After a sharp 7.7 percentage point rise last week, bullish sentiment as measured by the American Association of Individual Investors (AAII) weekly survey pulled back this week falling to 40.2%.  While lower, that is still a few percentage points above the levels observed throughout most of May and is roughly 2 percentage points above the historical average of 38.03%. From a contrarian perspective, the more modest readings on sentiment recently are a welcome change from the elevated readings seen earlier this spring and in the winter.

Bearish sentiment tipped back above 20% this week, though, that is still a muted reading in the bottom 5% of the past decade’s range. In fact, the current level of bearish sentiment is around 10 percentage points lower than the historical average of 30.5%.  Looking at another sentiment reading, the Investor’s Intelligence survey of newsletter writers saw bearish sentiment fall to 16.2% which is the lowest level since September.

That means sentiment continues to largely favor the bulls, but the drop in bullish sentiment was not matched by an equivalent rise in bearish sentiment. Instead, the bulk of those losses went into the neutral camp.  The percentage of investors reporting as neutral has continued to climb reaching 39.1% this week. As has been the case consistently over the past month, that is the highest level in neutral sentiment since the first few weeks of January 2020 when over 40% of respondents reported as such. Click here to view all of Bespoke’s premium membership options.

Initial jobless claims were expected to fall another 15K this week as forecasts were calling for a reading of 370K.  While claims did not live up to those expectations, they did make another move lower falling 9K to 376K.  That is now just 120K above the levels from last March, right before claims began to print in the millions.

WIth another sequential decline, seasonally adjusted claims have now fallen for six weeks in a row. That is about half of the record streak of 13 weeks long that ended in early July of last year. Outside of that streak, there have only been six other streaks as long as the current one and only two of those, one in 1980 and the other in 2013, went on for seven weeks.

Those improvements in initial claims were shared on a non-seasonally adjusted basis.  Claims from regular state programs fell below 400K for the first time since last year reaching 367.1K. Pandemic Unemployment Assistance (PUA) also set a new low with claims totaling just 71.29K; down only about 2K from the prior week. Although that was a minuscule improvement, the PUA program has massively been unwound over the past few months as we close in on the end dates for the program in half of US states. In fact, this week will mark the exit of the program for Alaska, Iowa, Mississippi, and Missouri.  In the most recent week’s data, these four states accounted for 1.7K initial PUA claims and 72.3K continuing PUA claims, or 2.5% and 1.14%, respectively, of PUA claims nationally.

Since the start of the year, the improvements in continuing claims had been decelerating, coming to a head over the past couple of months with multiple upticks.  This week offered a sigh of relief as claims fell 258K to 3.499 million.  That was not only the biggest one-week drop since March 12th’s 282K decline, but it also brings claims to the lowest level since the week of March 20th last year.

On a non-seasonally adjusted basis and factoring in all other programs (which creates another week’s lag), the picture has been generally more positive.  The most recent week’s data through May 21st showed total claims across all programs fell from 15.473 million to 15.376 million, the lowest level of the pandemic. A small uptick in claims from regular state programs was offset by sizable drops in PUA, PEUC, and Extended Benefit claims.  Click here to view all of Bespoke’s premium membership options.

The S&P 500 Energy sector is by far the best performing sector year-to-date with a gain of 45.2% through yesterday.  As shown below, Energy is outperforming the S&P 500 by roughly 33 percentage points so far in 2021.

Given its huge outperformance so far this year, it’s pretty remarkable that Energy is still lagging the S&P 500 over the last 12 months.  As shown below, Energy is only up 22.8% year-over-year versus the S&P 500’s gain of 31.6%.

And longer-term, Energy’s performance on an absolute basis and relative to the S&P 500 remains horrible.  Over the last 5 years, the Energy sector is down 18.7% versus the S&P 500’s gain of 99.5%.

Over the last 10 years, Energy is down 24.9% versus the S&P 500’s gain of 227.4%!

It’s not until we go back 20 years that Energy gets back into the green.  Since June 2001, Energy is up 69.4% while the S&P 500 is up 233.6%.

