It took a few months, but equity markets have finally made it back into overbought territory.  You can easily see this from the Trend Analyzer snapshot below.

Our Trend Analyzer allows users to easily see how well (or poorly) stocks or ETFs are trading relative to their 50-day moving averages.  It’s a useful tool when trying to get a gauge on trends of the overall market, and it also helps investors identify potential buy and sell opportunities on an individual security basis.

In the Trading Range section of the snapshot below, the dot represents where the ETF is currently trading relative to its 50-day moving average.  The tail end of the dot represents where it was trading one week ago.  The red shading in the Trading Range section represents overbought territory, so when the dot moves up into the red zone, it means the ETF has moved well above its 50-day up to levels that are considered extended.  The theory is that over time prices eventually revert to the mean as they trend in either sideways, upwards, or downward patterns.  When price gets extremely overbought, it may be best to wait for downside mean reversion to occur before entering into a long position.

As you can see, every single US Index ETF (across market cap levels) in our Trend Analyzer began the day trading well into overbought territory.  In 2017, overbought trading was extremely common, but we haven’t seen this kind of across-the-board “overboughtness” in a few months now since the correction began at the end of January.

You can learn more about how and why you should be using our Trend Analyzer tool here.  If there are specific stocks or ETFs that you’d like to monitor, you can even set up custom Trend Analyzer portfolios!

Jobless claims came in slightly higher than expected this week with first-time claims coming in at 222K compared to expectations for 220K.  Make no mistake, though, 222K is still extraordinarily low.  It also marks the 170th straight week that claims have been below 300K (longest on record) and the 35th straight week that claims have been 250K or lower (longest streak since 1970).

While claims declined for the second straight week, the four-week moving actually increased slightly, rising from 222.75K up to 225.5K.  That puts the current reading 12K above the multi-decade low of 213.5K that we saw back on 5/11/18.

On a non-seasonally adjusted basis (NSA), claims dropped from 202.8K down to 191.2K.  For the current week of the year, this is the lowest level since 1973 and more than 100K below the average for the current week of the year dating back to 2000.

Each week, we publish a Fixed Income Weekly, a recap of interest rate and credit markets in the US and around the world. In addition to charts and tables keeping track of performance and levels for fixed income assets in the US and around the world, we also present a weekly trade idea and unique analyses.

This week, we introduced a global central bank index using overnight index swap forwards which indicate market pricing for short-term central bank rates and current central bank rates. We can then convert those variables into 25 basis point increments, each representing 1 hike, and weight them by purchasing power parity (PPP) GDP levels. We include data for the US, Canada, Mexico, Brazil, the Eurozone, the UK, Switzerland, Norway, Sweden, Czech Republic, Poland, Australia, New Zealand, Japan, India, and South Korea, capturing a wide swath of developed and emerging markets.

As shown in the chart below, despite a small pullback over the last few weeks thanks to Italian stresses, interest rate markets are still pricing an output-weighted average of 1.6 hikes across the global economy between now and mid-2019. That’s near the most in over 5 years, and represents a significant shift from the neutral to cutting bias of the 2016-2017 period.