Market Timing 08 (Apr 2023 - Dec 26)

[winston]

The Contrarian Bet is That Stocks Will Rally

by Brett Eversole

The COT is a weekly report that tracks the real-money bets of futures traders. It also tends to be a useful contrarian tool. When these folks crowd into bearish trades, a rally tends to follow.

The COT reading has only been this bearish three other times since 2010. Those cases included the two best buying opportunities over that period… the near-bear market of 2011 and the 2020 pandemic crash.

Futures traders are incredibly bearish today… And that’s despite solid stock performance over the past six months. That means the contrarian bet is that this stock rally will continue.

Source: DailyWealth.com

https://dailytradealert.com/2023/04/28/ ... ill-rally/

[winston]

3 Market Catalysts That Will Define May Trading

From high-profile earnings to the latest FOMC decision to the ongoing debt ceiling debate, don't expect anything to go away in May.

by DANIEL KUHN

Source: The Street

https://www.thestreet.com/markets/3-mar ... %2BTrading

[winston]

Stocks May Have More Room to Run

by Sean Michael Cummings

The bond market isn’t buying this stock rally. We can see it by looking at the yield spread between the 10- and two-year Treasury bonds.

When the spread is negative, it means trouble for the economy. Today, as I mentioned above, the spread is wider than it was before the 2008 bust, and nearing levels we saw in the 1970s.

More than half of S&P 500 companies have reported earnings for the latest quarter – and 80% of those beat expectations. So, despite all the fear in the economy today, businesses are showing resilience.

That’s not what the bond market sees. But fighting the trend is rarely the right move. And with stocks consistently moving higher, the bond market might have it wrong this time.

Source: Daily Wealth

https://dailytradealert.com/2023/05/05/ ... om-to-run/

[winston]

Stocks Could Be on the Verge of a 20% Gain

by Brett Eversole

Over the past 40 years, stocks have a history of soaring after the Fed pauses rate hikes. And it means we could see the markets soar 20% over the next year.

Even though the worst of the economic pain isn’t over yet, it’s already priced in… which puts a floor under expectations. That means stocks tend to move higher, and fast.

Now, there’s no guarantee the Fed pause is here yet. But rate hikes are working. That means it’s likely, as I explained yesterday. And even if we get one more rate hike, the history of the looming pause is clear.

Stocks could be on the verge of a 20% gain. That means you need to be bullish right now.

Source: DailyWealth.com

https://dailytradealert.com/2023/05/10/ ... a-20-gain/

[winston]

2 Bullish signals suggest the S&P 500 could surge 19% to record highs over the coming year, Bank of America says

by Matthew Fox

BofA says a bullish breakout in global breadth means the S&P 500 could surge 19% from current levels.

"Bullish technical backdrop signals support the case for a higher S&P 500 into year-end and early 2024," BofA said.

Breadth is not bearish. Depending on the indicator, market breadth is stabilizing to positive.

Volume indicators are lackluster... Seasonality suggests a May dip ahead of a summer rip.

Credit spreads are benign and need to stay on vacation for a summer rally.

"Bullish signals from the golden cross, net tab, Farrell sentiment, the weekly global advance-decline line, NYSE breadth thrust and the cross above the 12-month moving average do not rule out the S&P 500 4,600s to S&P 500 4,900s into February and March 2024".

Source: Business Insider

https://finance.yahoo.com/news/2-bullis ... 31240.html

[winston]

U.S. Stock Market Bull Run May Be Over

By Michael Kramer

The bulls have struggled to push the S&P 500 higher, and instead, the market has continued to churn as we approach the VIX options expiration on Wednesday and the S&P 500 options expiration on Friday.

Source: investing.com

https://www.investing.com/analysis/us-s ... s_headline

[winston]

BofA Says an Ominous Signal From S&P 500 Is Pointing to Gains

by Alexandra Semenova and Jessica Menton

The 50-day moving average of the S&P 500 Equal Weight Index — a version of the benchmark that gives an equal share to each constituent — slipped below its 200-day moving average last week. That pattern, known as a death cross, usually signals that the market is pushing below key support levels and may have further to fall.

The S&P 500 Index has actually staged major rallies in periods in which the equal-weight index has lagged it.

“When you have a concentration issue where the bulk of returns are in megacaps versus the average stock, the equal weight versus cap-weighted ratio drops”.

“It’s not necessarily bearish for the market. It actually can be a positive.”

Source: Bloomberg

https://finance.yahoo.com/news/bofa-say ... 28667.html

[winston]

We’re headed higher over the coming months

We strongly believe the bias is for yields to move lower into July/August and for stocks to move meaningfully higher.

The jobs reports over the next few months shouldn’t be awful, but they will likely show continued softening in the labor market and continued easing of wage inflation. That should have a net negative impact on yields.

The inflation reports over the next few months will likely show more rapid disinflation than we’ve seen in the first half of the year. That should have a net negative impact on yields.

And the Fed will certainly pause its rate-hike campaign by this summer and will maybe even start to discuss cuts, which will have a major net negative impact on yields.

Therefore, the bulk of evidence suggests long-term Treasury yields will move meaningfully lower in the coming months.

And that should translate into stocks moving meaningfully higher over that time, too.

Source: Breakout Trader

[winston]

These 2 bullish indicators just flashed and point to a higher stock market going forward, research firm says

by Matthew Fox

Two bullish indicators just flashed, suggesting a continued rally in the stock market, according to the Carson Group's Ryan Detrick.

Detrick highlighted better-than-expected first-quarter earnings and a rising 200-day moving average.

"The vast majority of what we see continues to look quite positive and we expect more solid gains from stocks the rest of this year."

Source: Business Insider

https://finance.yahoo.com/news/2-bullis ... 03547.html

[winston]

A U.S. Debt Ceiling Deal Will Not Favor the Stock Market

By Steve Saville

The latest figures show a Treasury General Account (TGA) balance of only $57B, which probably means that the government will run out of money within the next three weeks unless a deal is made to raise or suspend the Debt Ceiling.

What comes after a Debt Ceiling deal will not favor the stock market.

What comes after a Debt Ceiling deal will be a flood of new government debt issuance to replenish the TGA and make the payments that were postponed during the preceding months.

To be more specific, based on information provided by the Treasury, there will be net new debt issuance of more than $700B during the three months following a deal.

Currently, therefore, there are two big unknowns. The first is the timing of a political deal to raise the Debt Ceiling, and the second is the proportion of the ensuing flood of new debt that will be offset — in terms of the effect on financial market liquidity — by money coming out of RRPs.

Source: investing.com

https://www.investing.com/analysis/a-us ... s_headline