If only there were signs...(part 2)
Ring the bell
In our email yesterday we provided 8 signs of a market top. This to support our bearish view from February 8th where we said that the market will take a pause and trade down over the next few weeks. Today we follow up with a few more observations on how extreme things are, including some sentiment & positioning indicators at 10-20 year extremes. Become a Premium subscriber to follow our short-term bear thesis and get constant market updates.
Finally, stretched
The GS sentiment indicator that measures positioning across various investors finally crawled back to "stretched" which should indicate lower returns going forward. Not a sell-signal per se, but "in the zone".
Source: Goldman
Et tu Bull-Bear?
Can we get a nice "betrayal of the bulls" sell signal from the supertanker that is Hartnett's "Bull & Bear" indicator sometime soon?
Source: Flow Show
10-year highs
Asset managers' net CFTC positioning on US equities has surged to record levels.
Source: Haver
20-year high
"Consensus Bulls" now match their highest level in 20 years.
Source: @HiMountResearch
Don't go there anymore; it is too crowded
The percent of HF longs invested in Morgan Stanley’s crowded long basket stands at ~10 year highs.
Source: Morgan Stanley
Probably not sustainable
Momentum as a factor looks unsustainable. Reversals here are often associated with market peaks.
Source: JPM PI
Retail has re-engaged
Many measures of recent retail flows are looking quite stretched. Here are two of many:
1. Rolling 20d net buying by retail, either in single-stocks only or when combined with ETF flows, have been hovering near 2021 peaks.
2. Rolling 3m net buying has increased dramatically since late October lows and is back near its historical peak.
Source: JPM QDS
Long/short ratio touching multi-month highs
The US fundamental long/short ratio is at 2-year highs. Not extreme from a mulit-year perspective, but it is the recent past that matters more.
Source: GS Prime
In the zone for seasonal weakness
Stocks tend to do well the first part of February. But the second half of the month is usually weak
