The S&P 500 has been hovering around 0.5% below its record highs this week, but without a true test of those highs, sentiment has not moved very far. The American Association of Individual Investors‘ weekly reading on bullish sentiment fell from 37% last week down to 36.4%. While that is the second week in a row with an absolute move less than a full percentage point in size, the marginally lower reading does leave bullish sentiment at the lowest level since the end of October.

Bearish sentiment moved by even less, only rising 0.1 percentage points.  At 26.4%, it still is below the reading of 27% from the first week of the month. Outside of that reading, that is the highest level since February.

This week’s moves left the bull-bear spread little changed at 10.  That’s down 0.7 points from last week but still above the 9.5 reading from two weeks ago.

Once again, the highest percentage of investors are in the neutral camp at 37.1%.  As was the case last week, that makes for the highest level in neutral sentiment since the first week of 2020 when it stood north of 40%.

Pivoting over to sentiment for equity newsletter writers measured in the Investors Intelligence survey, there were some more interesting moves.  Bullish and bearish sentiments were not necessarily anything to gawk at similar to the AAII survey. Bullish sentiment has been on the decline with this week’s survey showing a 3 percentage point drop to 51.5%, the lowest level since March 10th. Meanwhile, bearish sentiment moderated from 17.2 to 16.8%. That was the same level as the start of the month.

The percentage of respondents “looking for a correction” was more notable. Rather than simply asking whether or not respondents foresee a correction in the technical sense on the horizon (a 10% decline from a high), Investors Intelligence defines a newsletter writer as “looking for a correction” when they are bullish on a list of stocks but at a lower price point. Coming in at 31.7%, the reading is a few percentage points above the historical average of 27.6% and is in the top quartile of the historical range.  In other words, it is an elevated reading albeit far from without precedence.  What is more significant is that it has been over a year since this part of the survey has seen these levels.

In the history of the survey dating back to 1963, there have only been eight other times that the percentage of newsletter writers looking for a correction has crossed above 30% for the first time in at least a year.  The most recent of these was in April 2009. In the table below we show the S&P 500’s performance in the year following those occurrences.  As shown, performance has been generally positive across those past instances with average gains over the following weeks and months and moves higher at least 75% of the time one month, three months, and one year out.  Additionally, while there were two times, 1982 and 2009, in which the S&P 500 rallied over the following year without looking back, there were another two times, 2001 and 2007, that at the following years’ lows, the S&P 500 would end up lower by double-digit percentage points.  Click here to view Bespoke’s premium membership options for our best research available.

For the fourth week in a row, initial jobless claims have made a move lower coming in at 406K.  That is down 38K from last week’s unrevised level of 444K. That brings claims to the lowest level of the pandemic, and just 150K above the last sub-one million print in March of last year.

On a non-seasonally adjusted basis, the picture is equally as positive. Claims through the regular state program fell to 420.5K which is again the lowest level since the start of the pandemic.  Including other programs no longer significantly increases the total claims count either.  PUA claims came in below 100K for the second time in a row this week as they printed at 93.5K. As we noted last week, some states have announced plans to do away with programs like PUA, so this number will become more and more negligible.

Relative to initial claims, seasonally adjusted continuing claims (which are lagged an additional week) have not been trending as positively over the past few months as the series has been moving sideways to even slightly higher.  This week saw some respite in this trend as seasonally adjusted regular state continuing claims fell by 96K to 3.642 million.  That is still 2K above the low from 2 weeks ago, but the week over week improvement was the largest since the week of March 12th when continuing claims had fallen 282K.

Before seasonal adjustment, the picture is much better.  Regular state claims through May 14th have fallen for 12 weeks in a row with the 150K drop this week the largest week-over-week decline since March 12th.  Factoring in other programs for a more complete picture delays the data yet another week, but it does paint an even more optimistic picture.  After rising at the start of the year, total claims across all programs peaked during the week of February 19th at 20.7 million.  In the roughly three months since then, claims have generally ground lower having fallen by 4.9 million. While regular state claims have dropped by 1.18 million in that time, PUA claims have been a bigger contributor to the total decline having erased 1.87 million claims.  Pandemic Unemployment Assistance and Extended Benefits programs have also been significant contributors to the overall decline in claims. Combined, these two programs have seen a 1.8 million drop. In other words, while it may not be apparent from the headline seasonally adjusted number, continuing claims are improving alongside initial claims.  Click here to view Bespoke’s premium membership options for our best research available.

