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March Quarterly Options Expiration Week: S&P 500 and NASDAQ Up 12 of Last 16
By: Almanac Trader | March 13, 2024
March Quarterly Option Expiration Weeks have been quite bullish. S&P 500 has been up 27 times in the last 41 years while NASDAQ has advanced 25 times. More recently, S&P 500 and NASDAQ have both advanced 12 times in the last 16 weeks. But the week after is the exact opposite, S&P down 27 of the last 41 years—and frequently down sharply. In 2018, S&P fell –5.95% and NASDAQ dropped 6.54%. Notable gains during the week after for S&P of 4.30% in 2000, 3.54% in 2007, 6.17% in 2009, and 10.26% in 2020 appear to be rare exceptions to this historically poorly performing week.
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The 10 Top/Bottom S&P 500 Index percent net change performers
By: Thom Hartle | March 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 | March 13, 2024
• Today (8:34 CST), the 10 top/bottom percent net change performers in the NASDAQ 100 Index.
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AI-generated Buy and Sell Daily Signals
By: Hedgeye | March 13, 2024
• This is free access to our brand-new AI-generated buy and sell signals.
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$SPX Over $3 Million of 5200+ Calls Hitting the Tape
By: Cheddar Flow | March 12, 2024
• $SPX Over $3M of 5200+ Calls Hitting the Tape
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S&P 500: The reading of 95.76 indicates that the US stock market is clearly overbought, causing concern among investors who foresee a possible correction in the near future
By: Isabelnet | March 12, 2024
• S&P 500
The reading of 95.76 indicates that the US stock market is clearly overbought, causing concern among investors who foresee a possible correction in the near future.
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UltraPro S&P500 $UPRO $SPXL size DP
By: Flowrensics | March 11, 2024
• $UPRO $SPXL size DP
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Nasdaq 100 Continues to See Upward Pressure
By: Christopher Lewis | March 12, 2024
• NASDAQ 100 Technical Analysis
Take a look at the Nasdaq 100 and you will see that we have bounced around a bit near the 18,000 level, while I record this, we are waiting on the CPI numbers. It’s a pretty simple formula, if it’s bad for the economy, it’s good for Wall Street, and that’s because they are looking for the latest handout. So if inflation comes in hot, it will more likely than not be negative for stocks. But if it comes in really weak, like the economy slowing down, then they’re going to be all about it and start buying again. That being said, I do think you have a bit of a channel going on at the moment.
It’s not a perfect channel, but it is close enough that I think you have to pay close attention. Ultimately, this is a situation where market participants will continue to look at dips as buying opportunities, treat them as such, and take advantage of cheap contracts. The 20 day EMA continues to offer support and the 18,000 level, I think more or less is going to be an area where people pay close attention just because of the psychology involved.
I don’t know if there’s any significant support or resistance there, it’s just a round number. We are in an uptrend and it’s difficult to fight this uptrend, so I do think that every time it pulls back, you have to be looking at it through the prism of potential value in this environment. If we do break down, I think there’s plenty of support not only at the bottom of the channel but perhaps the 50 day EMA as well.
The NASDAQ 100, of course, is driven by a handful of stocks because it is not an equal weighted index, and of course, it’s a momentum driven index most of the time anyway. Because of this, I’m sure there are plenty of buyers.
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AI-generated Buy and Sell Daily Signals
By: Hedgeye | March 12, 2024
• This is free access to our brand-new AI-generated buy and sell signals.
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How High Can the S&P 500 Fly?
By: Dr. Arnout Ter Schure | March 11, 2024
• If the S&P 500 holds above $4946, it can reach $5260, but a break below $5093 with a follow-through below $5056 would already be a strong warning to the bulls.
Waves Can Always Extend
In our previous update, we anticipated using the Elliott Wave Principle (EWP) for the S&P500 to ideally reach $5026ish, assuming a standard Fibonacci-based impulse pattern, where the 5th wave tops at the 200% extension of the 1st wave, measured from the 2nd wave. Fast-forward and the index decided to extend, which is a known unknown. It peaked last Friday at $5189.26, which appears to have completed another, i.e., additional, five-wave sequence from the February 13 (green W-4 low). See Figure 1 below.
Figure 1. Daily SPX chart with detailed EWP count and technical indicators
Moreover, the negative divergences between several technical indicators are blatantly obvious, but they are a condition, not a trigger, as “divergence is only divergence until it is not.” Price is the final arbiter, and as such, the Bears have yet to break it below the colored levels, both on the daily chart above and in the hourly chart below (see Figure 2), which we use to alert our premium members the odds are for a top are increasing with each subsequent break lower.
Figure 2. Hourly SPX chart with detailed EWP count and technical indicators
Critical Support Levels to Watch
Thus, based on the EWP count presented in Figure 2 above and the associated colored warning levels, we find that the (grey) $5093 level is support, tested today, and a break below it would be a strong warning to the bulls. Ultimately, we need to see a break below $5056 (the low of the grey W-iv = the orange level) and a follow-through below $4946 (the grey W-ii = the red level) to confirm a significant top has been struck.
