Given the contrarian nature of this indicator, we are encouraged by Wall Street’s lack of optimism and the fact that strategists are recommending that investors significantly underweight equities vs. The unique boutique , which hit its 52-week high of Rs 36,335 on August 28, 2018, gave a return of about 66 times from the IPO price of Rs 300 in 2007. To put that into perspective, an investment of Rs 1 lakh in the stock in July 2009 would have given a return of Rs 35.5 lakh today. A look at the price of Dr. Copper, which is not weather sensitive, also shows a similar pattern of stabilization. The chart below shows the relative performance of the equal weighted NASDAQ 100, which takes out the strength of heavyweights like Apple, relative to the market. This chart of the relative performance of SPY against TLT, which represents long Treasuries, is getting close to panic levels, but not yet. My indicators of asset relative performance are not showing signs of a wash-out in sentiment either, though they are getting close.
Commodity prices, which are highly sensitive to China’s growth outlook, also appear to be bottoming. I have had comments from readers that the rise in commodity prices may be related to the rally in the grains, which is weather related. Citigroup’s Panic-Euphoria indicator (via BusinessInsider) is flashing a panic signal indicating a 97% chance of a rally. The same goes for BoAML’s Buy-Side Indicator. Similarly, a longer term chart of Canada’s Venture Exchange Index of junior stocks against the more senior TSX Composite is telling the same story. These are not signs of a durable intermediate term bottom. The stress points are also showing up on this side of the Atlantic. The 0.8 ppt decline pushed the indicator down to 49.3, the first time below 50 in nearly 15 years, suggesting that sell side strategists are now more bearish on equities than they were at any point during the collapse of the Tech Bubble or the recent Financial Crisis. These appear confusing and difficult to read, but they are actually easy to understand with a little practice. Most of them are new and are just starting or there is not enough business plan enough to be funded by the bank.
I am starting to see signs of stabilization. Fear will come in the form of a possible collapse of their beloved Landesbank and financial system, which is starting to show strains (see here). If there is an economic rebound, then it should show up in this sector. On the other hand if there are few people to buy a stock and more to sell a stock then obviously the price of the stock go down. There square measure several brokerage homes on the market in Bharat that provides free short-term tips for his or her customers. After triggering a Buy signal in May, our measure of Wall Street bullishness on stocks declined again, marking the ninth time in eleven months that the indicator has fallen. The most likely scenario is that US stocks will follow the election cycle and continue to grind upward, though in a highly choppy fashion. My take is that the leadership will start to shift away from US equities to stocks more exposed to the global cycle.
Cyclical stocks remain in a relative downtrend against the market, with no bottom in sight. Consider the chart below of the relative performance of Consumer Discretionary (XLY) against the market (SPY). The EMA9 on the 30 minutes chart (yellow line) has been a good support for BNGO’s stock price since it crossed the 80c zone. The board of directors declared a 5% stock dividend when the market price of the stock was $40 a share. The one canary in the German coalmine that I am watching is the share price of Commerzbank, which is one German bank that is known to be close to edge of the precipice. This stock market has been a difficult one for traders and investors alike. The final stretch of trading in December is historically positive for the stock market. If market is going sideways you need to look at its Fractal Efficiency Ratio during its uptrend before correction. Long-term investors may be tempted to get long here, but I would also caution against going all-in because we have not seen signs of investor capitulation yet.