came close to testing 2100, but no cigar. This is an important level.
The Russell 2000 peaked in November 2021 at 2459, subsequently reaching 1641 in June 2022, which was successfully tested in October of both 2022 and 2023. A 61.8-percent Fibonacci retracement of that drop comes to 2144. The small cap index lost 2100 in January 2022 and has since found stiff resistance at that price point, which also represents a measured-move price target post-breakout at 1900 last December. Before that, the index went back and forth between 1700 and 1900 going back to January 2022.
A decisive takeout of 2100 can give the bulls a much-needed fillip. Until then, they need to defend 2000 and most definitely 1900.
US Dollar Index: Currently net long 1.9k, up 1.9k.
Last Friday, the 50-day (now 104.52) was successfully tested. Dollar bulls did build on that this week, but only slightly. The US dollar index rose 0.2 percent this week to 105.18, with an intra-week high of 105.64 on Thursday.
Last week, on May 1st, the index rallied as high as 106.38 but only to retreat. That was the fourth week in a row the index stalled just north of 106. So, for now, this is the area to beat as far as dollar bulls are concerned.
On the downside, breakout retest lies at 103-104, which goes back to December 2016 and was taken out four weeks ago; 104 also serves as trendline support from last December when the index bottomed at 100.32.
VIX: Currently net short 38.9k, up 16.4k.
Volatility bulls better step up soon. VIX is perilously close to horizontal support at 12.30s. The volatility index yielded 0.94 points this week to 12.55. It is now down three weeks in a row. Four weeks ago – on April 19th – it tagged 21.36 and reversed.
Having lost nearly nine points over three weeks, VIX is oversold – way oversold. The daily in particular can rally.
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Five key takeaways from earnings season
By: Raymond James Financial | May 10, 2024
Key Takeaways
• Mega-Cap Tech Continues To Drive S&P 500’s Earnings
• Shareholder-Friendly Activity Is Back!
• Consumers Are Becoming More Discerning
Happy National Small Business Day! Every year on May 10, small businesses are officially recognized for their contributions to the US economy. And rightfully so. Small businesses are the backbone of the US economy. Today, there are over 33 million small businesses operating across the US. Small businesses employ over 61 million employees—nearly half of the entire American workforce. And a record-breaking 5.5 million new business applications were filed in 2023. Truly impressive! Just as small businesses are a key barometer for the nation’s economic health, large public companies drive the trends in earnings. That is why we pay so much attention to earnings season. With 1Q24 earnings season largely compete with over 88% of the S&P 500’s market cap having already reported, here are our five biggest takeaways:
Mega-Cap Tech Continues To Drive Earnings | Despite elevated valuations, mega-cap tech earnings remain a bright spot, driving the bulk of the S&P 500’s earnings. In fact, the composite of MAGMAN’s earnings (i.e., Microsoft, Apple, Google, Meta, Amazon, and NVIDIA) we track is on pace to climb over 50% YoY. Compare that to the other 494 stocks in the S&P 500, which have roughly flat earnings growth YoY. More important, this is the fifth consecutive quarter that MAGMAN’s earnings have outpaced the rest of the Index. In addition, MAGMAN has had greater top-line sales growth (over 5x higher), stronger net margins (~2.5x greater) and bigger earnings beats (~12% versus 8%) than the rest of the Index. Our composite of mega-cap tech (i.e., MAGMAN) has strongly outperformed the overall market, (50.9% versus 25.4% over the last 12 months), with their outperformance supported by strong fundamentals and superior earnings results.
Business Capex Spending Is On The Rise | Early gains in the bull market in late 2022 and 2023 were driven by businesses being rewarded for pivoting to contain costs (i.e., tech layoffs, restructurings) amid an uncertain economic environment. Nearly 1.5 years later, businesses are pivoting again—shifting from cost containment to investing in growth areas (like AI and cloud computing) to support their businesses. This is contributing to CEOs becoming more optimistic about the state of the economy. In fact, the Conference Board’s CEO Confidence survey moved back into expansionary territory (a level above 50) in Q1 for the first time in two years! Some of the biggest beneficiaries of the increased capex spend are tech-related, Communication Services and select areas of Consumer Discretionary stocks. Let’s not forget Industrials (one of our favored sectors), which continue to reap the benefits from all the fiscal spending via the CHIPS, IRA and IIJA legislation in recent years.