However, if, like last, the index breaks higher because the bears fail to break below critical levels and reach the next target zone of ~$5260, support will be moved up to $5150.
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Sentiment at 80.45, the current reading of the Market Greed/Fear Index indicates a significant level of market greed, raising concerns of potential overconfidence
By: Isabelnet | March 11, 2024
• Sentiment
At 80.45, the current reading of the Market Greed/Fear Index indicates a significant level of market greed, raising concerns of potential overconfidence.
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Nasdaq 100 Futures: While leveraged funds and asset managers are less bullish on Nasdaq 100 futures, they still maintain a net long position
By: Isabelnet | March 11, 2024
• Nasdaq 100 Futures
While leveraged funds and asset managers are less bullish on Nasdaq 100 futures, they still maintain a net long position.
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The 10 Top/Bottom S&P 500 Index percent net change performers
By: Thom Hartle | March 11, 2024
• Today (8:35 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 | March 11, 2024
• Today (8:35 CST), the 10 top/bottom percent net change performers in the NASDAQ 100 Index.
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Equity Bull Run Isn't Over, But Maybe Start Prepping
By: Schaeffer's Investment Research | March 11, 2024
• The severity of a pullback will depend on Fed rhetoric, open interest, and sentiment
• It’s too soon to call a significant turn despite some barriers
It’s been a while since we last spoke… In fact, it was all the way back when I warned of a post-September 2023 options expiration swoon that could create opportunities for bulls to buy the dip into mid-October. But even I didn’t think equities would go on such a historic run, up +25.51% from the October lows. That’s the thing about trend following, though; we trade the trend until it ends.
In recent weeks, we’ve recommended not fighting the momentum, and to be honest? Not much has changed in the short-run. We continue to see dips to the 10-or 20-day moving averages on the S&P 500 Index (SPX – 5,123.69) get bought up as we ride the upper rail of the price channel.
However, we did print a spinning top candle on the weekly timeframe last week, which typically denotes indecision amongst traders. This was on top of a nasty close on the daily chart, where we had an outside reversal candle. This tells me traders are getting nervous about a pullback. Moreover, this comes at the top of a trendline connecting the 2000 and 2021 tops. So, some long-term obstacles are starting to pile up that could stifle the bull run.
This all comes on the heels of Federal Reserve Chairman Jerome Powell's testimony before Congress, reiterating what he has been saying for months. To paraphrase, Powell expects interest rates to have peaked for the cycle, and foresees rate cuts this year, but the committee is in no rush. The CME target rate probabilities forecast no change for March at a 96% probability. And a cut in May has fallen to just 23.22% from 52.19% one month ago.
The bet appears to be that the Fed has pushed the cut to June, a probability that has increased from 41.85% to 57.44% over the last month. I hesitate to believe one month makes the difference, and I think if the Fed doesn’t cut in May, they will wait until the second half of the year. Still, even with Powell downplaying when rate cuts will happen, the U.S. Dollar and the 10-year Treasury continued their longer-term downtrend below significant resistance levels.
“For example, the VIX did not come close to moving above 14.71, a level that could hint at trouble ahead if taken out to the upside. That said, the VIX is sitting at trendline support using a series of higher lows since December 2023..
-Monday Morning Outlook, March 4, 2024
The Cboe Volatility Index (VIX – 14.74) once again popped and faded from one-half of the 52-week high level that has been capping volatility. However, it did manage to close near the 14.71 level mentioned last week, but still below 15, which the VIX has keyed off as a pivot level since 2021. A closing candle above 15 would signal caution, however it should be noted the last couple of breaks above were quickly negated in the following two days, so maybe a better level to watch is 16 for confirmation.
Something I like to follow is the SPX:VIX 10-day and 63-day correlations. I have alerts set for any reading above 0.00, because moves tend to happen when the SPX and the VIX gain a positive correlation. Sometimes, it’s simply a pullback before another rally. Other times, it marks a major top, and more rarely a market low.
It’s not perfect and sometimes has a slight lag, but it’s a decent indicator to alert of impending moves in equities. The correlation has recently pushed to a 20-year high. Remember, volatility can act in both ways, which is one reason we have continued to melt up. So, while you need to hold on as long as the trend remains intact, this tells me adding new long-term positions is not optimal, and we could see a better opportunity in the near future.
This week is also a large quarterly expiration. These often can present turning points in the market, so let’s review the open interest configuration for March standard options expiration (OPEX). The S&P 500 SPDR ETF (SPY – 511.72) is currently above the 510-strike call level, so if equities want to continue to push higher into OPEX, look for strikes at 515 and 520 as areas where price could be capped for the week.
However, if price breaks below the 510 level, it wouldn’t take much to push the market back to the lower trendline, setting up a break of the rail and the 20-day moving average to test the round 500 level, which is the spot of the first large put open interest area. Below that, we have a significant build-up of put open interest at the 495-strike, which will likely be defended fiercely if the price happens to get there, as it also fills the open gap from Feb. 22.
Post-expiration configuration through April shows call strikes at 515 and 525 as areas of potential resistance, and we also have a stacked put configuration starting at the 500-strike and all the way down to the 460-strike, which is -10% lower from Friday’s close. Trading back to the 460-strike certainly wouldn’t be my base case; more like a worst-case scenario.
