Although the S&P 500 has risen 3.25% in the past week, sentiment has seen little in the way of recovery from the substantial increase in bearish sentiment earlier this month. The AAII’s weekly sentiment survey saw bullish sentiment rise just 0.8 percentage points week over week to 33.1%. While that is a few percentage points below the historical average of 37.5%, bullish sentiment is above the consistently weak range of readings observed from early 2022 through this past spring.

Bearish sentiment, on the other hand, was slightly lower falling to 34.5% this week.  Like bullish sentiment, that is a few percentage points off the historical average of 31%.

The inverse moves to bullish and bearish sentiment means the bull-bear spread was modestly higher this week. However, that increase was not enough to lift it back into positive territory meaning bears outnumbered bulls in back to back weeks for the first time since the end of May and first week of June.

Factoring other sentiment surveys echo the recent turn toward bearish sentiment. In the chart below, in addition to the AAII survey we have added the Investors Intelligence and NAAIM Exposure Index readings to create a sentiment composite.  This index plummeted in August as increasingly bearish readings were observed across all three surveys.  Last week, that bearishness hit a low point of -0.45. Although it has bounced back this week, it is still in negative territory (meaning sentiment is more bearish than what has been the historical average). Just like the bull-bear spread for the AAII survey, that is the first back to back negative readings since May/June.

Ahead of tomorrow’s nonfarm payrolls report (which is expected to show a deceleration in jobs growth), initial jobless claims have been reversing lower in the past few weeks and are back down to the low end of the past several months’ range.  At 228K, the seasonally adjusted number came in well below expectations which were anticipated to rise to 235K.  Overall, claims continue to indicate a historically healthy labor market albeit with almost a year in the rearview since the absolute best levels.

On a non-seasonally adjusted basis, claims came in below 200K for a second week in a row. At 192.5K, claims are near similar levels to the comparable weeks of last year and 2017 through 2019.  From a seasonal perspective, this week or next is likely to mark the annual low for claims before drifting higher through year end.

Unlike initial claims, continuing claims were higher this week rising to 1.725 million which was a much larger increase than was forecasted.  Regardless, claims remain at healthy levels even after rounding out a bottom and beginning to trend higher more recently.

Earnings season is well past its peak, but one important report to watch this week (Thursday afternoon) will come from Broadcom (AVGO).  While it doesn’t attract nearly the type of publicity that many other stocks in the Technology sector get, AVGO is in the middle of two very impressive streaks.

First, as shown in the snapshot from our Earnings Explorer tool below, the company has reported twelve Earnings Triple Plays (better than expected earnings, better than expected revenues, and raised guidance) in a row.  Earnings Triple Plays are relatively uncommon already (just 6% of all earnings reports over the last ten years), but to report twelve in a row is practically unheard of.  In fact, using our earnings database which dates back to 2001, the only other stock to report 12 Earnings Triple Plays in a row was AMN Healthcare Services (AMN).  That streak actually ended earlier this month when the company reported better than expected EPS and sales but lowered guidance. When AMN’s streak ended with its report after the close on 8/3, the stock sold off sharply falling more than 11% on its earnings reaction day (8/4).

Almost as impressive as the streak of twelve straight Earnings Triple Plays, shares of AVGO have reacted positively on its earnings reaction day for ten straight quarters. There are actually 120 other instances dating back to 2001 in our database of companies reacting positively to earnings for at least ten quarters.  The record actually belongs to Assured Guaranty (AGO) which, if you have a good memory, you’ll recall lost over 90% of its value during the Financial Crisis due to its credit market exposure.  Coming out of the Financial Crisis, though, the company had 21 straight quarters from May 2012 through May 2017 where the stock’s one-day reaction to earnings was positive.

Given AVGO’s impressive streaks of Earnings Triple Plays and positive reactions to earnings, it should come as no surprise that it has performed admirably over the last three years.  With a gain of 153%, the stock has been the 30th best performer in the S&P 500 during that span.  Of the 29 stocks that have outperformed AVGO, thirteen are from the Energy sector, while the remaining sixteen span the Technology (7), Industrials (4), Materials (3), and Health Care (2) sectors.