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Friday, May 17, 2019 12:16:15 PM
Foreigners Are Selling, And That's A Good Sign
By: SentimenTrader | May 17, 2019
Home country bias
The latest data from the Treasury shows that foreign investors have been selling U.S. stocks at a record pace. They’ve sold an average of $17 billion per month for the past year.
That accounts for about 0.05% of the total market cap of U.S. equities, the most in 30 years. During that time, they’ve proved to be bad market timers, with extremes in their buying and selling activity coinciding with peaks and troughs in stocks.
No trust
Individual investors have little trust in stocks despite what has been a healthy market environment. Their average Bull Ratio under similar conditions is 58%, compared to only 44% this week.
When it has been as low as this during similarly good longer-term markets, stocks did well.
Closing the gap
Jitters over the weekend triggered a large gap down on Monday, which was closed (for a while) on Thursday when stocks traded above Friday’s close. That’s a large gap to fill in less than a week. And it’s not necessarily a good short-term sign, as we learned in a premium note. During bull markets, especially, the S&P had a strong tendency to pull back in the days ahead.
Hedging
There have been more puts than calls traded on the CBOE for the past 7 sessions, a streak matched 25 times in the past 25 years. Forward returns were okay over the next 1-3 months. When the S&P 500 was above its 200-day average at the time, 9 of the 12 streaks led to rallies over the next month.
Read Full Story »»»
• DiscoverGold
By: SentimenTrader | May 17, 2019
Home country bias
The latest data from the Treasury shows that foreign investors have been selling U.S. stocks at a record pace. They’ve sold an average of $17 billion per month for the past year.
That accounts for about 0.05% of the total market cap of U.S. equities, the most in 30 years. During that time, they’ve proved to be bad market timers, with extremes in their buying and selling activity coinciding with peaks and troughs in stocks.
No trust
Individual investors have little trust in stocks despite what has been a healthy market environment. Their average Bull Ratio under similar conditions is 58%, compared to only 44% this week.
When it has been as low as this during similarly good longer-term markets, stocks did well.
Closing the gap
Jitters over the weekend triggered a large gap down on Monday, which was closed (for a while) on Thursday when stocks traded above Friday’s close. That’s a large gap to fill in less than a week. And it’s not necessarily a good short-term sign, as we learned in a premium note. During bull markets, especially, the S&P had a strong tendency to pull back in the days ahead.
Hedging
There have been more puts than calls traded on the CBOE for the past 7 sessions, a streak matched 25 times in the past 25 years. Forward returns were okay over the next 1-3 months. When the S&P 500 was above its 200-day average at the time, 9 of the 12 streaks led to rallies over the next month.
Read Full Story »»»
• DiscoverGold
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Your Due Dilegence is a must!
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