Momentum has been too strong, and we have many layers of support below to think the market will have a significant selloff, especially with April -- historically the second most bullish month of the year -- around the corner. However, a move towards 490 or even 480 post-expiration is plausible, where the 50- and 80-day moving averages loom if the round 500 level can be breached.
From a broader sentiment standpoint, we’re also starting to see optimism at extreme levels in some of our longer-term sentiment indicators. The Investors Intelligence (II) bulls minus bears ratio is 43.4%, its highest level since mid-2021. This puts readings in the 95th percentile, and historical returns going forward often underperform the average return over the next year.
The thing about a bull market is that you need people to be bullish for it to continue. So, while we may have reached nosebleed levels on some longer-term sentiment indicators, they can remain elevated for an extended period, unwind some optimism through a slight 3-5% pullback, or mark a top for a much larger correction. This doesn’t undermine the data; it simply tells us to be cautious with adding exposure and to wait for safer levels to trade against.
To sum it all up, equities have been on a great run. It’s not necessarily over, and it’s too soon to call a significant turn despite some barriers. I would be cautious to add long-term bull bets except in individual names that could see money rotate, but continue to buy short-term pullbacks at defined levels in momentum names for quick trades until we get a better risk/reward opportunity. If you’re worried the market is too extended, you can always add a hedge through SPY puts and use last week’s high or a close above $520 as a stop level.
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AI-generated Buy and Sell Daily Signals
By: Hedgeye | March 11, 2024
• This is free access to our brand-new AI-generated buy and sell signals.
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Amidst Pervasive Bullish Sentiment, Signs Of Exhaustion Show Up In US Equity Indices
By: Hedgopia | March 11, 2024
Amidst ecstatic bullish sentiment, major US equity indices last week exhibited signs of exhaustion. Confirmation is needed, but equity bears may have an opening here – duration and magnitude notwithstanding.
Equity bulls are too bulled up.
Chart 1 combines three different investor surveys to take out an average measuring the three diverse groups. Investors Intelligence is a survey of newsletter writers, who cater to paying subscribers. The American Association of Individual Investors surveys its members, so it represents a good reflection on individual mood. And the NAAIM Exposure Index surveys how money managers are positioned, with the index measuring National Association of Active Investment Managers members’ average exposure to US stock markets.
In the week to last Tuesday, Investors Intelligence bulls hit 59.4 percent, which is the highest print since July 2021; bears at 16 percent were the lowest since August that year. In the week to Thursday, AAII bulls reached 51.7 percent, a tad lower than last December’s 52.9 percent, which was the highest reading since April 2021. And in the week to Wednesday, the NAAIM index stood at 94 percent; since the week to December 27th when the index hit 102.7 – the highest since November 2021 – there have been three readings in the ’90s.
The average of the three last week was 68.4, within earshot of last December’s 69, which was a 25-month high. The bottom line: the bullish sentiment is pervasive.
Sentiment has remained ebullient for a while now. The Investors Intelligence ratio of bulls to bears, for instance, has been north of three in all but one of the last 12 weeks (not shown here).
Not surprisingly, major US equity indices have rallied relentlessly since the lows of last October. Going into last week, the S&P 500 was up in 16 of 18 weeks. Through intraday Friday, it was on course for making it a 17 out of 19, but then things began to reverse in the first hour itself. The large cap index ticked 5189 and retreated. By close, it was down 0.3 percent for the week, as opposed to being up one percent at the session high. The weekly formed a spinning top, with a high-low range of 5189 and 5057 and a close of 5124 (Chart 2).
This has the potential to become an important reversal. From last October’s low through Friday’s high, the large cap index rallied 26 percent. That is in a little over four months! This has pushed the index into gross overbought territory, unwinding of which looks imminent in the weeks ahead. Nearest support lies at 5050s.
The small-cap arena was not spared either on Friday. The Russell 2000 reached a session high of 2116 and turned lower. This was the highest price point since March 2022. When it was all said and done, the small cap index closed up 0.3 percent for the week to 2079, forming a weekly spinning top. The candle showed up at an interesting spot (Chart 3).
Last October, the Russell 2000 bottomed at 1634, successfully testing the lows of 2022 – 1641 in June and 1642 in October. As it rallied from that low through last Friday’s high, it broke out of 1900 last December. Before that, the index had gone sideways between 1700 and 1900 since January 2022. A measured-move target of this breakout would complete at 2100, and that has now happened. As a matter of fact, 2100 has proven to be important going all the way back to January 2021.
Nearest support lies at 2070s.
Last Friday’s intraday reversal was particularly apparent in tech. An hour into the session, the Nasdaq 100 was on its way to rally 0.6 percent for the week, which would have been its 17th up week in 19. But that was not to be. After tagging 18415, the tech-heavy index reversed hard to end the week down 1.6 percent to 18018 (Chart 4).
The index evidently finished a tad above 18000, which until a breakout in the week before stopped rally attempts for three weeks. Given how overbought the overall conditions are, odds favor the level gets breached in the sessions ahead.