Buybacks Are Back! | With many S&P 500 companies still flush with cash on their balance sheet—to the tune of $2 trillion—management teams are re-focusing on delivering shareholder value. This is evident in dividend growth, which is running at an 8% YoY pace in 2024—above last year’s 5+% pace and the 10-year average of 6.6%. In addition, companies thus far have announced over $180B in stock buybacks in 1Q—yet another sign of improved confidence. In fact, stock buybacks have remained above their 10-year average for 13 consecutive quarters. A continuation of this trend should serve as another tailwind for stocks. Case in point: Meta and Alphabet authorized their first-ever dividend this quarter, and additional repurchases of stock. Apple announced a $110 billion dollar buyback—its biggest in the company’s (and market’s) history! We think this trend will continue.
Consumers Are Becoming More Discerning | Despite ongoing concerns of consumer fatigue, a big takeaway this earnings season is that consumers, in aggregate, remain healthy and resilient. This was highlighted by some bank and credit card companies, which reported that loan loss reserves (the amount set aside to cover uncollectible debts) remain stable and even decelerated last quarter and delinquency rates remain well below historical averages. Yes, there are signs that consumers are starting to prioritize their spending (i.e., travel remains favored over goods-related areas) and lower-income consumers are feeling the pinch from higher prices (e.g., restaurant, beverage companies), but this is forcing companies to compete on delivering value to capture the discretionary spend. Those who execute well are being rewarded.
Earnings Growth Is On A Solid Uptrend | Earnings growth has remained positive for three consecutive quarters, with 1Q24 on pace for a 6+% YoY gain. The healthy macro backdrop and optimistic comments about the resilient consumer and business spending suggests forward looking earnings should remain on an uptrend in the coming quarters. In fact, consensus estimates reflect double digit EPS gains in two of the next three quarters, with 2025 earnings estimates around ~$275/share—a 13+% gain YoY. More important, earnings growth is expected to broaden, with the other 494 stocks in the S&P 500 catching up and even outpacing MAGMAN’s earnings later this year. These solid earnings trends, plus optimistic management commentary, leave us confident in our $240 year-end S&P 500 EPS target.
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$SPXW They are buying this intraday dip with millions worth of contracts that expire on Wednesday
By: Cheddar Flow | May 10, 2024
• $SPXW They are buying this intraday dip with millions worth of contracts that expire on Wednesday
*Above the Ask*
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The 10 Top/Bottom NASDAQ 100 Index percent net change performers
By: Thom Hartle | May 10, 2024
• Today (8:34 CST), the 10 top/bottom percent net change performers in the NASDAQ 100 Index.
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Highest and Lowest Price to Sales (P/S) Ratios
By: Bespoke Investment Group | May 10, 2024
In the S&P 1500, which encompasses the large-cap S&P 500, the Mid Cap 400, and the Small Cap 600, there are just under 1,175 stocks that have positive next-year EPS estimates and trailing 12-month revenues of more than $1 billion. We wanted to see which stocks of this group currently have the highest and lowest forward price to sales ratios. For those that aren't familiar with the price to sales ratio, it's simply a stock's current market cap divided by annual sales (in this case, forward 12-month consensus sales estimates).
Of the stocks 1,150+ stocks that fit our initial criteria, the average stock currently has a forward price to sales (P/S) ratio of 2.59, but the median is significantly lower at 1.73.
Notably, there are 31 stocks that currently have forward P/S ratios greater than 10, meaning market cap is 10x larger than annual sales. That's a very high P/S ratio, and the company better be growing significantly if it's going to maintain that type of multiple. Collectively, these 31 stocks are up an average of 43.34% over the last year! Below is the list for those interested.
As shown, NVIDIA (NVDA) currently has the highest forward price to sales ratio at 18.91! Its shares are up 211.7% over the last year.
