Another day, another (yawn) new high in the SPX. Yesterday's data was solid, fixed income is very well behaved, and the internal gyrations in terms of sector rotation seem to have settled down, at least judging by the modest recovery in growth versus value (below.)
Super Tuesday made a reappearance, having ceased working more or less on schedule a couple of weeks ago. While both the law of averages and last year's precedent suggest that the ludicrous equity outperformance on Tuesdays should be over, there's nothing that says that the market cannot rip off the occasional 12 point rally, a la yesterday.
What's interesting is that despite the fact that Spooz are at their highs, the last available speculative positioning is quite the contrary; an aggregate speculative positioning indicator of Spooz and E-Minis shows that punters are the nearly the shortest they've been in two years. Hmmmm.....
Suffice to say that "sell in May" has not yet gone according to plan. Had Macro Man dramatically reduced length willy-nilly he'd be kicking himself right now; given that he followed his plan, he can be a little more philosophical about it while figuring out what to do next.
To be sure, fixed income is offering a lot more support to stocks than seemed likely a few months ago, and that has got to enter the analytical equation. It now seems reasonably probable that yields will stay well-behaved until we get closer to the end of summer (and QE.)
By the same token, looking at US stocks through the prism of an international screener, the investment case is a little less robust. For example, of the 26 indices in Macro Man's still-being-developed screener, US stocks have the 24th lowest dividend yield. Indeed, on current analysis American stocks look decidedly middle of the pack in terms of attraction. So while getting out of stocks generally may have been somewhat premature, if and when Macro Man chooses to get back in, he may choose to look a bit further afield than Spooz or Q's, to indices where the investment argument is a bit more compelling.
Super Tuesday made a reappearance, having ceased working more or less on schedule a couple of weeks ago. While both the law of averages and last year's precedent suggest that the ludicrous equity outperformance on Tuesdays should be over, there's nothing that says that the market cannot rip off the occasional 12 point rally, a la yesterday.
What's interesting is that despite the fact that Spooz are at their highs, the last available speculative positioning is quite the contrary; an aggregate speculative positioning indicator of Spooz and E-Minis shows that punters are the nearly the shortest they've been in two years. Hmmmm.....
Suffice to say that "sell in May" has not yet gone according to plan. Had Macro Man dramatically reduced length willy-nilly he'd be kicking himself right now; given that he followed his plan, he can be a little more philosophical about it while figuring out what to do next.
To be sure, fixed income is offering a lot more support to stocks than seemed likely a few months ago, and that has got to enter the analytical equation. It now seems reasonably probable that yields will stay well-behaved until we get closer to the end of summer (and QE.)
By the same token, looking at US stocks through the prism of an international screener, the investment case is a little less robust. For example, of the 26 indices in Macro Man's still-being-developed screener, US stocks have the 24th lowest dividend yield. Indeed, on current analysis American stocks look decidedly middle of the pack in terms of attraction. So while getting out of stocks generally may have been somewhat premature, if and when Macro Man chooses to get back in, he may choose to look a bit further afield than Spooz or Q's, to indices where the investment argument is a bit more compelling.
4 comments
Click here for commentsYesterday was a perfect example as to why I wont be going the way of rotating in US stocks. Just the one market of action , that leaves you free to make decisions without and bias.
ReplyA new low in UST10Y yields, today, MM, and another morning of rectal discomfort for the bond shorts. Some interesting chatter this morning about how "everyone" had the "consensus trades" on this year of Long USDJPY and Short USTs, so "everyone" hasn't been making any money.
ReplyCold Steel, baby!
Short squeeze anyone? Slow and painful... maybe some youtube-pro can find a suitable clip for it.
ReplyPositioning data from the smallest to the largest CFD trading firms and similar also show the largest net short I have seen in a very long time.
Hmmm are bonds lending support or are they really warning of a problem ahead?
Reply