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[PLUS] Weekly Sentiment Report

November 17, 2021
JC Parets

From the desk of Willie Delwiche.

Key Takeaway: Bullish sentiment is on the rise. The bears may be reluctant to leave the party, but the bulls squarely outnumber their counterparts. The AAII survey shows bulls exceeding bears by two-to-one, and the II bull-bear spread is back within a high optimism zone. At the same time, options markets reveal that volatility and fear are being replaced by complacency. Though optimism has risen sharply during the past few weeks, current levels do not present risk. However, problems may arise when the lofty expectations associated with the sentiment backdrop are not met.

Sentiment Report Chart of the Week: Risk On Buffett Lacking Calories

[PLUS] Weekly Market Notes & Breadth Trends

November 15, 2021
JC Parets

From the desk of Willie Delwiche.

Key Takeaway: Inflation remains hot as narratives shift. Yields perk up as the bond market takes notice of price pressure. Gold catches a bid as real rates remain negative. Breadth trends point to US leadership.

  • Recent leaders have become near-term laggards, with Energy and Financials dropping to the bottom of the shorter-term relative strength rankings. Energy remains strong overall across the rankings and our industry group heat map. The cooling in Financials could be more significant.
  • Materials is gaining strength from a sector ranking perspective and is seeing improving trends in our industry group work. We are also seeing pockets of strength within Industrials (Capital Goods and Transportation) and Tech (Semiconductors).

Breadth Thrusts & Bread Crusts: Stillness Can Be the Riskiest Decision

November 11, 2021
JC Parets

From the desk of Willie Delwiche.

After my daughter’s flight landed in Minneapolis, she had to hurry through the terminal to catch a bus for the ride that would complete the final leg of her trip back to college. She did a great job of navigating uncertainties and asking for directions. She went where she was told and saw people, but no bus. "Just wait here," she was told, "the bus shows up, you get on, and it leaves right away."

A couple of buses came, some people got on, the buses left. Meanwhile, her ride was still a no-show. 

But people who appeared to be in-the-know said she was in the right spot. 

So she waited.

[PLUS] Weekly Sentiment Report

November 10, 2021
JC Parets

From the desk of Willie Delwiche.

Key Takeaway: The bulls are back as more and more investors begin to reach for risk. Optimism is expanding across investor surveys and active equity managers have increased their exposure to levels not seen since the beginning of the year. This fresh bout of risk-seeking behavior comes as both momentum and price trends have turned bullish. Also, participation beneath the surface is expanding as the major indexes reach record highs. Combine this backdrop with a healthy number of stubborn bears and we have an environment that supports the next leg higher.

Sentiment Report Chart of the Week: Appetite For Risk Returns

[PLUS] Weekly Market Notes & Breadth Trends

November 8, 2021
JC Parets

From the desk of Willie Delwiche.

Key Takeaway: Small-caps leading the way higher. No breadth thrusts (yet) but rally participation is improving. Looking for copper & bonds to confirm risk on messages from the equity market.

  • Energy and Information Technology are at the top of the relative strength rankings. The industry group heat map confirms this strength with Energy and Semiconductor groups (up and down the cap scale) accounting for five of the top ten spots in the industry group rankings.
  • Relative weakness can be found in Utilities, Consumer Staples and Health Care, trends that are echoed in both our sector rankings and the industry group heat map. 

[PLUS] Weekly Observations & One Chart for the Weekend

November 5, 2021
JC Parets

From the desk of Willie Delwiche.

We’ve been on the lookout for evidence of breadth improvement and the new high lists this week have given us plenty of it. The 63-day (3-month) new high lists for small-caps and mid-caps have heated up after being dormant for most of the summer and that is starting to stretch into new highs on a 126-day (6-month) and 252-day (1-year) basis as well. On the NASDAQ we have now seen the most 52-week highs since March. I’ll let pundits talk about the impact that a drop in bond yields might be having on this and just note that new highs expanding is one of the most bullish things we can see from the stock market. When they stop expanding and start to contract is when we start to see trouble.