Yesterday, by far the biggest mover in the S&P 1500 was GameStop (GME) which rallied 16.34% on the day. While that was the biggest single-day gain since only April 14th when it popped 18.11%, it is being followed by a 12.6% gain today as the stock trades above $200 for the first time since mid-March.  Meanwhile, another favorite from the massive short squeeze period earlier this year, AMC Entertainment (AMC), is similarly surging as it is now up 55% so far this week. That brings it to the highest level since the high on January 27th; the same day of GME’s high during the meme stock mania.

Looking beyond just these two focal points of January price action, more broadly the stocks that were the best performers year to date at the time of the GME and AMC highs on January 27th are once again outperforming today.  On average, the decile of Russell 3,000 stocks that were up the most YTD on January 27th has risen 2.72% today. Moving down through the other deciles, there is a clear trend in which the stocks that were weaker back in January are seeing worse performance today.

At the same time, highly shorted stocks are back to outperforming.  The stocks in the decile of the most heavily shorted names (which includes AMC and GME) are up an average of 2.33% today.  Once again, moving down across deciles, there is a clear trend of stocks with lower short interest as a percent of float experiencing weaker performance today and vice versa. Click here to view Bespoke’s premium membership options for our best research available.

Just over a week ago, gold,  the SPDR Gold Trust ETF (GLD) closed above its 200-DMA for the first time since February 1st.  The rally that took GLD above its 200-DMA has also broken the downtrend that had been approaching a year in age.  Today, GLD is up another 0.22% to the highest level since January 7th.

Given another move higher today, GLD is also on pace to close in the green for the tenth day in a row.  That is not necessarily the case for other measures of the yellow metal like front-month futures which experienced a 2 bps decline on Monday, but with regards to GLD that is tied for the second-longest winning streak on record.  At ten days long, the current streak of consecutive gains is the longest run since the 11-day streak ending 1/2/18.  Prior to that, July 2011 was the only other double-digit streak with a few other nine-day-long steaks; the most recent of which ended in July of last year.

The recent rally in GLD continues to set up the over-decade-long cup and handle pattern that we have made note of in the past, though, GLD still needs to rally another 8.15% to take out last summer’s highs to complete the pattern.  Given the nearly 8% rally over the course of the current winning streak, GLD has reached extremely overbought levels at more than 2 standard deviations above its 50-DMA and begs the question of how much steam is left.

While it is certainly too small of a sample size to put too much weight on, looking at the streaks in 2011 and 2018 that also went on for 10 or more days there has been somewhat mixed performance. The instance in 2011 saw further gains one week later and particularly strong performance over the next month with an 11.4% move higher. Granted, those gains were erased over the course of the rest of the year after the streak came to a close. One year out, GLD was lower than where it stood at the end of the streak. The more recent streak on the other hand was lower one week after coming to an end. While there was a bit more upside in the next quarter, six and twelve months later it was again lower.  In order for GLD to take out last year’s high, it’s going to have to buck its recent trend that followed prior extended streaks. Click here to view Bespoke’s premium membership options for our best research available.

It’s that time of year again.  Summer driving season kicks off this weekend with the Memorial Day holiday, and if you’re planning on doing a road trip, you may want to consider a trailer for the back of the car to hold all the gas money.  The table below shows the AAA national average price of a gallon of gasoline on this day for every year since 2005.  At the current level of $3.04, the national average is the highest it has been at this time of year since 2014, and since 2005 there have been just six other years where prices were higher.  In terms of the YTD change, prices are already up 34.6% this year, which is the third-largest YTD increase since 2005 and the largest since 2009.  That’s not only nearly twice the historical average but also a big swing from last year when prices were actually down 24% YTD as of 5/26.

