Happy New Year! I hope that you had an enjoyable holiday season and are looking forward to another crazy year in the markets. We have been working on some stuff behind the scenes which I will be announcing soon if all goes to plan. It’s something totally new and will sit as a separate service alongside the current Traderseed programs which we will continue to support and grow. I’m pretty excited about what this year has in store, but I cannot share to much more at this stage. Updates coming soon though!
Weekly Watchlist
As you have probably noticed, the euphoric risk-on mood that we saw in the markets at the end of last year has soured a bit and risk markets are pulling back slightly. US inflation data will be the main focus this week when we get CPI numbers on Thursday and PPI numbers on Friday.
Also this week Major US banks kick off earnings season with JPMorgan Chase, Bank of America and Citigroup due to report fourth quarter and full-year results on Friday. Also keep your eyes on the current issues in the Red Sea as supply bottlenecks and oil delivery issues can all come quickly into play should we see a further escalation of tensions.
The Macro View
Heatmap for the first week of the year. Lots of familiar names flashing red.
The magnificent 7 breaking down? Last year we spoke a lot about the Mag 7 stocks. These stocks held up the market. We are at important levels. If this breaks, another leg down in the indices is assured.
Apple has been the market general for the last decade. The tide is turning, and it’s now falling fast.
Hedge Funds continue to sell Tech. Goldman Sachs on the sector: “the most net sold sector on the Prime book this week and saw the largest notional net selling in 11 weeks, driven by short and long sales (1.8 to 1), as managers also reduced exposure to mega-cap tech. This week’s notional net selling in the sector ranks in the 88th percentile vs. the past five years.”
No longer ‘Stretched’ positioning. So where does this leave us in terms of positioning? Still positive, but more on the neutral side. No signal either way for now.
BofA’s contrarian bull/bear indicator rose again, now in red territory. The big contrarian buy is long gone.
An interesting chart to incorporate into your macro view. With big issues with shipping lanes in the Red Sea and an escalating conflict in the middle East, it is curious to see Oil prices continue to fall. We are 50% down from the 2022 high. An explanation can be found in the fact that the US has been the world’s biggest oil producer since 2018 and remains so. You do not hear about this from US politicians but they are producing more oil than any country in history! An interesting fact that runs counter to US government’s Great Green Initiative 🙂 Have a great week!
I hope you found this interesting and useful. As ever, keep your risk management top of mind, trade safe, and stay nimble out there.
Have a good week!
Kieran
www.traderseed.io
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