Sunday , February 28 2021
Home / Tag Archives: sentiment analysis

Tag Archives: sentiment analysis

When new highs aren’t bullish

Preface: Explaining our market timing modelsWe maintain several market timing models, each with differing time horizons. The “Ultimate Market Timing Model” is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade.  The Trend Asset Allocation Model is an asset allocation model that applies trend following principles based on the inputs of global stock and...

Read More »

In need of a sentiment reset

Mid-week market update: This market is in need of a reset in investor sentiment. In addition to recent reports of frothy retail sentiment, the latest BoA Fund Manager Survey (FMS) indicates that global institutions have gone all-in on risk. The FMS contrarian trades are now “long T-bills-short commodities, long US$-short EM, long staples-short small cap”, or short market beta.   Along with growing signs of deteriorating market internals, this market is poised for a correction....

Read More »

One last push, or a downside break?

Mid-week market update: I have been warning about the extended nature of this stock market for several weeks. The latest II sentiment update shows more of the same. Bullish sentiment has come off the boil, but readings are reminiscent of the conditions seen during the melt-up top that ended in early 2018.  The market can correct at any time, but I also have to allow for the possibility of one last bullish push to fresh highs. Here is what I am watching. High levels of speculation...

Read More »

Tactically cautious, despite the data glitch

In yesterday’s post, I pointed out that, according to FactSet, consensus S&P 500 EPS estimates had dropped about -0.50 across the board over the last three weeks (see 2020 is over, what’s the next pain trade?).  The decline turned out to be a data anomaly. A closer examination of the evolution of consensus estimates revealed a sudden drop in EPS estimates three weeks ago. Discontinuous changes like that are highly unusual, and it was traced to the inclusion of heavyweight Tesla in...

Read More »

Santa has returned to the North Pole

Mid-week market update: The last day of the Santa Claus rally window closed yesterday, and Santa has returned to the North Pole. But he left one present today in the form of an intra-day all-time high for all the good boys and girls who ever doubted him.  Tactically, today’s rally may be the last hurrah for the bulls.  Sentiment warnings I have been writing about the extended nature of sentiment readings for a while. The Goldman Sachs sentiment dashboard has been stable and...

Read More »

The most wonderful time of the year…

Mid-week market update: In my last post (see Trading the pre-Christmas panic), I pointed out that the VIX Index had spiked above its upper Bollinger Band, which is an indication of an oversold market. In the past year, stock prices have usually stabilized and rallied after such signals (blue vertical line). The only major exception was the February and March skid that saw the market become more and more oversold (red line). The market today appears to be following a more typical pattern of...

Read More »

How far can stocks pull back?

Preface: Explaining our market timing modelsWe maintain several market timing models, each with differing time horizons. The “Ultimate Market Timing Model” is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade.  The Trend Asset Allocation Model is an asset allocation model which applies trend following principles based on the inputs of global stock and...

Read More »

The bearish window is closing quickly

Mid-week market update: I highlighted this chart as a possible warning on the weekend (see Melt-up, or meltdown?). In the past, high levels of correlation between the S&P 500 and VVIX, the volatility of the VIX, has generally led to market stalls. In addition, high correlations between the S&P 500 and the VIX Index has […]

Read More »

Melt-up, or meltdown?

Preface: Explaining our market timing modelsWe maintain several market timing models, each with differing time horizons. The “Ultimate Market Timing Model” is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade.  The Trend Asset Allocation Model is an asset allocation model which applies trend following principles based on the inputs of global stock and...

Read More »

The bears’ chance to make a stand

Mid-week market update: As the S&P 500 pushed to another fresh high, more cracks were appearing in the market internals, indicating that it may be time for the rally to take a pause. Negative divergences, such as the 5-day RSI and a trend of falling NYSE new 52-week highs, are warning signs for the near-term outlook.  While the intermediate-term trend is still up, the bears have a chance to make a stand here, at least in the short run. Frothy sentiment Sentiment indicators...

Read More »