It is possible NVIDIA (NVDA) – the current poster child of ‘overbought’ – suffered a crucial reversal last Friday. The stock closed 2023 at $495, having earlier bottomed at $108 in October 2022, and began to go parabolic in the early sessions of this year, breaking out of $500 (Chart 5). It then rallied for nine straight weeks, including last week, when it added 6.4 percent to $875.
But the real story lies elsewhere. Last Friday, within the first hour, NVDA touched $974 and then ran out of steam. On the daily, a massive, high-volume bearish engulfing candle developed. On the weekly, all this action helped form a shooting star.
These are signs of exhaustion. The stock has come too far, too fast. Unwinding of the extended conditions it is in looks probable. NVDA has quickly transformed itself into a $2.2-trillion market-cap stock and will heavily influence the market-cap-weighted indices.
There is minor support at $820s.
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Early week dip buyers in the S&P 500 have gotten rewarded all 2024, a trend to keep an eye on
By: TrendSpider | March 10, 2024
• Early week dip buyers in the S&P 500 have gotten rewarded all 2024, a trend to keep an eye on.
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Most Overbought S&P 500 Stocks
By: Barchart | March 9, 2024
• Nvidia $NVDA and General Electric $GE among this week's Most Overbought S&P 500 Stocks.
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Why the equity market should move higher over the next 12 months
By: Raymond James Financial | March 8, 2024
Key Takeaways
• Strong rally suggests muted gains going forward
• Elevated valuations suggest market priced to perfection
• Investor sentiment becoming increasingly optimistic
Don’t forget to turn your clocks forward early Sunday morning! That’s right, this weekend most of the nation (except Arizona and Hawaii) will follow the twice a year ritual of adjusting the clocks forward or backward. The second Sunday in March, when we 'spring forward,' is always bittersweet. The good news: we add an extra hour of sunlight to our days. The bad news: we lose an hour of sleep. And speaking of daylight savings time, our view on the equity market follows similar patterns – where we expect a short-term 'fall back' after the market’s recent gains but remain optimistic that equities can 'spring forward' over the long term given the market’s solid fundamental underpinnings. Here are reasons the equity market is vulnerable to a near-term pullback, but should move higher over the next 12 months:
• Strong rally suggests muted forward gains | The move higher in the S&P 500 has been historic. In fact, the S&P 500 has climbed ~17% over the last four months and is on pace to rally 17 of the last 19 weeks. A run of this magnitude has only occurred three other times in history and not since 1964. Historically, when a rally of this duration has taken place, it has led to more muted forward performance as the S&P 500 was flat on average in the following six months. This suggests that the market may see a period of consolidation or a pullback in the near term as it looks to digest these gains. This would be consistent with history, as the S&P 500 has seen 90 trading days without a 5% pullback, nearly 2x times the historical average. And remember, the S&P 500 typically experiences 3-4 pullbacks of 5% or more, on average, each year, so a pullback would not only be normal, but healthy for the market. While near-term caution is warranted, we would use pullbacks as opportunities to add to positioning as the bull market is still in its infancy – currently 1.4 years versus an average duration of 5.5 years.
• Elevated valuations pose a near-term risk | The recent run-up in stock prices has pushed valuations to elevated levels. In fact, on a trailing twelve-month basis, the S&P 500’s price-earnings ratio has climbed to 23.0x – its highest level since 2002 (ex-COVID). Enthusiasm around AI and the mega-cap names have been the main drivers behind the move. With the S&P 500’s valuations trading in the 92nd percentile, the market is priced to perfection. The problem: any hint of disappointing news (whether macro or earnings related) could lead to a negative reaction. Case in point: news headlines this week around Apple’s China sales plunging 24% in the first six weeks of the year. Not only did the news weigh on Apple’s stock price, but it also dragged the S&P 500’s Info Tech sector down 2.2% on the day – a prime example of what can happen when optimism meets disappointment. And while the market’s top-heavy names can cause price swings in the overall Index, we expect the broader market to participate in the months ahead as the overall macro backdrop remains positive.
• Investor sentiment is optimistic | With the S&P 500 notching its 18th record high for the year, investors have become increasingly optimistic this year. The relentless rally and stronger than expected economic data over the last few months has caused many Wall Street strategists to ratchet up their S&P 500 targets for the year – which is ironically the mirror opposite of the set-up at the start of 2023 when most Wall Street analysts were expecting a down year. In fact, the bears (i.e., those who think the stock market is going to fall) have gone into hibernation, at least according to the latest AAII sentiment survey. While investor sentiment is just below its recent maximum bullishness, bearish sentiment is extremely low (21.3%) relative to the past historical patterns. The overwhelming positive sentiment on stocks has carried over to consumers too. The latest Conference Board report revealed that consumers are the most optimistic on the stock market since February 2020. And from a contrarian standpoint, we are taking note. With these sentiment indicators moving more toward extreme bullishness, a near-term consolidation seems likely. However, over the longer term, fundamentals (such as earnings which are improving) should win out.
