The S&P 500 and Dow have continued to make pushes up to new all-time highs in the past week but sentiment remains subdued.  AAII’s weekly sentiment survey showed 33.61% of respondents have bullish sentiment, up 0.5% from last week.  As we have been mentioning, this is in the lower range of sentiment readings given the run-up to new highs.  At this level, bullish sentiment is in the 15th percentile of times that the S&P 500 has reached a new all-time high in the past week.  Additionally, the current reading is still below the historical average for bullish sentiment as it has been for nine straight weeks now. That is the longest such streak since the 12-week streak ending May 17th of last year.

While bullish sentiment only saw a slight increase, bearish sentiment saw its largest decline in a month falling from 32.35% down to 27.5%.  Bearish sentiment is now at its lowest level since the first week of May and is also below the historical average for the first time since that same week.

Most of the losses to bearish sentiment were picked up by those reporting as neutral.  The percentage of investors reporting this sentiment rose 4.4% to 38.89%. This brings it back to the high 30’s levels that it has sat at for a majority of 2019. Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.

Fed Chair Powell’s testimony on Capitol Hill yesterday made frequent mentions of the strength of the labor market, and initial jobless claims data released this morning helped to give further support of this strength. Claims were expected to come in unchanged from last week at 221K but instead fell to a seasonally adjusted level of 209K. That is the lowest print in about three months (since April 12th) when claims came in at the multi-decade low of 193K. Whereas the past few weeks were near the upper end of the past year’s range, this drop now brings claims back down towards the lower end of that range. In other words, while not a new low, it is still a healthy number. As such, the record streaks at or below 250K and 300K continue at 92 weeks and 227 weeks, respectively.

The four-week moving average helps to sift out some of the fluctuations of the high-frequency weekly data. This week saw the moving average fall from 222.5K down to 219.25K. Unlike the weekly number, there were actually several lower prints throughout the past couple of months, so this does not bring the indicator back towards the lower end of its range. In fact, this decrease only brings things back to where they stood about one month ago.

As could be expected given seasonal patterns, on a non-seasonally adjusted basis, claims rose to 232.7K after falling to 224.5K last week. Typically, the current week of the year sees a sizeable increase in claims averaging a week-over-week rise of over 42K over the past fifteen years, but this week’s change was much smaller with only an 8.2K increase. This week’s NSA number was also lower than the comparable week in 2018 when NSA claims were 264.9K.  Additionally, this was the lowest reading in claims for the current week of the year of the current cycle and it was substantially under the average for the past couple of decades of 371.69K.    Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.

Recent data from the Investment Company Institute shows that mutual fund investors are fleeing equity funds at a staggering pace. As shown in the table below, one-week outflows from equity funds were larger (more negative) than all but 2% of prior periods since 2007. The four week sum of flows is similarly negative. At the same time, fixed income mutual funds are seeing huge and consistent inflows, with total bond flows near the 90th percentile this week.

As shown in the charts below, the one-week collapse in equity fund flows are not without precedent. That said, only periods with extreme equity market volatility saw similarly large declines in cash. January 2008 (as the financial crisis was picking up), October 2008 (in the wake of Lehman and TARP), March 2009 (the ultimate low for the equity market), August 2011 (the US debt downgrade), November 2016 (the last Presidential election) and January of this year (when equities had dropped almost 20% from closing highs). Unlike all of those prior instances, stocks are near all-time highs and volatility is extremely low, presenting an interesting puzzle for assessing the sentiment implications of equity fund outflows.  Start a two-week free trial to Bespoke Institutional for access to our weekly fund flows analysis in our Closer report.

Bed Bath & Beyond (BBBY) was an $80 stock back in early 2015, but it’s trading at $11 this morning which represents a drop of 86% from its highs.  The stock has been in a perpetual downtrend since peaking four years ago, and the news didn’t get better when the company reported earnings after the close yesterday.  Shares are currently set to open down 5%.

Below is a snapshot of BBBY earnings reports over the last three years using our Earnings Explorer tool.  We’ve highlighted the stock’s percentage move at the open of trading (versus the prior day’s close) following its quarterly earnings reports over this time period.  Aside from one gap up of 7.75% following its January 2019 report, the stock has gapped down sharply on seven of its last eight reports.  This morning’s gap down of 5% will be its eighth gap down of 5%+ out of its last nine reports.  Start a two-week free trial to one of Bespoke’s three premium research services.

Below is a list of today’s biggest losers in the S&P 1500.  Realogy (RLGY) and Granite Construction (GVA) took it on the chin the most with drops of 9%+.  Other notables on the list of biggest losers include Applied Opto (AAOI), Hanesbrands (HBI), Pitney Bowes (PBI), and WW Grainger (GWW).  Start a two-week free trial to one of Bespoke’s three premium research services.

SMART Global (SGH) and Harmonic (HLIT) — two Tech stocks — gained nearly 25% in today’s trading.  Three Energy stocks followed the two big Tech winners with moves of 11%+.  McDermott (MDR) gained 12.89%, Pioneer Energy (PES) gained 12.5%, and Noble Energy gained 11.17%.  Note that Pioneer and Noble have extremely low share price levels at this point, so just a small change in price represents a big percentage move.  WD-40 (WDFC) is a stock we highlighted in a post yesterday for reporting a triple play, and it shows up on the biggest winners list as well with a gain of 8.55% on the day.

Below are price charts for SGH and HLIT — yesterday’s two biggest gainers.  SGH had been in a steep 12+ month downtrend before yesterday’s move, while HLIT looks much different, breaking out to new highs from what was already a nice uptrend channel.  Subscribe to Bespoke Premium for access to our interactive investor tools, including our list of the day’s biggest winners and losers and biggest volume movers.

It was a monumental milestone for the S&P 500 earlier today as the index briefly crossed 3,000 for the first time in its history.  While the S&P 500 traded up to a new all-time high, it was interesting to see that not a single sector made a new high in terms of their relative strength versus the index.  The only two sectors where relative strength is even close to a 52-week high versus the S&P 500 are Consumer Discretionary and Technology.  Just two sectors hitting new highs on a relative basis may not sound too impressive, but when those two sectors account for nearly one-third of the entire index, it’s not as bad.

While no sectors are hitting new highs today on a relative basis, a number of sectors have recently hit new highs on an absolute basis.  The chart below shows the S&P 500 over the last year, and on it we have notated the date of each sector’s 52-week high.  When the S&P 500 recently first made a new high, the rally was being led by defensives like Real Estate and Utilities which made their highs on 6/20 and 6/24, respectively.  On 7/3, another defensive sector joined the fray as Consumer Staples rallied to a new high.  Today, we are finally beginning to see some non-defensive sectors get in on the act as both Consumer Discretionary and Technology made new highs.  Trailing way back in the dust of these sectors are Financials, Industrials, Materials, and Health Care, which haven’t made new highs in over eight months.  If these sectors can make it over the hump, the S&P will likely be in the midst of a big leg higher.  Start a two-week free trial to Bespoke Institutional to access our full research suite.