Five other stocks have P/S ratios above 15: Fair Isaac (FICO), Eli Lilly (LLY), Cadence Design (CDNS), Intuitive Surgical (ISRG), and Monolithic Power (MPWR). Credit card companies Visa (V) and Mastercard (MA) both have 14x P/S ratios, and a few other very notable large-caps that have 10+ P/S ratios include Microsoft (MSFT), Broadcom (AVGO), and Texas Instruments (TXN). Clearly many of the Tech stocks on this list have seen massive gains since late 2022 from the current AI boom, and investors are still expecting BIG things from them in the years ahead to demand these kind of multiples. They have a lot to live up to indeed.
On the flip side of the equation are the stocks with the lowest price to sales ratios. There are currently 338 stocks with forward P/S ratios that are less than one, meaning their market caps are lower than annual sales estimates. When sales are greater than market cap, companies typically have very low (and usually declining) margins. Many of the names below with P/S ratios of 0.20 or lower come from slow and steady groups like wholesale food distributors, big box retail, or large health care insurance providers.
Whereas the 31 stocks with 10+ P/S ratios are up 43% over the last year, the group of stocks below are only up an average of 6% YoY. While many of these names are and will continue to be on a downward trajectory in the coming years, we're confident that a few will end up turning around their margin situations, especially if we see disinflation. Now go dig deeper and find them!
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Currently, the S&P 500 is considered overbought, with potential upside to the 5600 and 6150 levels
By: Isabelnet | May 10, 2024
• S&P 500
The Williams %R indicator is a useful tool for identifying overbought and oversold conditions in financial markets. Currently, the S&P 500 is considered overbought, with potential upside to the 5600 and 6150 levels.
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Stocks Make Mom Happy Before & After Mother’s Day
By: Almanac Trader | May 10, 2024
Remember to take time out this Sunday for all the Mother’s in your world. Over the last 29 years on the Friday before Mother’s Day Dow has gained ground 19 times. On Monday after, DJIA has advanced 18 times. Average gain on Friday has been 0.25% and 0.23% on Monday. However, Monday following Mother’s Day has been down 8 of the last 12 years. In 2019, DJIA suffered its worst post Mother’s Day loss going back to 1995, off 2.38%.
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S&P 500: The new low in the US high yield option-adjusted spread is seen as a promising signal, supporting the expectation of a summer rally on the S&P 500 in 2024
By: Isabelnet | May 9, 2024
• S&P 500
The new low in the US high yield option-adjusted spread is seen as a promising signal, supporting the expectation of a summer rally on the S&P 500 in 2024.
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It appears that the S&P 500 is wrapping up a final (grey) 5th wave to the extended target zone of $5210-5230, with some short-term negative divergences developing
By: Intelligent Investing | May 9, 2024
• It appears that the #SP500 is wrapping up a final (grey) 5th wave to the extended target zone of $5210-5230, with some short-term negative divergences developing.
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$QQQ $2.6 Million OTM Call This whale purchased 4,161 450c's for the June 21st expiration
By: Cheddar Flow | May 9, 2024
• $QQQ $2.6M OTM Call
This whale purchased 4,161 450c's for the June 21st expiration
There is a similarity in bullish $SPX flow for this expiration. Almost all flow after June has been bearish
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$SPX / $SPXW Flow Hasn't Changed All Day
By: Cheddar Flow | May 9, 2024
• $SPX / $SPXW Flow Hasn't Changed All Day
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Money managers Increased their exposure to the US Equity markets since last week...
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NAAIM Exposure Index
May 9, 2024
The NAAIM Number
91.55
Last Quarter Average
87.84
»»» Read More…
Sentiment-based indicators for the Nasdaq 100 have signaled heightened levels of uncertainty among investors
By: SentimenTrader | May 8, 2024
• Sentiment-based indicators for the Nasdaq 100 have signaled heightened levels of uncertainty among investors. Last week, the fear subsided, triggering a flurry of buy alerts from trading models based on the volatility index, liquidity premium, and aggregated put/call ratio.