Energy has finally experienced some outperformance versus the broad market in 2021, but its 45% gain year-to-date hardly makes up any ground when looking at the sector’s performance in the 2010s.  The sector still has a LOT of catching up to do.  Click here to view Bespoke’s premium membership options and sign up for a trial.

It’s been quite a rangebound period for the S&P 500 over the last few days.  Over the last 12 trading days, the spread between the S&P 500’s intraday high and low has been just 1.65% which ranks as narrower than any other period since July 2019.  More recently, the upside has been especially capped.  Ever since the start of June, the S&P 500 has made multiple attempts to take out its 5/7 record high, but each time it has failed.  In just the last four trading days, if the S&P 500 doesn’t take out its record high today, the S&P 500 will have traded within 0.15% (0.11%, 0.14%, 0.03%, and 0.02%) of its all-time high from early May, but each time failed to take it out.

Coming up so close so often but falling short each time has to be disheartening for bulls, and it doesn’t happen particularly often either.  The chart below shows streaks where the S&P 500’s intraday high came within 0.25% of an all-time but didn’t quite make it.  Since intraday data for the S&P 500 begins in 1983, there have only been four other streaks of similar or longer duration.  The first two were in the early 1990s, and then it wasn’t until 2016 that we saw a streak of six days.  After that 2016 occurrence, there were two occurrences in the first half of 2017.  Click here to view Bespoke’s premium membership options and sign up for a trial.

Glancing through the US Groups ETF screen of our Trend Analyzer, by far the best performer over the past week has been the Dynamic Leisure and Entertainment ETF (PEJ).  The portfolio is largely comprised of reopening stocks like restaurants, travel companies, and various forms of entertainment both live and otherwise. PEJ has rallied 11.77% in the five trading days ending yesterday in a move that has moved it deeply into overbought levels as it sits 16.71% above its 50-DMA.  As the next best-performing ETFs in this screen, oil-related names like the S&P Oil and Gas Equipment and Services ETF (XES) and Oil Services ETF (OIH) have both risen well over 7% and are even more extended above their moving averages in percentage terms. As for the other ETFs, the S&P Biotech ETF (XBI) is another top performer and is the only one that is not overbought at the moment. Granted, it has retaken its 50-DMA in the past week, and its longer-term trend is worse than the rest of the screen.

Pivoting back to the Dynamic Leisure & Entertainment Portfolio ETF (PEJ), the double-digit move in the past week is actually part of a longer near-vertical move that began in mid-May.  Since the May 12th low, PEJ has rallied 28.72% through today moving it to within 2% of its 52-week high from back on March 15th.  Additionally, looking just at the nearly 12% rally of the past week, a massive portion of the move came last Wednesday when it rose over 10% in a single session. In fact, last Wednesday was so volatile that even after a few days of higher closes, it is still below last Wednesday’s intraday high.

It is hard to mention parabolic moves these days without some mention of a meme stock, and of course, the massive move for PEJ is meme-related.  Below we show the ten best-performing holdings of PEJ over the past week. Topping the list is AMC Networks (AMCX) with a 31.67% gain in the past week alone.  After that move, AMCX is just shy of doubling year to date.  While sharing a similar name, AMCX is not to be confused (although the meme traders seem to be doing just that) for AMC Entertainment (AMC) which has taken center stage with regards to meme stocks lately. In other words, the AMCX has gotten caught up in the meme stock mania alongside AMC. While AMCX is up big, the chart is extremely extended above its 50-DMA, and at the moment is setting up in what appears to be a head and shoulders pattern. From a technical perspective, that is viewed as a bearish pattern, and for that pattern to be confirmed, it would have to fall below the past several months’ support at around $44 after failing to move above the January and more importantly mid-March highs.

While it has no doubt had an impact, the move in PEJ has not solely been due to the strength of AMCX. The stock only ranks as the tenth-largest holding accounting for 3.26% of the portfolio. There have also been a handful of other strong performers pulling weight like Lions Gate Entertainment (LFG/A) and Cheesecake Factory (CAKE) which both have risen over 9%. Everi (EVRI) has also risen considerably, notching an 8.29% five-day gain.  Click here to view Bespoke’s premium membership options for our best research available.