• Macro volatility will take the front seat | The improving earnings outlook has been the key driver pushing stock prices to record highs as the market has remained relatively immune to the modest backup in interest rates seen since the beginning of the year. But with 4Q earnings season behind us, investors will need to wait five more weeks before they get a glimpse into how companies fared in 1Q24. In the interim, the market will likely turn to the macro backdrop to get clues on where earnings (and stock prices) may be heading. And with stock prices already reflecting positive developments on the economic and jobs front, any deviations from the soft-landing narrative could lead to a temporary setback. With our economist still expecting a growth slowdown, whether it’s the softest-of-soft landings or the mildest-of-mild recessions, the market remains vulnerable to any less than stellar macro news. While caution is warranted in the near term, we remain optimistic overall as the Fed pivot to cutting interest rates, disinflationary trends and solid earnings growth should underpin stock prices over the long-run.
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S&P 500: In the fourth year of a new President's term, the S&P 500 typically experiences a period of weakness around now, before regaining momentum in Q2 and performing well through to the end of the year
By: Isabelnet | March 9, 2024
• S&P 500
In the fourth year of a new President's term, the S&P 500 typically experiences a period of weakness around now, before regaining momentum in Q2 and performing well through to the end of the year.
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CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | March 9, 2024
• Following futures positions of non-commercials are as of March 5, 2024.
E-mini S&P 500: Currently net short 204.4k, down 19.8k.
This could prove to be an important reversal. Intraday Friday, the S&P 500 was up as much as 0.6 percent but only to reverse and end the session down 0.7 percent. On the weekly, a spinning top formed, with a high of 5189 and a low of 5057, closing down 0.3 percent to 5124. This was only the third down week in 19. From last October’s low through Friday’s high, the large cap index rallied 26 percent.
If this week’s indecision candle gets confirmed, more down weeks lie ahead. Given how overbought the overall conditions are, weakness looks probable in the weeks ahead.
Nearest support lies at 5050s.
Non-commercials are staying put with their bearish bias, with net shorts just north of 200,000 contracts for six weeks in a row.
Nasdaq (mini): Currently net long 635, down 9.6k.
Non-commercials have been net long since mid-August last year. This week, they cut their holdings to merely 635 contracts, with a 157-week high of 39,251 contracts as of January 30th.
By intraday Friday, tech bulls were sitting pretty with the Nasdaq 100 on pace to rally 0.6 percent for the week; by the time the session closed, things looked a lot different with the index having reversed hard to close the week down 1.6 percent.
If there is any consolation for the bulls, it is that the tech-heavy index closed at 18018 – at/just above horizontal support at 18000. Prior to last week’s breakout, the index had been stopped at that level since February 9th.
That said, odds favor 18000 gets breached soon. Nvidia (NVDA), which has been a go-to stock for the bulls, reversed big on Friday, with a session high of $974 and a close of $875, forming a bearish engulfing candle and contributing to the weekly shooting star.
Russell 2000 mini-index: Currently net short 22.8k, up 4.6k.
Friday’s session high of 2116 set a two-year high but this also completed a measured-move target of a 1700-1900 range breakout on December 13th. The Russell 2000 closed the week up 0.3 percent to 2079 but also formed a spinning top on the weekly.
The small cap index closed right at 2070s horizontal support. A likely breach opens the door to 2000.
US Dollar Index: Currently net long 3.1k, up 1k.
The US dollar index fell in all five sessions this week; in fact, it has now fallen for six sessions in a row. This was the third weekly loss in succession, with this week down a solid 1.1 percent to 102.69.
Prior to this, the index hit 104.88 on February 14th and retreated, having bottomed at 100.32 last December. A rising trend line from that low was breached three weeks ago.
This week’s action also represents dollar bulls’ inability to reclaim 103-104, which goes back to December 2016.
On the weekly, there is plenty of room for the index to continue lower.
VIX: Currently net short 46k, up 5.3k.
A rising trend line from December 12th when VIX bottomed at 11.81 remains intact. The 50-day is now slightly rising, with the 200-day flattish. Volatility bulls had an opportunity this week to push through horizontal resistance at 15 but could not quite pull it off, although the index rose as high as 15.53 intraday Friday but only to close at 14.74, up 1.63 points.
On the weekly, the RSI at 51.50 poked its head out of the median. This has not happened since late October when stocks bottomed. This raises the odds that the RSI continues higher in the sessions/weeks ahead. In this scenario, it is all but certain VIX will rally.
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Big US Stocks’ Q4’23 Fundamentals
By: Adam Hamilton | March 8, 2024
The big US stocks dominating markets and investors’ portfolios are soaring. They recently wrapped up another quarterly earnings season, reporting some spectacular results. Yet these huge market-darling companies are still extremely overvalued, deep into dangerous bubble territory. Their incredible mounting euphoria fueled by some parabolic gains can’t last either. So serious imminent downside risks abound.
As a lifelong student of the markets, I love earnings seasons! Publicly-traded companies are required to submit comprehensive 10-Q quarterly and 10-K annual reports to the SEC, which are chock full of their latest and best-available hard fundamental data. That illuminates how companies are really faring, cutting through the obscuring fogs of sentiment normally driving stock-price action. This perspective is invaluable.