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The AAII Investor Sentiment
By: AAII | May 9, 2024
Bullish 40.8%
Neutral 35.4%
Bearish 23.8%
• Historical 1-Year High
Bullish: 52.9%
Neutral: 37.4%
Bearish: 50.3%
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When Bullish April Is Down Stocks Often Struggle Until Q4
By: Almanac Trader | May 7, 2024
April was the first down month in 6 months. Almanac readers know April is the best Dow month by average percent change and #2 for S&P. It’s ranked fourth for average percent change on NASDAQ and Russell 2000.
In general, April is a notoriously bullish market month overall with a high average percent and plurality of gains across the board. A negative April is cause for concern. When the #1 Dow month is down that could be significant.
Digging into the data in the tables below of all down Aprils since 1950 there is a plethora of red in May and through Q2 and Q3. There are several steep drops scattered throughout these 21 down April years. May, Q2 and Q3 show consistent and average losses.
Q4 however delivered solid gains except for four years: 1973 (Watergate, Vietnam, Oil Embargo), 1987 (Crash), 2000 (Undecided Election) and 2012 (ZIRP, QE3, Operation Twist, Big Q1 & Q3). You can see why we expect the market to struggle for the next several months.
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$SPY $1.2 Million OTM Put (Unusual) This order was executed above the ask and has a June expiration
By: Cheddar Flow | May 8, 2024
• $SPY $1.2M OTM Put (Unusual)
This order was executed above the ask and has a June expiration.
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Drop in Investor Optimism Could Spell Trouble
By: Schaeffer's Investment Research | May 8, 2024
• An underperforming market usually follows drops in the percentage of bullish newsletters
• Significant stock underperformance could be ahead
Editors at Investors Intelligence (II) collect more than 100 stock market newsletters and designate them bullish, bearish, or calling for a correction (short-term bearish, but longer term bullish). They publish the outcomes of this newsletter survey on a weekly basis.
Recently, their report showed the biggest weekly drop in optimism we have seen in a long time, after three consecutive weeks of losses for stocks. In the analysis below, I study how stocks tended to perform after newsletters suddenly soured on the market.
DRAMATIC DROPS IN OPTIMISM
Three weeks ago, 57% of newsletters were bullish and just 14.5% bearish according to II, meaning bulls outpaced bears by 42%. The following week, the bulls fell to 46% while the bears jumped to 21.5% -- a 25% difference. The 10% drop in bulls and 17% drop in bulls minus bears were the largest weekly drops since 2018.
The table below summarizes S&P 500 Index (SPX) returns after the percentage of bulls in the II survey fell at least 10% from one week to the next. These signals have not been contrarian. An underperforming market usually follows dramatic drops in the percentage of bullish newsletters.
Six months after these drops, the SPX averaged a loss of roughly 0.5%. One year later, the index averaged a flat return, with less than half of returns positive. This is significant underperformance.
Newsletter sentiment data was much more volatile in the 1970s. The first table above shows 49 drops in bulls of 10% or more, with 42 occurring in the 70s. The table below shows the seven drops since 1980.
Even in the more recent data, poor stock performance followed these 10% shifts lower in bulls. In fact, the SPX averaged a loss three months to a year later after these instances.
In a similar analysis, I looked at the times the weekly bulls minus bears figure fell 17% or more. Stocks underperform going forward, but not as bad as what we saw above. I’m not sure if that’s comforting or not. Six months after these signals, the SPX averaged a gain of 2.16% with 58% of the returns positive. Typically, stocks average a return of 4.35% with 69% of the returns positive.
Again, the overwhelming majority of the signals occurred in the 1970s. The signals since 1980 are below. The SPX performed well the last time we saw this in December of 2018, adding almost 30% over the next year. The signal before was exactly a year from the 2008-2009 financial crisis lows.
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$SPY $1 BILLION+ worth of singular Dark Pool prints were just executed after-hours (Unusual)
By: Cheddar Flow | May 7, 2024
• $SPY $1 BILLION+ worth of singular Dark Pool prints were just executed after-hours (Unusual)
1M shares each
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The 10 Top/Bottom S&P 500 Index percent net change performers
By: Thom Hartle | May 8, 2024
• Today (8:34 CST), the 10 top/bottom percent net change performers in the S&P 500 Index.
