Hey it’s Kieran! Last week was a turbulent week in the industry with metaquotes causing connectivity issues for many software platforms (including ours) and on Friday, True Forex Funds announced that they have had to pause their services due to metaquotes pulling their license. Anyway, we managed to get up and running again, signed with a new API provider and upgraded our tech stack, so hopefully we’ve turned a negative into a positive and are now in a stronger position than before.
We are going to push back releasing our new product for a little while to let everything ‘bed-in’ for a few weeks and to see if metaquotes have any more surprises up their sleeve. In the meantime, the Traderseed Challenges are up and running, so if you want to take part, jump in! and i’ll speak to you over there. With that said, let’s prepare for the week ahead.
Weekly Watchlist
This week earnings season continues with many of the smaller companies reporting results after last week’s tech companies posted huge numbers in most cases.
It’s much quieter on the data front this week, with today’s ISM services PMI, and Thursday’s Unemployment Claims numbers being the biggest events. We’ll hear from lots of Fed speakers throughout the week though, so expect some volatility.
The Macro View
Massively magnificent. The mag 7 have now all reported earnings and any hopes for misses and a subsequent market shock have faded away. In short, they all ‘Beat’ expectations and reported massive numbers, more or less across the board, and as a result we are back to all time highs in the Nasdaq 100.
Mag 7 are Growing at 4x the rate of the rest of the market. Consensus expects the mag 7 to grow sales at 4x the rate of S&P 493.
The Magnificent 7 trades at P/E of 30x vs. 18x for the S&P 493. Much high valuations sure, but they don’t look too elevated considering the numbers they just reported.
Positioning sentiment not ‘Stretched’ yet. Big inflows into equities last week (+20bn), however we could still have more room to run as we are not even at ”stretched’ positioning levels yet.
The Goldman “Sentiment Indicator” measures stock positioning across retail, institutional, and foreign investors versus the past 12 months. Readings below -1.0 or above +1.0 indicate extreme positions that are significant in predicting future returns.
Non-extreme Sentiment. On the slower moving BofA “Bull & Bear” indicator, we are only now passing neutral. This is not what tops usually look like.
Elsewhere, things couldn’t be more different over in China. China’s CSI 1000 index is now down 8% today and 30% in the first month of 2024. Last week, Evergrande, China’s largest property developer, was ordered to be liquidated by a Hong Kong court. Absolute carnage that needs to be watched closely for spillover to global markets..
Evergrande, in context. Evergrande, which has now been ordered to liquidate, has an astonishing $80 billion of bonds and loans outstanding. That places it near the very top of the all-time list of corporate bankruptcies. It’s hard to imagine that there will not be any spillover, but so far even the highly China exposed German DAX index, doesn’t care even one little bit. Let’s see how the rest of this week plays out!
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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