Given the big reversal from a 24% YTD decline last year to one of the largest YTD increases this year, you can imagine that gas prices are up a lot over the last year. Not only is the national average price up a lot, but it also just saw its largest y/y increase on record.  Back on May 4th, the y/y increase in the national average topped out at 63.98%, which just barely eclipsed the prior record high of 63.95% from back in January 2010 coming out of the Financial Crisis.  It should come as no surprise that the two largest y/y increases in gasoline prices since 2006 have both occurred coming out of major economic contractions.  Crude oil and gasoline are notoriously volatile, and their direction is highly correlated to the business cycle.

There’s no arguing the downside of higher gasoline prices for the consumer, but what’s done is done.  Looking ahead, seasonal trends suggest that barring a major disruption in supply, the upside potential for gasoline prices may be limited.  The chart below compares the YTD change in crude oil prices so far in 2021 to a composite of the average YTD change for all years since 2005.  While this year’s increase has been much steeper than the typical year, we have reached the time of year where gas prices typically start to peak out and trade sideways through the Summer before a steady decline to close out the year.  Click here to view Bespoke’s premium membership options for our best research available.

Last week, we highlighted how the Xtrackers CSI 300 ETF (ASHR) tracking Chinese A-Shares finally began to trend higher after being sandwiched between its 50 and 200-DMAs for most of 2021.  After that breakout, ASHR did not see much of a further move higher but fast forward to today and the ETF is surging once again. After a strong session overnight, ASHR has risen almost 4% today for its best single-day performance since July 6th of last year when the ETF popped 11.24%. As previously mentioned, ASHR had been stuck between its 50 and 200-DMAs for most of the time since late February, and as such, up until the past week it had not seen an overbought reading since February 19th. With the huge move today, ASHR is trading 3.45 standard deviations above its 50-DMA. As with the size of the move today, the last time that ASHR was as extended above its 50-DMA as it is now was in July of last year following the massive single-day July 6th surge.  Prior to that, you would have to go back to November 2016 to find as elevated of a reading.  Click here to view Bespoke’s premium membership options for our best research available.

After trading deep into oversold territory, the past two weeks have seen the ARK Innovation ETF (ARKK) erase some of the losses of the past few months. Since the closing low on May 13th, ARKK has rallied a hair above 10%, although that still leaves it down over 30% from its 52-week high on February 12th.  As for the holdings of the ETF, on a year-to-date basis there are just 10 stocks that are still in the green in 2021.  Back in late January, nearly every ARKK holding was in the green.

Performance over the past week is essentially the inverse of year-to-date performance.  Whereas there are only a handful of stocks up YTD, there are only a handful that have fallen over the past five days.  Although it does not hold a large weight in the ETF (0.98%), by far the worst-performing stock has been Iovance Biotherapeutics (IOVA).  The stock was hit with a double whammy of bad news recently when the company announced the CEO, Maria Fardis, would be stepping down in addition to delaying its biologics license application until the first half of next year following feedback from the FDA.  That actually comes after a previous delay in the application back in October.  As for the rest of the ARKK cohort, Coinbase (COIN), HUYA (HUYA), and Proto Labs (PRLB) are the only other names down at least 5% in the past five days ending yesterday. On the other end of the spectrum, there are ten stocks that have rallied at least 10% in the same span.  Only one of these, Shopify (SHOP), has risen to more than one standard deviation above its 50-DMA while Sea (SE) is on the cusp of being able to say the same.

The charts of the ARKK holdings are all over the place ranging from still trending higher, to being in consolidation, to having totally collapsed.  For holdings like DraftKings (DKNG), ROKU (ROKU), Teradyne (TER), Trimble (TRMB), or Twitter (TWTR), the past few months of declines have brought price back down to around the past year’s uptrend lines or their 200-DMAs.  For others like Square (SQ), Sea (SE), or Tesla (TSLA), those long-term uptrends of the past year are less intact but the recent bounces have similarly come around their 200-DMAs or prior support from the lows earlier this year.  The snapshot above is from our Trend Analyzer tool that Bespoke Premium members have access to.  We have whited out two of the columns in the snapshot — our Trend and Timing scores.  To access these two proprietary indicators, be sure to start a two-week Bespoke Premium trial.  You’ll also have access to our Chart Scanner tool which is where the charts below are pulled from.