Like their peers in the US, European stocks enjoyed quite a rally over the last two months of the year. In early December the STOXX 600 broke out above the resistance of the summer highs, and while momentum has slowed in the last couple of weeks, earlier this week the index experienced a golden cross where its 50-day moving average (DMA) moved above its 200-DMA as both were rising. Technicians consider these types of formations to be bullish in terms of longer-term returns, but are they?

The table below summarizes the performance of the STOXX 600 following prior golden crosses since the index’s inception in 1987. Looking across the table, forward returns were generally better than average over the following one, three, and six months, but over the following week and year, forward returns were weaker than the average long-term returns for all one-week and one-year periods. So, contrary to conventional wisdom, golden crosses in the STOXX 600 have not necessarily been a precursor of better-than-average returns.

What’s also notable about this week’s golden cross is the fact that it occurred on a day when the STOXX 600 declined 0.9%,  While four of the six prior golden crosses occurred on days when the STOXX 600 was down, the only one where it was down anywhere nearly as much as it was on January 3rd was back in May 1995.

At the end of last year we wrote an educational post highlighting some of the similarities between the sports card collectibles industry and stock market investing.  We wanted to see how well we’d do if we invested in some boxes of the newest baseball card product — 2023 Bowman Draft — featuring a rare Tom Brady autograph card and the rookie cards of Major League Baseball’s most recent batch of prospects.  As we noted in our prior post, opening packs of cards is the riskiest part of the sports card industry.  You simply don’t know which cards you’re going to pull, so your investment can quickly become close to worthless if you don’t pull any good cards, or you can hit it big by pulling a rare or highly sought-after card.  In the sports cards world, opening sealed packs is similar on the risk scale to buying stock options in financial markets that can quickly move sharply higher or go to zero.

So how’d we do in our recent box break?

Below are pictures of the various cards we pulled across the six boxes we opened.  All in all, of the 4,500 cards, we got 30 different autographed rookie cards along with dozens of “short-printed” parallel cards that are serial numbered.  These serial-numbered cards are more rare and thus more valuable than the non-numbered “singles” that fill up the majority of packs that we opened.

Our best pull was a Paul Skenes blue autographed rookie card serial-numbered out of 150 that was selling for roughly $450 on eBay at the end of December.  Skenes was the #1 overall pick last year by the Pittsburgh Pirates; a pitcher from LSU who is maybe most famous right now for dating LSU gymnast and NIL-celebrity Livvy Dunne.

After checking the most recent completed sale prices on eBay for all the cards we pulled, we found that the entirety of our collection was worth about 50% of our total purchase price of the six boxes.  Ugh.  We certainly didn’t find the rare Tom Brady that would have immediately doubled or tripled our initial investment!

From an investment standpoint, our experiment was not a success!  Down the road, there’s a chance that one of the autographed rookie cards we pulled will skyrocket in value.  After all, Mike Trout was a relative nobody when his rookie autographs first showed up in the 2009 version of the same product we opened.  The least rare of the Trout rookie autographs currently sells for five figures.  But the higher likelihood is that we’ll never make our initial purchase price back on these packs!

For any card collectors reading this that might see a card they’re interested in, feel free to reach out!

The S&P 500 has gotten off to a rocky start to the new year, but it hasn’t knocked down bullish sentiment yet. This week’s bullish sentiment reading from the American Association of Individual Investors (AAII) rose from 46.3% in the final week of 2023 up to 48.6% this week.  That edges bullish sentiment back towards the multi-year high of 52.9% put in place two weeks ago and still leaves bullish sentiment over a full standard deviation above its historical average.

As for bearish sentiment, things are not as extended, though at 23.5%, the share of bears is still several percentage points lower than the historical average (31%).

That means the bull-bear spread is also still historically in favor of bulls with a 25 percentage point gap between the two.

Including other weekly sentiment surveys, the picture is a bit more muddled albeit still showing a bias towards bullishness. For starters, after its holiday hiatus, the Investors Intelligence survey posted its highest reading on bullish sentiment since November 2021.  Conversely, this week’s reading in the NAAIM Exposure index tracking active managers’ equity exposure plummeted from a reading above 100 (meaning managers reported they were fully invested long) all the way down to 71. That is the lowest reading in the index since early November.