Hey it’s Kieran! Another week of madness in the industry. Thankfully for us, our broker Eightcap remains unaffected by the ongoing turbulence, and our new tech stack is running smoothly, so it’s business as usual for us. So if you have been on the fence about trying one of our Traderseed Challenges now is a great time to try something different from the regular “prop firm” model. With that said, let’s prepare for the week ahead.
Weekly Watchlist
The key event to look for this week is Tuesday’s US inflation (CPI) number. Any surprises here will cause volatility across all asset classes. Elsewhere, this week includes US Retail Sales numbers for January on Thursday along with the weekly report on initial jobless claims the same day, while a report on Producer Price Inflation (PPI) and preliminary data on Consumer Sentiment is due out on Friday.
The Macro View
Earnings Growth. With results in from about two-thirds of S&P 500 companies, Wall Street estimates for fourth-quarter earnings growth of 9.0% versus expectations for 4.7% growth on Jan. 1 while 81% of companies are beating estimates, compared with a 76% average in the previous four reporting periods, according to Reuters. There is still a major disparity between and ‘tech’ and ‘non-tech’ companies but earnings are very much keeping up with higher stock prices.
Stunning stock streak. The number of up weeks during any 15 week stretch in the S&P500. Surely we’ll have a down week soon right??
Positioning still not stretched. It’s crazy considering this never ending rally, however positioning via Goldman Sachs is still not in ‘stretched’ territory. Could be more room to run.
Sentiment also not extreme yet. On the slower moving BofA “Bull & Bear” indicator, we have now moved off of the neutral position from last week, and are approaching extreme levels. Still not there yet though, and this is not what tops usually look like.
Winners gonna keep on winning. From Ryan Dettrik “S&P 500 up more than 5% YTD so far this February. I found 28 other years that were up at least 5% YTD at some point during Feb. Final 10 months? Higher 25 times and up another 13.3% on avg.”
Chinese market intervention is back…big. A major theme of last week’s newsletter was the huge down moves off the back of the Evergrande liquidation, causing crashing markets across the board there. Well last week Mainland China equity funds saw very large inflows (approximately 9% of AUM) from domestic buyers, suggesting continued “National Team” support for the equity market.
The only bear market in the US. Not too much to point towards in terms of divergences to this latest “everything” melt-up however there is one sector struggling at least. Price per square foot for US offices is down 40% from peak. At least it’s something 🙂 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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