While 10-Qs have 40-day deadlines after quarter-ends, the way-larger and more-in-depth 10-Ks aren’t required until 60 days out. So just last week Q4 earnings season ended, with the stragglers among the big US stocks publishing their official reports. Last quarter the flagship S&P 500 stock index surged a hefty 11.2% higher to 4,770, leaving all of 2023 with massive 24.2% gains! Were those fundamentally justified?
Traders either think so or don’t care. So far in 2024, frenzied stock buying has intensified driving the SPX another 7.7% higher at best! In late January it achieved its first record close in 24.5 months, which really supercharged popular greed. That fueled the SPX powering even higher since, attaining 15 record closes in just 30 trading days as of early March! Excited investors have rushed in chasing these fat stock gains.
All that left the S&P 500 and many of its dominant component stocks seriously overbought. A week ago the SPX stretched 13.5% above its baseline 200-day moving average! With US stock markets greedy and euphoric, way overbought, and super-overvalued, a major-selloff reckoning is inevitable and looming. Trading at these extremes simultaneously, stock prices need to normalize soon to reflect their underlying fundamentals.
As always big US stocks’ latest Q4’23 results are important for gaming stock markets’ likely direction in coming months. For 26 quarters in a row now, I’ve analyzed how the 25 largest US companies that dominate the SPX fared in their latest earnings seasons. These behemoths commanded a stunning near-record 45.6% of the SPX’s total market cap exiting Q4! 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 Q4’22. These symbols are followed by their stocks’ Q4’23 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 Q4’23 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. These latest quarterly results are very important for American stock investors, including anyone with retirement accounts, to understand. They illuminate whether US stock markets are fundamentally sound enough to keep powering higher or are threatened with a major correction or bear selloff.
While the SPX includes 500 stocks, lately only the largest Magnificent 7 mega-cap technology ones really matter. Exiting Q4, mighty Apple, Microsoft, Alphabet, Amazon, NVIDIA, Meta Platforms, and Tesla commanded an astounding 28.4% of the entire SPX’s market capitalization! That equaled this benchmark’s bottom 398 components’ collective weightings. These Mag7 giants exert absolute dominance over stock markets.
In 2023, the Mag7’s total market caps skyrocketed 74.4% to $12,095b! That more than tripled the entire SPX’s 24.2% surge! That vast outperformance has left the US stock markets stunningly bifurcated, with nearly all their gains driven by the Mag7. That has forced professional fund managers to increasingly chase mega-cap-tech upside with outsized allocations, or risk their funds’ performances lagging their peers’.
Underperform too long in the money-management business, and investors will pull their capital which can quickly strangle and even kill funds. So more and more investment has flooded into the Mag7, amplifying their enormous gains. All day long on CNBC, Wall Street fund managers and analysts argue that this concentrated mega-cap-tech focus is righteous. The big US stocks’ latest Q4 results sure buttressed that case...
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$SPX Uh, guys... They're buying the dip again
By: Cheddar Flow | March 8, 2024
• $SPX Uh, guys... They're buying the dip again.
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SPY $4.2 Million Put • Strike: 515 • Expiration: 4/19/24
By: Cheddar Flow | March 8, 2024
• $SPY Hello there, it's been a while
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The 10 Top/Bottom S&P 500 Index percent net change performers
By: Thom Hartle | March 8, 2024
• Today (8:36 CST), the 10 top/bottom percent net change performers in the S&P 500 Index.
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$SPX - Caution. At the Uppr-Parallel & Squeezed betwixt the narrowing lines of that Bear 'Wedge' urging us to be cautious up here...
By: Sahara | March 8, 2024
• $SPX - Caution
At the Uppr-Parallel & Squeezed betwixt the narrowing lines of that Bear 'Wedge' urging us to be cautious up here...
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AI-generated Buy and Sell Daily Signals
By: Hedgeye | March 8, 2024
• This is free access to our brand-new AI-generated buy and sell signals.
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Money managers Increased their exposure to the US Equity markets since last week...
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NAAIM Exposure Index
March 7, 2024
The NAAIM Number
93.99
Last Quarter Average
67.81
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Quiet McClellan Oscillator
By: Tom McClellan | March 6, 2024
Since late January 2024, the daily readings of the NYSE's McClellan A-D Oscillator have been contained in a very tight range. They have also been showing us only "simple" structures, which carries and interesting message.
A "complex" structure in the McClellan Oscillator (and in some other indicators too) is one that sees chopping up and down while on one side of the zero neutral level. The message of a complex structure is that the side on which it forms is the side that is "in charge". This message persists until it is canceled by a divergence versus prices, or canceled by a later "simple" structure's message on the same side of zero.
A "simple" structure involves the Oscillator just going across the zero line and back, without building any complexity. A simple structure says that its side is NOT in charge.
What we have had since late January 2024 is a fascinating collection of multiple alternating simple structures on both sides of zero. The message is that neither side has been in charge, even though the major averages were able to climb a little bit higher to make incrementally higher price highs. In a condition like that, the situation is ripe for either side to make an assertive move and seize control, and we are left to watch for signs of which side is doing that.
At the same time we are seeing this back and forth near the zero line, we are seeing the Oscillator remain in a very tight range of values. I have been studying this aspect of the Oscillator's behavior, and years ago found that a 15-day lookback period made for a useful indicator, seen in the chart below.
