Although the S&P 500 has dropped in the past week, sentiment has surged with the latest survey from the American Association of Individual Investors (AAII) showing 42.2% of respondents reporting as bullish.  That is up 9.1 percentage points from the previous week. While not large enough to earn any long standing superlatives, it marks the largest one week jump in bullish sentiment since July 20th when it increased 10.4 percentage points and indicates a significant increase in bullish sentiment.

Bearish sentiment in turn was lower at 29.6%. However, the weekly decline was much smaller at only 4.9 percentage points.  Although the jump in bullish sentiment did not borrow heavily from bears, the 4.9 percentage point drop was the largest one week decline since early June.

Additionally, the drop in bearish sentiment was enough to lift the bull-bear spread back into positive territory.  That follows two straight weeks of negative readings.  While not as elevated as the late spring and early summer, at these levels, the bull-bear spread is indicating more bullish sentiment than has been observed for much of the past year and a half.

Using the latest AAII data in combination with the findings from the sentiment surveys from Investors Intelligence and the NAAIM Exposure Index, our weekly sentiment composite indicates that investors hold slightly more optimism than has been the historical norm as the index is slightly positive.  That compares to negative readings the prior two weeks and extremely bullish readings as recently as the second half of July.

In last night’s Closer, we included a look at this composite with the addition of another sentiment indicator: the TD Ameritrade Investor Movement Index.

In last night’s Closer, we discussed a couple of recent releases of alternative housing data sets including the latest delinquency data from Black Knight and housing inventory numbers from Realtor.com. Zeroing on the latter, Realtor.com’s August inventory data showed only 585K active listings nationally after seasonal adjustment. Inventories have been drawn upon for seven months in a row, resulting in the lowest level since June 2022.  On the bright side, August did also see a seasonally unusual uptick in new listings, but that only puts a small dent in what are historically low inventories.

Using state level data aggregated by region, the multi-month drawdown in inventories has been observed throughout the country. The South has tended to have the highest quantity of homes on the market while the opposite applies to the Northeast. In fact, whereas other regions have generally seen inventories rise off of their lowest levels reached in late 2021, the Northeast is only slightly above its series low.

Similar to aggregate inventory levels, median days on market are well off their record lows early last year but have begun to roll over. Currently, median days on market is at 53 days, which is well below the pre-pandemic range.

Given the continued low supply, prices have swung higher with median prices at the highest level since last July both in terms of total price and price per square foot.  Rising at a high single digit month over month annualized pace, August also saw the most rapid appreciation since June of last year.

Breaking down home prices by geography, the West has the highest median home price in the country, but those prices have been relatively stagnant since early 2022.  The Northeast, on the other hand, has consistently had the second highest prices in the country and prices have been steadily rising. In fact, prior to seasonal adjustment, prices in the Northeast have risen 11% YoY compared to the next highest of 8.8% YoY in the Midwest and low single digit growth in the South and West.  For more in-depth coverage of housing and the economy, make sure to subscribe to our Closer feed.

The latest update of jobless claims was broadly positive with both initial and continuing claims moving lower by more than expected. Although initial claims were revised up by 1K to 229K last week, this week’s reading  fell down to 216K. That means claims have broken down out of the past several months range, notching the lowest levels since the end of January.

Before seasonal adjustment, claims are even more impressively low at 190K. That marks the third week in a row below 200K, however, that is still above the comparable readings for the same weeks of the year in 2018, 2019, and 2022. Additionally, as we show in the second chart below, the current week of the year has historically been the one to see claims put in their annual low meaning from a seasonal perspective, claims will face headwinds from here on out.

Switching over to seasonally adjusted continuing claims, like initial claims the latest reading is back down to the low end of the recent range. Claims have been fluctuating around 1.7 million over the past couple of months, but at 1.679 million this week, continuing claims are tied with the week of July 15th for the lowest reading since January 21st.

In the large-cap Russell 1,000, there are more than 18,800 individual analyst ratings, meaning the average stock in the roughly 1,000 member index has more than 18 analyst recommendations.  It’s widely known that there are way more “buy” ratings than “sell” or “hold” ratings, but to put a number to it, right now 54.5% of all analyst ratings in the Russell 1,000 are “buy” ratings.  (A “buy” rating includes terms like “outperform” or “overweight” that some firms prefer to use.)

Today we wanted to provide you with a list of the current stocks in the Russell 1,000 that have the highest percentage of “buy” ratings.  These could be considered the most loved stocks by Wall Street analysts.  (To be included on the list below, the stock needed to have at least five analyst ratings.)

Starting at the top, there are nine stocks that have 100% buy ratings, and the name with the most number of buys is Alexandria Real Estate (ARE) at eleven.  WillScot Mobile (WSC), Royalty Pharma (RPRX), Liberty Media Sirius XM (LSXMA), Kirby (KEX), Curtiss-Wright (CW), Churchill Downs (CHDN), Service Corp (SCI), and Howard Hughes (HHH) are the eight other stocks with 100% buy ratings.  The remaining eleven stocks shown have at least 93% buy ratings, and the most notable are two mega-caps with $1+ trillion market caps: Amazon (AMZN) and NVIDIA (NVDA).  At the moment, 61 of 64 analyst ratings for Amazon (AMZN) are buys, while 59 of 63 ratings for NVIDIA (NVDA) are buys.

NVIDIA (NVDA) has already surged 232% in 2023, so it’s pretty remarkable that analysts are still this bullish on the name.  It may be hard to believe, but the average analyst price target for NVDA has moved up to $638/share.  NVDA’s current share price is 26.6% below that price target.  The average stock in the Russell is only 14% below its consensus price target, so analysts expect more gains for NVDA than they do for the average name in the index.

Remember, from a contrarian’s perspective, a stock with an extremely high percentage of buy ratings may be a name to avoid.  After all, once you get to 100%, there’s no more room for analysts to get more bullish!

As we noted in a tweet this morning, price action of US equities has been flipped from Tuesday with large caps suffering larger losses than small caps. Looking at yesterday, the decline in the Russell 2,000 (-2.1%) dwarfed the S&P 500’s (-0.4%).  For the small cap Russell 2,000, that marked the first daily move of at least 2% (positive or negative) since June 5th when the index rallied 2.4%.  As shown below, that three month stretch without a daily move of 2% is far from the longest on record, but it does stand out as one of the largest in some time. Running for 61 trading days, it was the longest since the 133 day streak ending on 10/9/18.

As previously mentioned, today’s price action is a bit of the reverse of Tuesday, however, the S&P 500 is far from a 2% drop of its own.  In fact, the S&P 500 has been on an even longer streak without a 2% daily move.  At 136 trading  days, the current streak ranks as the longest since February 2018 (310 days). As with the Russell, the current streak would have a long way to go to reach records that lasted for years like from 2003 to 2006. Regardless, the fact of the matter is that day to day volatility by this measure has been extremely muted of late.