Sentiment Indicators are Very Bullishness

Sentiment Indicators are Very Bullishness

Sentiment Indicators are Very Bullishness

$DIA, $SPY, $QQQ, $VXX

The recent economic reports have been overall positive, and better than expected. Many of those reports were sentiment oriented, reflecting optimism about the future of the economy.

Markets responded to the notion of tax reform, with US stock markets providing a steady stream of all time highs, bond yields rising and the USD is stable if in a downtrend.

Over the last month, Russell 2000 (small caps) are +8%, the 10 year TIPS yield has nearly 2X’d and the 10 year Treasury yield is up 24 bpts. That is impressive and for small cap stocks. The Russell 2000 is up 22.5% over the last year and sits at an all time high as investors have apparently decided that tax reform will benefit small domestic firms a lot.

Other markets have moved North too.

Sentiment measures are mostly at the tops of the Bullish marks. Puts are cheap and everyone is short the VIX even as it scrapes multi-decade lows.

As I said above the economic reports of the last 2 weeks that were sentiment based: regional Fed surveys, ISM surveys, plus also show Optimism about the future.

This Optimism is rooted in expectations of imminent tax reform but there is really no way to know what motivates traders and investors as a whole.

There are some signs of improved economic performance and it may be just that that is driving the bond and currency markets.

As for Stocks

Investors desire to buy one of the most expensive markets in history is hard for many to understand and to justify.

Earnings have been climbing of late but like a lot of things, just back to levels of Y 2014. Stock prices on the other hand are much higher now than they were then, some do not understand that at all.

But always remember to take what the market gives in this Wall Street game.

Monday, the US major stock market indexes finished at: DJIA -12.60 at 22761.07, NAS Comp -10.45 at 6579.73, S&P 500 -4.60 at 2544.73

Columbus Day Volume was light with only 620-M/shares exchanged on the NYSE.

  • NAS Comp +22.4% YTD
  • DJIA +15.2% YTD
  • S&P 500 +13.9% YTD
  • Russell 2000 +11.3% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Very Bullish (0.56) Very Bullish (0.60) Very Bullish (0.69) Bullish (0.38)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Bullish (0.41) Neutral (0.21) Very Bullish (0.60) Bullish (0.42)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Bullish (0.39) Bullish (0.46) Bullish (0.31) Bullish (0.40)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bearish (-0.47) Bearish (-0.26) Bearish (-0.48) Very Bearish (-0.67)

Stay tuned…

 

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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