Most of the time, a very low reading for this 15-day range indicator is a great marker for a price top, because quietness in the stock market is a sign of complacency. Like any rule, there are exceptions, though, and the last two very low readings highlighted in red are good examples of how such exceptions can occur.
How low is low enough for this indicator is a reasonable question. The horizontal threshold line is arbitrarily drawn, using the LAR method (Looks About Right). Its purpose is to help the eye compare a current level to what "low" has meant in the past. I would not propose trying to create an automated trading signal out of such an indicator. This is information about a condition, and it is not a "signal" like crossing a moving average, or reversing a Price Oscillator.
It is still an important message to pay attention to, noticing the complacency it reflects for stock prices. Getting to a condition of complacency just as the slope of the uptrend is shallowing out, and the energy is going out of an advance, is a very typical prelude for a downward move.
Tom McClellan
Editor, The McClellan Market Report
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$SPY $4+ Million OTM Calls (Very Unusual)
By: Cheddar Flow | March 7, 2024
• $SPY $4M+ OTM Calls (Very Unusual)
These are above the ask and a decent amount OTM which shows urgency
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The 10 Top/Bottom NASDAQ 100 Index percent net change performers
By: Thom Hartle | March 7, 2024
• Today (8:33 CST), the 10 top/bottom percent net change performers in the NASDAQ 100 Index.
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The AAII Investor Sentiment
By: AAII | March 7, 2024
Bullish 51.7%
Neutral 26.5%
Bearish 21.8%
• Historical 1-Year High
Bullish: 52.9%
Neutral: 39.5%
Bearish: 50.3%
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AI-generated Buy and Sell Daily Signals
By: Hedgeye | March 7, 2024
• This is free access to our brand-new AI-generated buy and sell signals.
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$SPX Whales are making everyone dizzy right now
By: Cheddar Flow | March 6, 2024
• $SPX Whales are making everyone dizzy right now
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Typical March Performance: Second Half Better
By: Almanac Trader | March 6, 2024
Over the recent 21 years March has been a decent performing month for the market. Average gains over the period range from a low of 0.78% by DJIA to a respectable 1.40% by NASDAQ. March typically opens positively but selling pressure and weakness tend to follow quickly thereafter with choppy trading until around mid-month. From here on the market generally rallied to finish out the month. End-of-Q1 portfolio adjustments have contributed to additional choppy trading during the last three or four trading days of March. Election year average performance is influenced by across-the-board double-digit losses in 2020, but March’s pattern is similar with weakness in the first half and modestly improved trading in the second half.
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The 10 Top/Bottom S&P 500 Index percent net change performers
By: Thom Hartle | March 6, 2024
• Today (8:33 CST), the 10 top/bottom percent net change performers in the S&P 500 Index.
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The 10 Top/Bottom NASDAQ 100 Index percent net change performers
By: Thom Hartle | March 6, 2024
• Today (8:33 CST), the 10 top/bottom percent net change performers in the NASDAQ 100 Index.
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AI-generated Buy and Sell Daily Signals
By: Hedgeye | March 6, 2024
• This is free access to our brand-new AI-generated buy and sell signals.
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$QQQ Start the week red, end the week green has been the status quo all 2024 for the Nasdaq...
By: TrendSpider | March 5, 2024
• $QQQ Start the week red, end the week green has been the status quo all 2024 for the Nasdaq...
Something to keep in mind this week.
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If history is any indication, the current 4-month rally by the S&P 500 is likely a post-recession rally or a bubble. Which do you think it is?
By: Barchart | March 4, 2024
• If history is any indication, the current 4-month rally by the S&P 500 is likely a post-recession rally or a bubble. Which do you think it is?
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Nasdaq 100 Continues to Look Bullish
By: Christopher Lewis | March 5, 2024
• The NASDAQ 100 has been a bit of a juggernaut over the last several months, and there’s nothing on the charts early during the Tuesday session that suggests that we are not going to continue to see this extraordinarily bullish behavior.
NASDAQ 100 Technical Analysis
On Tuesday, you can see that we initially pulled back just a bit during the early hours only to find buyers yet again. This is a market that is in a 45 degree up trending angle and that of course is a very bullish sign. At this point in time, it looks like 18,000 will offer short-term support, right along with the 20-day EMA. Underneath there, you have the 50-day EMA, and then finally, 16,950. All of those areas are possible floors, and therefore, I think we see the market continues to go higher. The 20,000 level above, I think, is starting to become a very viable target at this point. Needless to say, that’s an area that would attract a lot of attention and probably grab quite a few headlines. However, I just don’t see anything to keep us from getting there.
Remember, momentum begets momentum. As traders around the world continue to bank on the idea that the Federal Reserve will be cutting rates later this year, the NASDAQ 100 is a natural beneficiary. Furthermore, we have the race into anything that is related to artificial intelligence, and that of course will have an influence on the NASDAQ 100 itself. Because of this, I like the idea of looking at every dip as a potential buying opportunity. This has been a viable strategy for some time.
