Warning Signs 03 (Jun 19 - Jun 23)

[winston]

Correction warning after surge in US stocks

by Winnie Lee

One key risk that most people are overlooking is that Treasury yields continue to march higher, which could create jitters that send stocks lower.

Source: The Standard

https://www.thestandard.com.hk/section- ... -US-stocks

[winston]

The S&P 500 should keep advancing — but watch for these warning signs

by Lawrence G. McMillan

A close below 3500 would be game-changer and would turn the chart bearish.

There have been several daily CBOE equity-only put-call ratio readings below 45, and even a couple below 40.

The trend of VIX is downward, and that is bullish for stocks

Source: Market Watch

https://www.marketwatch.com/story/the-s ... eid=yhoof2

[winston]

These Five Charts Throw Cold Water on Chances of Santa Rally

By Cormac Mullen

1. Pass the Bollinger
2. Option Fever
3. Broad Participation
4. Stretched Tech
5. Shriller Shiller

Source: Bloomberg

https://www.bloomberg.com/news/articles ... anta-rally

[winston]

How high can you go? Wall Street exuberance makes some uneasy

by Lewis Krauskopf

The S&P 500 now trades at just over 22 times forward earnings, well above its historic average of 15.3.

"Buffett Ratio": S&P 500's market capitalization to nominal US gross domestic product. is at its highest level in history.

A net 46% of fund managers saying they are overweight equities.

Cash levels, which when low indicate market optimism as investors buy assets, were back to early-year lows.

The latest weekly survey by the American Association of Individual Investors (AAII) found bearish sentiment at an 11-month low.

The ratio of puts to calls, is at the lowest point since 2000 on a monthly average basis.

Source: Reuters

https://www.theedgemarkets.com/article/ ... ome-uneasy

[winston]

Be Careful, Breadth Is Weakening and Warning Signs Are Starting to Appear

Earnings estimates are overvalued, breadth is weakening and markets are vulnerable.

By GUY ORTMANN

Source: The Street

https://realmoney.thestreet.com/investi ... _ven=YAHOO

[winston]

The ‘ice is cracking’ on the bull market, one stock-market analyst warns

By Mark DeCambre

The biggest breakdowns in the positive trend for markets tend to come when fewer stocks are helping to drag benchmarks toward fresh records.

“The biggest issues have come when underlying momentum wanes and we see cracks under the surface”.

Fewer stocks are managing to end above their short-term moving averages.

The S&P 500 closed at another record high on Monday, “and yet fewer than 45% of its stocks managed to close above their 10-day moving averages.”

On Monday, roughly 68% of S&P 500 stocks traded above their 50-day MA, representing the lowest such level since Nov. 6. That’s below 2021’s average level at 74.5%.

When breadth starts to narrow, or fewer stocks are making new highs, returns for the market overall tend to be middling to poor, referencing the McClellan Oscillator‘s subzero breadth reading.

Massive betting on companies using options, including in companies like GameStop Corp., AMC Entertainment Holdings AMC, and others, has been raising concerns on Wall Street.

Source: Market Watch

https://www.marketwatch.com/story/the-i ... eid=yhoof2

[behappyalways]

These wild stock moves will end badly for investors, DoubleLine’s Sherman says
https://www.cnbc.com/2021/01/27/these-w ... -says.html

[winston]

The ONE Market Crash Warning Sign to Watch Right Now

Buffett Indicator: Ratio of the stock market’s total market cap to U.S. GDP

CAPE: Multiple of 10 years’ average earnings, adjusted for inflation

If you are a trader, then watching the 14–day relative strength index (RSI) can give you a lot of information about the market conditions. If the RSI is above 70, things are getting heated, and the odds of a pullback increase.

If the 14-day RSI gets over 80, it is time for short-term money to exit the playing field. The odds of prices falling are rising rapidly.

There is only one number that long-term investors should watch to determine when to enter or exit the stock market.

That number is the 200-day moving average of the S&P 500 index.

You should only check the number on the last day of every month.

If the price of the S&P 500 is above the 200-day moving average, then own stocks.

If the index’s price is below the 200-day moving average, then sell your stocks and go to cash.

Source: Money Morning

https://dailytradealert.com/2021/03/05/ ... right-now/

[winston]

Are The Markets Sending A Warning Sign?

BY Chris Vermeulen

The US stock markets have not experienced a moderate price pullback since August 2020 – when the SPY pulled back almost 11%.

Volatility is still quite high, with 2% to 3%+ swings between trading days.

A moderate pullback from these levels could represent another -8.5% to -14% decline before true support is found.

Source: INO

https://www.ino.com/blog/2021/03/are-th ... FP5R68zZRY

[winston]

'Buffett indicator' at all-time high, indicating soaring valuations

Billionaire investor Warren Buffett's preferred market gauge has surged to an all-time high, signaling global stocks are extremely overpriced and could crash in the coming months, Business Insider reports.

The global version of the "Buffett indicator" has breached 123 percent, surpassing its previous record of 121 percent during the dot-com bubble. The milestone was first highlighted by the Welt market analyst Holger Zschaepitz on Twitter.

The metric takes the combined market capitalizations of publicly traded stocks worldwide, and divides it by global gross domestic product.

A reading of 100 percent or more suggests the global stock market is overvalued relative to the world economy.

Buffett, the billionaire investor who runs Berkshire Hathaway, trumpeted the indicator in a Fortune magazine article in 2001. He described it as "probably the best single measure of where valuations stand at any given moment."

When the yardstick hit a record high before the dot-com bubble burst, that should have been a "very strong warning signal," Buffett added.

However, Buffett's favorite indicator has several shortcomings. For example, it compares current stock valuations to past GDP figures. Not all countries provide regular, reliable GDP data either.

The gauge's elevated level also reflects the fact that pandemic-linked lockdowns, business closures, and travel restrictions have depressed economic growth. Meanwhile, government interventions have artificially pumped up stock prices.

For example, the Buffett indicator continues to flirt with record highs in the US, partly because federal officials have pumped trillions of dollars into the economy over the past year.

Source: The Standard

https://www.thestandard.com.hk/breaking ... valuations