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$SPX Big Picture
By: Tom Bowley | May 7, 2024
The monthly PPO continues to push higher and away from centerline support. This is indicative and consistent with how the S&P 500 behaves during secular bull markets. Also, note that RSI 40 support tests have been successful since the financial crisis in 2008/2009. This is another sign that the secular bull market remains alive and kicking.
Both our 10-year and 20-year rate of change (ROC) panels show that highs during this secular bull market have not come close to previous secular bull market highs. It's telling me we still have much further to go.
Sentiment
Let's revisit the 253-day SMA of the equity only put call ratio ($CPCE). I want to refresh everyone's memory as to what happens to the S&P 500 when this sentiment indicator tops with readings showing EXTREME fear:
Bet against this chart at your own risk. Personally, I believe that sentiment plays a much bigger role in stock market direction than most folks give it credit for. Every single major S&P 500 advance during this secular bull market has occurred with a significant top in the 253-day SMA of the CPCE. When this moving average is falling, you want to be on the long side.....PERIOD! This doesn't mean there aren't pullbacks. There simply aren't pullbacks that morph into bear markets.
Rotation/Intermarket Analysis
Here's the latest look at our key intraday ratios as we follow where the money is traveling on an INTRADAY basis (ignoring gaps):
QQQ:SPY
First, a quick reminder. While this chart is named "@SPYQQQ", it's actually the QQQ divided by the SPY. When this line is rising, it means the QQQ is outperforming the SPY ("risk on" environment). When it's falling, it means the SPY is outperforming the QQQ ("risk off" environment). We've clearly been in a downtrend as money has rotated towards defensive- and value-oriented stocks. The past few days, this has changed and you can see the lines turning higher. The key to a sustainable upside move will be the continuation of this ratio to the upside.
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$SPY $2.9 Million Far OTM Put (Very Unusual)
By: Cheddar Flow | May 7, 2024
• $SPY $2.9M Far OTM Put (Very Unusual)
This print is an opening order and volume had a major uptick today
*Above the Ask*
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$SPX - 1st Target from the 'Broadening' Hit
By: Sahara | May 7, 2024
• $SPX - 1st Target from the 'Broadening' Hit.
Tipped the Outer Uppr-Parallel & 'Gap' Fill too. If it doesn't get rejected here then its going to B/Out...
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The 10 Top/Bottom NASDAQ 100 Index percent net change performers
By: Thom Hartle | May 7, 2024
• Today (8:34 CST), the 10 top/bottom percent net change performers in the NASDAQ 100 Index.
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S&P 500: The US stock market is not considered overbought at the moment, as the current reading of 68.01 suggests there is still upside potential
By: Isabelnet | May 7, 2024
• S&P 500
The US stock market is not considered overbought at the moment, as the current reading of 68.01 suggests there is still upside potential
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Typical May Up Early, Weak Middle, Strong Finish
By: Almanac Trader | May 7, 2024
Over the last 21 years, the first three days of May have historically traded higher, and the S&P 500 has been up 18 of the last 26 first trading days of May. Bouts of weakness often appear around or on the fourth, sixth/seventh, and twelfth trading days of the month while the last four or five trading days have generally enjoyed respectable gains on average, but the last day of May has weakened noticeably with only NASDAQ gaining ground.
Monday before May monthly option expiration is much stronger than monthly expiration day itself albeit weaker for small caps. S&P 500 has registered only ten losses in the last thirty-four years on Monday. Monthly expiration day is a loser nearly across the board except for Russell 2000 with a slight average gain (+0.01%). The full week had a bullish bias that is fading in recent years with DJIA down seven of the last eight and S&P 500 down six of the last seven. The week after options expiration week now tends to favor tech and small caps. NASDAQ has advanced in 24 of the last 34 weeks while Russell 2000 has risen in 26 of the last 34 with an average weekly gain of 0.88%.
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Best Returns Last 10 Years...
By: Charlie Bilello | May 6, 2024
• Last 10 Years...
