Bulls Fading Into the Fall
Based on the latest weekly sentiment data from AAII, it appears that investors are growing increasingly concerned about the market as bullish sentiment declined from an already low 34.17% down to 28.1%. That’s the lowest weekly reading since June 1st right before the volatility in the FANG stocks really got going and the largest weekly decline since mid-May. This week’s reading also extends the record streak of weeks below 50% up to 138 weeks!
Bearish sentiment has seen an even more pronounced move, rising from 32.8% up to 38.29%. That’s the largest reading for the bearish camp since mid-April. Also outside of a few weeks in the Spring where bearish sentiment spiked higher, you have to go all the way back to early 2016 to find a period where bearish sentiment was higher.
While individuals are increasingly bearish, one-third of investors still can’t make up their mind. While that may sound like a lot, it is actually down considerably from the 40%+ levels it was at just a few weeks ago.
The Closer — Hedging With Yen, Performance Spreads — 8/23/17
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ETF Trends: US Indices & Styles – 8/23/17
Chart of the Day: Amazon Survivors vs Mortals
Alibaba (BABA) Catching Back Up to Amazon.com (AMZN)
Below is a chart of the historical market caps for Alibaba (the Chinese version of Amazon) and Amazon.com (AMZN). As shown, Alibaba (BABA) actually had a higher market cap that Amazon.com (AMZN) for quite some time just after BABA IPOd back in late 2014. Once AMZN’s market cap crossed above BABA’s in mid-2015, however, AMZN opened up a wide lead for a two-year period.
BABA has been on an absolute tear lately, though, and its market cap has ballooned from $220 billion up to $447 billion since the start of the year. While AMZN’s market cap has risen more than $100 billion this year as well, BABA has pulled to within $14 billion of AMZN at this point. Another decent-sized down day for AMZN accompanied by a gain in BABA would see these market caps cross yet again.
Fixed Income Weekly – 8/23/17
Searching for ways to better understand the fixed income space or looking for actionable ideals in this asset class? Bespoke’s Fixed Income Weekly provides an update on rates and credit every Wednesday. We start off with a fresh piece of analysis driven by what’s in the headlines or driving the market in a given week. We then provide charts of how US Treasury futures and rates are trading, before moving on to a summary of recent fixed income ETF performance, short-term interest rates including money market funds, and a trade idea. We summarize changes and recent developments for a variety of yield curves (UST, bund, Eurodollar, US breakeven inflation and Bespoke’s Global Yield Curve) before finishing with a review of recent UST yield curve changes, spread changes for major credit products and international bonds, and 1 year return profiles for a cross section of the fixed income world.
In this week’s note, we take a look at Energy’s impact on the high yield market.
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Bespoke’s Global Macro Dashboard — 8/23/17
Bespoke’s Global Macro Dashboard is a high-level summary of 22 major economies from around the world. For each country, we provide charts of local equity market prices, relative performance versus global equities, price to earnings ratios, dividend yields, economic growth, unemployment, retail sales and industrial production growth, inflation, money supply, spot FX performance versus the dollar, policy rate, and ten year local government bond yield interest rates. The report is intended as a tool for both reference and idea generation. It’s clients’ first stop for basic background info on how a given economy is performing, and what issues are driving the narrative for that economy. The dashboard helps you get up to speed on and keep track of the basics for the most important economies around the world, informing starting points for further research and risk management. It’s published weekly every Wednesday at the Bespoke Institutional membership level.
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Breadth Still Not Great
The S&P 500 re-took its 50-day moving average yesterday, but unfortunately it did so without more than half of its index members closing above their 50-days as well. As shown below, only 48% of stocks in the S&P are currently above their 50-day moving averages. Bulls would like to see a much stronger reading than that based on where the S&P is currently trading.
Below is a look at the percentage of stocks above their 50-day moving averages by sector. As shown, five cyclical sectors have breadth readings that are weaker than the 48% reading for the broad S&P 500. Energy is all the way down at 16%, while Industrials and Consumer Discretionary are at 40% or less. The two sectors with the strongest breadth levels are both defensive in nature — Utilities and Consumer Staples. We’d prefer to see the script flipped with cyclicals leading and defensives lagging.
The Closer — Large Cap Technicals, Mexican Growth, and Canadian Retail — 8/22/17
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Chart of the Day: Introducing The “Amazon Survivors” Index
Back in February of 2014, we introduced the Bespoke “Death By Amazon” Index (DBA), a portfolio of companies culled from retailer indices that we judged as being extremely exposed to Amazon’s assault on the traditional retailing business model. The “Death By Amazon” Index has become pretty well-known over the past few years — especially over the last year since it has underperformed the rest of the stock market quite dramatically.
While the “Death By Amazon” Index is made up of retail stocks that are most threatened by Amazon.com, what about the rest of the retail sector? We wanted to know how the retailers that aren’t in the “Death By Amazon” Index are doing compared to the DBA, AMZN, and the broad market. In this regards, we’ve created the Bespoke “Amazon Survivors” Index (ASI), which is composed of companies not included in the “Death By Amazon” Index but still included in the retailing indices we use as our source list for companies. Below, we chart the performance of Amazon, the S&P 1500, and our two indices. All charts of our indices in this post are the equal weight versions.
Subscribe to one of our three membership levels to continue reading today’s Chart of the Day. We provide additional performance metrics as well a list of index members of our “Death By Amazon” and “Amazon Survivors” indices.