Home > Jan 2018 > Jan 9,2018 Another Day in a World where Stocks can’t sell off, Thanks Central Banks

Jan 9,2018 Another Day in a World where Stocks can’t sell off, Thanks Central Banks

January 9th, 2018

Futures are flat tonight but Oil is up .41% leading into API. Jolts job data tomorrow fwiw. Shanghai Futures were actually up in Copper as we move closer to next months Chinese New Years. Stocks around the world are in super over bought territory like always. Central Banks continue to push the Phillips Curve as Macy, Sears, etc are shutting doors. Global Debt to GDP continues to push up with no success appearing in this lifetime. …bummer. China PBoC is continuing to not perform Open Market Operations arguing that liquidity levels are ok. AAII Investor Survey is bullish and at a seven year high. BoJ ACTUALLY cut back of long term Bond buying, Yen moved up, but Japanese Equities still closed up cuz nobody fears the BoJ.

Jan 2018

  • Trading_Nymph

    From AAII…

    Survey Results for Week Ending 1/3/2018
    Data represents what direction members feel the
    stock market will be in next 6 months.

    HISTORICAL AVERAGE: 38.5%

    BULLISH
    59.8%
    +7.1 Percentage point
    change from
    last week

    HISTORICAL AVERAGE: 31.0%

    NEUTRAL
    24.7%
    -2.0 Percentage point
    change from
    last week

    HISTORICAL AVERAGE: 30.5%

    BEARISH
    15.6%
    -5.1 Percentage point
    change from
    last week

    Note: Numbers may not add up to 100% because of rounding.

    The AAII Investor Sentiment Survey has become a widely followed measure of the mood of individual investors. The weekly survey results are published in financial publications including Barron’s and Bloomberg and are widely followed by market strategists, investment newsletter writers and other financial professionals.

    AAII Sentiment Survey:
    Optimism jumped to its highest level in seven years. Find out how the S&P performed when optimism was previously at this level or higher.
    January 4, 2018
    Optimism among individual investors jumped to its highest level in more than seven years, according to the latest AAII Sentiment Survey. Pessimism, meanwhile is at its lowest level in more than three years.

    Bullish sentiment, expectations that stock prices will rise over the next six months, surged 7.1 percentage points to 59.8%. Optimism was last higher on December 23, 2010 (63.3%). The historical average is 38.5%.

    Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, pulled back by 2.0 percentage points to 24.7%. Neutral sentiment is below its historical average of 31.0% for a fifth consecutive week.

    Bearish sentiment, expectations that stock prices will fall over the next six months, fell 5.1 percentage points to 15.6%. Pessimism was last lower on November 6, 2014 (15.1%). The historical average is 30.5%.

    Optimism has now risen by a cumulative 30.5 percentage points since hitting a near-term bottom of 29.3% on November 16. Over the same seven-week period, pessimism has fallen by a cumulative 19.6 percentage points.

    There have only been 46 weeks with a similar or higher bullish sentiment reading recorded during the more than 30-year history of our survey. The S&P 500 index has a median six-month return of 0.5% following those previous readings, up slightly more times than it has been down.

    Historically, the S&P 500 has realized below-average and below-median returns over the six- and 12-month periods following unusually high bullish sentiment readings and unusually low bearish sentiment readings. The magnitude of underperformance has been greater when optimism is unusually high than when pessimism has been unusually low. In both instances, returns have still been positive on both an average and median basis. An updated table with the historical readings can be found in my Investor Update commentary from three weeks ago.

    Some individual investors are encouraged by the record highs for the major indexes, the tax cuts and/or the Federal Reserve’s decision to continue raising interest rates at a gradual pace. Other individual investors are concerned about the possibility of a pullback or a more severe drop occurring. Also affecting investor sentiment are earnings growth, economic growth, valuations and the lack of volatility. Washington politics remain at the forefront of many individual investors’ minds.

    This week’s special question asked AAII members how big a percentage gain or loss the S&P 500 will realize in 2018. Nearly two out of five respondents (37%) expect the large-cap index to rise between 6% and 10%. An additional 13% of respondents predict the S&P 500 will realize a gain of between 1% and 5%, 14% expect an increase of between 11% and 15% and 7% think the index could rise by 16% or more. Tax reform was the most common reason given for the optimism, followed by economic growth. A little under 7% of respondents think the S&P 500 will end 2018 down by single digits, while 10% believe the index could incur a double-digit percentage drop. Many respondents anticipate greater volatility with a pullback occurring at some point during the year.

    Here is a sampling of the responses:

    “8% gain. Continued global economic expansion and the U.S. tax cut will likely push equity prices up.”
    “Tax reform should boost the S&P 500 by 15%.”
    “Tax reform helps, but the market is already ahead of itself. I’d say 6%.”
    “I estimate a 10% increase by mid-year, but a pullback late in 2018 with further interest rate increases.”
    “5%. My guess is as good as anyone’s. Volatility will increase.”
    “It will dip in the 10% range as some of the many events that could provide a catalyst for a drop finally impact the market.”
    See Past Results Download Historical Data

  • panther341

    did you get enough rain to help? I hope so!

  • Trading_Nymph

    It is STILL Raining….can’t get enough lol.

  • Trading_Nymph

    So, Central Banks HAVE to keep liquidity up or no one will be interested in buying Sov Debt? China pulling back from OMO isn’t pumping as much. The bond auctions could get interesting this week?….From Bloomberg…We’re seeing a lot of overseas buyers who would come in every time we’d have a move close to these levels who aren’t coming in anymore,” said Michael Franzese, New York-based head of fixed-income trading at MCAP LLC, a broker-dealer. “That’s kind of scaring me a little bit. One eye is constantly on the exit button.”

    The 10-year yield moved above 2.5 percent earlier Tuesday before paring its gain, and then resumed its upward shift in U.S. trading hours, making fresh highs. It was at 2.542 percent as of 12:16 p.m. in New York. The yield curve from two to 10 years steepened by 5.4 basis points, the most in over a year, to 57.43 basis points.

    Gross’s Call
    Gross, the billionaire fund manager at Janus, said Tuesday on Twitter “bond bear market confirmed,” with 25-year trend lines broken in five- and 10-year Treasury maturities. He said last year that 10-year yields persistently above 2.4 percent would signal a bear market, though added in an interview last week that even in such an environment, investors probably won’t lose a lot of money.

  • Trading_Nymph
  • panther341

    I just saw about mud slides! not that much needed!