Sep 18, 2023
For a second month in a row, homebuilder sentiment slumped with the NAHB’s Housing Market Index falling from its recent high of 56 in June down to 45 in August. That is the lowest reading since April and the first back-to-back declines since last December.
As shown below, double-digit drops in two month spans are far from unprecedented, but the most recent one is in the bottom 2% of all two-month moves since the start of the survey in 1985.
The declines in homebuilder sentiment were observed across the country with the indices of each of the four regions of the country falling. The charts are largely similar with each having come off of recent highs well below the prior peaks but still well off the lows put in place late last year.
As homebuilder sentiment has peaked, so too have homebuilder stocks. This group was a big winner in the first half of the year, but so far in Q3, the iShares Home Construction ETF (ITB) has made a series of lower highs and lower lows. In the process, it has fallen back below its 50-DMA and continues to trade below that level near its summer lows.
Again, relative to the broader market, ITB was a consistent winner throughout much of 2022 and the first half of 2023. But with weaker performance over the past few months, that outperformance relative to the broader market (indicated by the upward trending relative strength line below) has been put to the test.
Sep 14, 2023
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we begin with commentary regarding the ECB’s dovish hike (page 1) followed by a dive into the latest retail sales report (page 2). We then review today’s PPI data (page 3) and GDP tracking (page 4). We also discuss the impacts of government shutdowns (page 5) and the drop in the correlation between the Nasdaq and Russell 2,000 (page 6).
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Sep 14, 2023
As was expected this week, jobless claims data deteriorated with seasonally adjusted claims rising to 220K from 216K. However, that was better than expectations which were calling for claims to rise by another 5K up to 225K. As shown below, claims continue to sit at the low end of the past several months range, indicating a still healthy labor market.
At the moment, claims prior to seasonal adjustment are at an interesting point of the year. Unadjusted claims totaled 174.5K this week. That is only a couple thousand claims higher than last year and near the slightly lower readings from 2018 and 2019. Overall, those remain some of the strongest readings on record when comparing the like weeks of the year. Additionally, we would note that claims are likely at or near their seasonal low. Historically, the current week of the year has been the annual low a quarter of the time (that being the case in 2018 and 2019) whereas the following week has marked the low another 35.7% of the time. In other words, as we have frequently mentioned in recent weeks, seasonal tailwinds will begin to shift to headwinds in the coming weeks.
Seasonally adjusted continuing claims likewise came in below expectations this week, rising to 1.688 million compared to forecasts of 1.69 million. Again like initial claims, continuing claims are far from worrisome as they sit at historically strong levels, however, the past few months downtrend in claims has begun to bottom out as it has been eight weeks since the last near term low.
Sep 14, 2023
The S&P 500 has managed to rise 1.15% in the past week, but sentiment has barely reflected the positive tone. After climbing to 42.2% last week, AAII bullish sentiment dropped right back down to 34.4% this week. That is the largest one week drop in a month although it doesn’t leave bullish sentiment at any sort of new low.
The bulls didn’t move to the bearish camp, however. In fact, bearish sentiment fell to 29.2%, which is the lowest reading since the week of August 10.
Because the declines in bullish sentiment outpaced the drop in bears, the spread between the two dropped to +5.2.
Given both bulls and bears dropped, neutral sentiment picked up the difference. As shown below, neutral sentiment rose to 36.4% this week, which was the highest reading since the week of May 18th when it was slightly higher at 37.4%.
While the AAII sentiment survey did not see any sort of particularly noteworthy moves this week, the equity put/call ratio did notch a new high yesterday. As shown below, over the past couple of months, the ratio has begun to turn higher with yesterday seeing the highest reading since March 10th. At 1.35, that ratio also measures in the top 1% of all readings since 1995. Remember, a reading above 1 means there are more put buyers (negative bets) than call buyers (positive bets).
