Market Sentiment 05 (Nov 17 - Dec 25)

[winston]

It’s Smart to Be Bullish Right Now

by Brett Eversole

The National Federation of Independent Business (“NFIB”) asks the owners a series of questions on their views on the economy. It then builds the answers into the index. This index is high when times are good. And it’s low when folks are worried.

Not surprisingly, the index is low right now. What is surprising is that today’s level is the lowest in a decade.

The current reading of 89 is worse than any other reading we saw last year. It’s lower than the pandemic bottom – a painful time for small businesses.

Folks are still scared that the worst is yet to come. But as contrarians, we want to buy when others are scared. Combine that with the fact that stocks are moving higher, and it means it’s smart to be bullish right now.

Source: DailyWealth.com

https://dailytradealert.com/2023/05/24/ ... right-now/

[winston]

When bears on Wall Street say bullish things

by Sam Ro

In recent weeks, strategists have revised up their year-end targets for the S&P 500. These updated calls incorporate the improving outlook for earnings, expectations for the Fed to soon dial back hawkish monetary policy and the fact that stock prices have mostly gone up since the beginning of the year.

MS's Wilson, who expects S&P 500 earnings per share (EPS) to fall to $185 in 2023, predicts a "sharp rebound" in growth with EPS surging 23% to a record $228 in 2024 and jumping another 10% to $250 in 2025.

Capital Economics’ Thomas Mathews, who recently revised his target up to just 4,000 from an initial target of 3,800, predicts the S&P will explode to 5,500 by the end of 2024 and 6,500 by the end of 2025. This would imply a 37.5% surge assuming the index falls to 4,000 this year, followed by an 18.1% gain in 2025.

Strategists’ short-term returns expectations for the S&P will often range from very positive to very negative.

But longer term, they tend to skew positively.

Source: Yahoo Finance

https://finance.yahoo.com/news/when-bea ... 08496.html

[winston]

Retail investor exposure has reached “max bull” levels

From AAII last Thursday:

Bullish sentiment, expectations that stock prices will rise over the next six months, increased 4.5 percentage points to 46.4%. This reading marks a new high for 2023…

Optimism is above its historical average of 37.5% for the fifth consecutive week. This has been the longest above-average streak since a five-week streak in October and November 2021…

Bearish sentiment, expectations that stock prices will fall over the next six months, decreased 3.0 percentage points to 24.5%. At five consecutive weeks, this is the longest that pessimism has been below 30% since a five-week streak in October and November 2021.

Meanwhile, CNN’s Fear & Greed Index continues to register “Extreme Greed” as the prevailing market sentiment.

To be clear, this does not mean the market is about to crash. We don’t know exactly where the market is in this transition from “mostly bearish” to “mostly bullish.”

Furthermore, this type of snowballing bullishness can make investors a tremendous amount of money while animal spirits own the day.
,
So, this bullishness is fantastic…until it isn’t.

Source: Investor Place

[winston]

US retail investors add equities, while hedge funds trim exposure

RETAIL investors bought roughly US$7 billion of equities last week, showing a near record appetite for shares since 2016, while US hedge funds trimmed their exposure to global equities.

Still, retail appetite year-to-date through Jul 7 was down 60 per cent when compared to the first six months of the years between 2016 and 2022. Individuals net bought US$80 billion in equities so far this year.

Contrary to retail, US-based long/short hedge funds reduced their exposure to global equities last week. Their so-called gross leverage, which adds up hedge funds’ bets on the rise and fall of shares, fell 2 per cent compared to the previous week.

Hedge funds mostly cut their long exposure to the pharmaceutical sector and to Asia ex-Japan, while they added some consumer-related sectors and Japanese shares to their portfolio,

Source: Business Times

https://www.businesstimes.com.sg/compan ... m-exposure

[winston]

‘Mom and Pop’ Are Excited About Stocks Again

by Brett Eversole

The bottom happened nine months ago. Stocks have surged higher since then… And we’re darn close to new all-time highs.

The bullish reading from the AAII survey hit a 52-week high last month.

Only about 19% of folks said they were bullish in mid-March. That figure has jumped to more than 45% in recent weeks.

It isn’t time yet to bet against stocks. Sentiment still has plenty of room to run. So despite the ramp-up in optimism, we want to stay bullish today.

Source: DailyWealth.com

https://dailytradealert.com/2023/07/12/ ... cks-again/

[winston]

The sentiment among Wall Street’s stock market forecasters is anything but frothy

by Sam Ro

The S&P is now above all the year-end targets Wall Street forecasters had coming into the year.

If earnings recover as the consensus expects, and if we do get a soft landing, then it's possible stocks could be on the road to new highs.

Even though many Wall Street strategists have revised up their 2023 targets for the S&P 500, many expect the index to end lower by the end of the year.

We do know that the outlook for earnings growth in the coming years is bullish. So it wouldn’t be too surprising if stocks end up even higher a year or two from now.

We continue to get evidence that we could see a bullish “Goldilocks” soft landing scenario where inflation cools to manageable levels without the economy having to sink into recession.

Unemployed people are getting jobs. Those with jobs are getting raises. And many still have excess savings to tap into. Indeed, strong spending data confirms this financial resilience. So it’s too early to sound the alarm from a consumption perspective.

Source: Yahoo Finance

https://finance.yahoo.com/news/the-sent ... 48218.html

[behappyalways]

Call volume is outpacing put volume significantly of late, in yet another sign of exuberant market expectations
https://twitter.com/Mayhem4Markets/stat ... 9521489926

[behappyalways]

Korean Exchange Sounds Alarm Over Superconductor Stock Mania
https://www.zerohedge.com/markets/korea ... tock-mania

[winston]

Investors haven't seemed to care much about corporate fundamentals lately.

The S&P 500 is up big this year. But importantly, it's not really because people think corporations will bag far fatter profits in the immediate future.

In fact, Wall Street analysts think companies in the S&P 500 will see earnings per share rise just 1% in 2023, compared with 2022. The S&P 500, on the other hand, is up 17%.

In other words, share prices are outpacing puny expectations for profit growth.

Source: Axios

[winston]

Goldilocks Economy

by Luke Lango

If the economy were super hot, there wouldn’t be any confusion in the economic data or corporate commentary. The data and CEOs would agree: The economy is hot.

If the economy were super cold, there also wouldn’t be any confusion. The data and CEOs would agree: The economy is cold.

We have an economy that is in “the middle” right now. It is hot in some areas and cold in others. Some businesses are booming. Others are failing.

And in the long term, that’s bullish for stocks because it means overall, the economy is strong enough to avoid a recession, yet not strong enough to create reinflation or force the Fed to keep hiking rates.

Source: Investor Place