In the week leading up to Christmas, large-cap equities have made a modest move lower with the S&P 500 ETF (SPY) down 0.28% over the past five days.  Meanwhile, small caps have continued to surge.  With equities overall mixed based on market cap, bullish sentiment has held steady this week.  The percentage of investors reporting as bullish in the weekly AAII survey was slightly higher coming in at 43.57%, up 0.14 percentage points from last week.  Given the reading on bullish sentiment did not change much, sentiment remains elevated relative to most readings over the past several years, though, there is not the same exuberance as back in November.

Although bullish sentiment didn’t move very far, bearish sentiment took another leg lower. The percentage of respondents reporting a pessimistic outlook for the market fell from 26.29% to 21.99%. That is the lowest reading on bearish sentiment since the first week of 2020 when it was just 0.09 percentage points lower.

The inverse moves in bullish and bearish sentiment have led the bull-bear spread to move further in favor of bulls.  The spread rose to 21.58 which is not at any sort of a new high after peaking above 30 in mid-November but remains at the high end of the past several years’ range.

Relative to the big drop in bearish sentiment, bullish sentiment’s move was tiny.  That means the percentage of investors reporting as neutral on the market picked up the losses in bearish sentiment.  34.44% of respondents reported as neutral this week, up 4.16 percentage points from last week.  Similar to bearish sentiment, that brings the reading back up to where things stood in the first couple of weeks of the year. Unlike bearish sentiment which is at the low end of its range, this reading for neutral sentiment is also much more historically normal after being muted all year.  Click here to view Bespoke’s premium membership options for our best research available.

Over the past few weeks, initial jobless claims have been fairly elevated in the 800K range and moving higher.  Last week’s reading came in at the highest level since the first week of September and was revised even higher this week to 892K (compared to 885K originally). While claims remain elevated, they improved in a big way this week.  Claims were expected to drop to 880K, but instead, claims saw their largest one-week decline since the last week of August, falling to 803K.

As we noted last week, on an unadjusted basis claims were lower thanks likely to seasonal effects.  The current week of the year’s seasonal effect was not quite as strong, but it marked another decline in the non-seasonally adjusted number nonetheless.  Unadjusted claims came in at 869.4K from 941.9K last week. Again, although this was an improvement, claims are still coming in at some of the highest levels of the past few months.

Including other programs, it is the same story.  Regular state claims in combination with Pandemic Unemployment Assistance (PUA) claims were lower dropping to 1.267 million from 1.396 million.  While lower, outside of the prior two weeks, that is still the highest level since the last week of September.  The decline this week was broad with both regular state claims and PUA claims falling sequentially.

Continuing claims are lagged an additional week to initial claims meaning the most recent reading is for the week of December 11th; the same week as initial claims recent high of 892K.  In spite of that week’s big inflow into the unemployment insurance system, continuing claims actually fell 170K to a pandemic low of 5.337 million.

As we have frequently made note of recently, the continuing claims number does not tell the full story though.  Including all programs adds another week’s lag but gives a more complete picture.  Total continuing claims across all programs for the week of December 4th totaled 20.4 million. While that was lower sequentially, it was also above the pandemic low of 19 million from the week of November 20th.  Breaking this number down by program, while regular state claims are around their lows of the pandemic, PUA claims have risen for two straight weeks and are back up to where they stood in October. Meanwhile, extension programs remain elevated.  Pandemic Emergency Unemployment Compensation (PEUC) did fall week over week, although at those levels, the reading was above all but one other week since the pandemic started. Conversely, the Extended Benefits program saw an uptick to a new pandemic high of 712.9K.  Click here to view Bespoke’s premium membership options for our best research available.

Yesterday’s Existing Home Sales data from the National Association of Realtors for the month of November continued to impress.  As discussed in last night’s Closer, Existing Sales came in at 6.69 million SAAR. Although lower, snapping a streak of five straight months of increases, sales continue to come in at some of the highest levels since 2006.  With sales running at such a strong clip recently, inventory numbers have been nothing short of remarkable: there are only 1.32 million listed units nationally with 1.12 million single-family homes listed.  Both respective readings are the lowest levels of the past two decades.  Even with declines in volumes, the ongoing collapse in inventory levels has driven the number of units in inventory down to 2.37 months’ sales (only 2.25 months for single family homes), a new record low.  We should note that implied new listings have indeed risen. They stand in the mid-6mm SAAR range, the highest since 2007 but still about 20% below the 8mm range that they hit in the mid-2000s. While prices are still extremely high, they did drop sequentially on the month thanks most likely to a shift in mix towards lower value homes.  Click here to view Bespoke’s premium membership options for our best research available.