That doesn’t mean that you jump in with a huge position. It just means that you’re buying on the dip, selling when it rallies a bit too much, and then repeating. I think that’s essentially been the way the market’s behaved here for a couple of months anyway. Is the market overdone? Yes, by most metrics it is, but it doesn’t seem to be affecting it. Momentum is just driving this thing straight up in the air. That being said, just a little bit of patience and a little bit of work on your timing makes this an excellent buy on the dip index.
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AI-generated Buy and Sell Daily Signals
By: Hedgeye | March 5, 2024
• This is free access to our brand-new AI-generated buy and sell signals.
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$SPX Well that's a major change in positioning
By: Cheddar Flow | March 4, 2024
• $SPX Well that's a major change in positioning
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Nasdaq 100 Dec Breakout Followed By S&P 500 Jan Breakout, Mid-Caps Likely To Break Out Soon, Small-Caps Unlikely To Repeat Feat
By: Hedgopia | March 4, 2024
Stocks have rallied huge since last October’s lows. Breadth, however, has been a problem. Large-caps are outperforming, and even here, just a handful are leading the way. Mid- and small-caps are lagging. Amidst this bifurcation, mid-caps have now rallied within just a jump away from their November 2021 peak. Small-caps are a ways off from their peak from that time and are unlikely to join their large- and mid-cap cousins.
The Nasdaq 100 is going gangbusters. With two months and a session in, it is already up 8.8 percent this year. From last October’s lows, it is up 30.4 percent – and 75.6 percent from the lows of October 2022!
Of the major US equity indices, the tech-heavy index is the first one to eclipse its prior high (Chart 1). In November 2021, it peaked at 16765, before tumbling 37.7 percent by October 2022. That high from two-plus years ago was taken out last December. (The 30-stock Dow Industrials also reached a new high last December.)
The Nasdaq 100 has not looked back since. A new intraday high of 18333 was hit last Friday, with a close of 18303. Since February 9th, rally attempts persistently stopped at 18000, which has now given way. The index acts like it wants higher prints.
The S&P 500 joined the Nasdaq 100 this January. Two years before that, the large cap index peaked at 4819 in January 2022, subsequently losing 27.5 percent through October that year. From that low, it has now rallied 47.1 percent.
Last Friday, the S&P 500 tagged 5140 intraday, closing at 5137. These are new highs. The January 2022 high was surpassed in January this year (Chart 2), and the momentum has continued. As was the case with the Nasdaq 100 last Friday, the S&P 500 enjoyed a mini breakout.
The rally off last October’s lows in particular is like no other. Up in 16 of the last 18 weeks – ditto with the Nasdaq 100 – the S&P 500 remains in gross overbought territory but is yet to show serious distribution.
One constant knock against the rally in large-cap indices such as the Nasdaq 100 is that it lacks wide participation. Indeed, the index remains top-heavy. Within it, the top five – Microsoft (MSFT), Apple (AAPL), Nvidia (NVDA), Amazon (AMZN) and Google owner Alphabet (GOOG) – command 32.7 percent. Within the S&P 500, the top five’s share is 25.6 percent.
As large-caps dominate the action, mid- and small-caps are falling behind. But there is hope for the bulls. This has been slow in coming, but the S&P 400 is within earshot of a new high. The mid cap index peaked in November 2021 at 2926. From that high through the low of 2186 posted in September 2022, it dropped 25.3 percent. From that low, it is now up 33.2 percent.
Last Friday, the S&P 400 rallied 0.7 percent to close at 2911, merely 15 points from the November 2021 high (Chart 3). A breakout here would finally result in both large- and mid-caps with new highs.
Equity bulls are hoping that this then spreads to the small-cap land. For that to happen, however, serious effort is needed.
The Russell 2000 is 15.6 percent from its November 2021 high. Back then, it peaked at 2459 and then dropped to 1641 by June the following year, down 33.2 percent. That low was tested in October that year (1642) and last October (1634). From the October 2023 low through December’s 2072, it then rallied 26.8 percent. Last Friday, the December high was tested, with a session high of 2078 and a close of 2076.
In the sessions ahead, there is a decent chance the Russell 2000 proceeds to at least test 2100, which is a measured-move target following a 200-point range breakout at 1900 on December 13th (Chart 4). Even in this scenario, the index is too far away from testing its all-time high from more than two years ago.
This is important considering that the overall investing environment already reeks of giddy exuberance. As things stand, even if the mid-caps succeed in rising to new highs, small-caps remain a suspect.
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S&P 500 4Q Earnings Growth Has Been Stellar. Growth was almost 8%, compared to only 1.2% that was expected before the season started
By: Cheddar Flow | March 3, 2024
• S&P 500 4Q Earnings Growth Has Been Stellar
Growth was almost 8%, compared to only 1.2% that was expected before the season started
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The 10 Top/Bottom S&P 500 Index percent net change performers
By: Thom Hartle | March 4, 2024
• Today (8:33 CST), the 10 top/bottom percent net change performers in the S&P 500 Index.
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:::::::::::: Welcome to S&P 500 & Nasdaq Analysis and Trends :::::::::::::
• The purpose of this board is to help others with Short & Long term S&P 500 & Nasdaq analysis and direction.
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