NVIDIA $NVDA: +20,081%
Bitcoin $BTC: +14,740%
$AMD: +3,486%
Tesla $TSLA: +1,208%
Amazon $AMZN: +1,112%
Netflix $NFLX: +1,105%
Microsoft $MSFT: +1,104%
Apple $AAPL: +887%
Facebook $META: +640%
Google $GOOGL: +521%
S&P 500 $SPY: +225%
Gold $GLD: +72%
US CPI: +32%
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$SPY $3.8 Million Far OTM Put (Highly Unusual)
By: Cheddar Flow | May 6, 2024
• $SPY $3.8M Far OTM Put (Highly Unusual)
This order has a near-term expiration and a lot of premium
Contract volume has seen a substantial uptick today
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Major Ultra-Bullish Signal is Approaching
By: Lucas Downey | May 6, 2024
Last week we took a deep dive in our data and found something interesting. When the BMI falls 40+ points in 16 weeks, it’s extraordinary.
In fact, over the past 30 years, it’s occurred 303 times.
While that may not seem exceptional on the surface, in reality most of those instances cluster around 17 discrete episodes throughout the 3 decade period including back-tested data.
But history proves these prolonged money flow dips are quite bullish over the medium to long-term. Even more striking are periods that are very similar to today’s environment.
I’m referring to conditions when the BMI fell 40+ points from a red-hot overbought reading over the next 4-month trading period.
Let’s visualize one from recent memory.
We experienced a similar peak to drop like now after the pandemic. From mid to late 2020, the BMI dropped from the 90 area to the low 50s, eerily similar to today.
By far this is the closest analog to today’s situation:
- Investors were still spooked by the unprecedented macro environment
- Bearish rhetoric was all over the media given the unfolding pandemic
That pullback eventually ended with a powerful rally starting soon later:
What’s important to note is that market lows were eventually hit and the BMI began rallying well ahead of the surge that followed.
Turns out, this similar pattern has been rather predictable in our data.
If you’re allergic to an extremely bullish setup, LOOK AWAY NOW.
When we single out similar BMI pullbacks to now, we find 6 instances ranging from 1998, 2019, & 2020.
What we find is near-term stocks struggle with the S&P 500 falling 4.1% a month later and 1.2% 3-months later.
But the underlying message that you need to heed is stocks zoom 6 and 12 months later with average gains of 14% and 20.3% respectively.
If that doesn’t impress you, I’ve included all 303 instances as well. In aggregate, they forecast market beating forward returns:
But I don’t want to stop with the coming bullish message.
For those that think Technology stocks are not going to shine again…keep dreaming.
This massive BMI drop favors those bold enough to bet on high-quality growth stocks.
Here I’ve performed the same analysis but with the NASDAQ 100 (NDX). The same weakness is seen 1 to 3 months out, with -2.5% and -.2% returns respectively.
But that’s when you want to be accumulating best of breed stocks. 6-months later the NDX surges 31.6% and 12-months later an awe-inspiring 49.5% jolt is seen.
And for those curious, the 303 instances offer outstanding forward gains too:
Folks, stop worrying about interest rates. You might risk missing a major ultra-bullish situation.
Instead, follow evidence-based data.
New market leaders are under heavy accumulation…now isn’t the time to bounce, it’s the time to pounce.
We are getting our subscribers ready for when the all-clear signal finally strikes. I firmly believe it’s around the corner.
Just like we sent out some of the best stocks to buy in October, we’re prepping for a similar rip.
A market map is the way.
Here’s the bottom line: Investors are looking for clarity in this turbulent market. Data has more answers than the news ever will.
We are currently witnessing a rare 40+ point drop in the Big Money Index (BMI). History says a little more pain will lead to monster gains in the coming months.
Not only that, whenever the BMI drops 40+ points from a red-hot overbought period similar to now, stocks have never been lower a year later, with the NASDAQ averaging a 49.5% twelve-month gain.
Don’t stop and stare. PREPARE!
After doing this study, earlier this week we sent 3 stocks to our PRO Members that we love for this coming uptrend. And chances are they aren’t names you’re familiar with…but the Big Money loves them!
Listen, a major ultra-bullish signal is approaching.
Don’t wait for the media bull whistle to blow…it’ll be too late.
Follow the money and you’ll be ahead of the move.
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