Thursday, January 27th, 2022
Indices: Dow -0.02% | S&P 500 -0.54% | Nasdaq -1.40% | Russell 2000 -2.29%
Sectors: 6 of the 11 sectors closed higher. Energy led, gaining 1.09%. Consumer Discretionary lagged, falling 2.42%.
Commodities: Crude Oil futures slipped 0.85% to $86.61 per barrel. Gold futures dropped 2.00% to $1,793 per ounce.
Currencies: The US Dollar Index rose 0.75% to a new 52-week high.
Interest Rates: The US 10-year Treasury yield fell to 1.803%
Here are the best charts, articles, and ideas being shared on the web today!
Chart of the Day
Investor sentiment is at historic pessimism.
Worse than MARCH 2020.
Worse than DECEMBER 2018.
Even in 2008 – similar spikes led to violent Bear Market rallies.
And lastly – when investors finally got this negative, the 2000-2002 Tech Crash was *over*. pic.twitter.com/o1fhONVIHC
— Macro Charts (@MacroCharts) January 27, 2022
Today’s Chart of the Day was shared by Macro Charts (@MacroCharts). The S&P is currently down nearly 10% from its highs, but that has been enough to force the bears out of hibernation in a big way. The Bull-Bear spread from the latest AAII Sentiment Survey just plunged to its lowest level since 2013. That’s worse than March 2020 or December 2018, when the S&P 500 had dropped roughly 30% and 20%, respectively. As Macro Charts points out, this level of extreme bearishness is often seen at market bottoms. Survey data has its flaws, so we want to take this with a grain of salt. But overall, it’s encouraging to see this level of pessimism as the S&P 500 continues to test crucial support around 4300.
Quote of the Day
“Everyone’s got the brainpower to do well in the stock market. The question is, whether you have the stomach for it.”
– Peter Lynch
Don’t Sweat the S&P 500’s Pullback to This Key Trendline – Schaeffer’s Investment Research
Rocky White examines what has historically happened after the S&P 500 breaks its 200-day moving average while sentiment is extremely bearish.
Extreme Bearish Sentiment – Bespoke
Bespoke takes a look at the jump in bearish sentiment.
Why Are Stocks Going Down? – All Star Charts
JC Parets shares his thoughts on the current market environment.
Breadth So Bad, It’s Good? – Potomac Fund Management
Dan Russo examines the continued deterioration in market breadth.
Inflation or Deflation? Depends on What the Commodity Index Does Next! – Kimble Charting Solutions
Chris Kimble points out that the CRB Index is testing a major long-term level.
— The Kobeissi Letter (@KobeissiLetter) January 27, 2022
We're now up to 44% of Nasdaq securities cut in half from their highs.
That's in the top 7% of all days since 1999.
Lots of crap on that exchange, but at least now they're half as crappy as they were before. pic.twitter.com/cmwzAOURp4
— SentimenTrader (@sentimentrader) January 27, 2022
Well, it is all about the 13900 level now… Bulls kept buying every dip during the last several sessions. Even 'large institutional' players got in via dark pools. And we know that all breadth indicators are oversold.
Soon we will know if this is a bottom… or not. pic.twitter.com/9VchCIsf6a
— Yuriy Matso (@yuriymatso) January 27, 2022
Energy stocks are on track for the best month ever relative to tech. Sure, a 15% rally in oil certainly helps, but crude had a similar run last month — and energy shares gained less than 3%. pic.twitter.com/LiZCHy5i7u
— Elena Popina (@lena_popina) January 27, 2022
9 of the 10 top performers in the SP 500 YTD are energy companies. pic.twitter.com/TZ960ue7Q5
— Peter Mallouk (@PeterMallouk) January 27, 2022
— Liz Ann Sonders (@LizAnnSonders) January 27, 2022
I.I. Bull/Bear ratio now in the bottom 10th percentile. The response function tends to be asymmetric, with lower ratios more significant to forward returns than higher ratios. We're in the bullish zone, but liquidity trumps sentiment historically. #bouncesetup pic.twitter.com/wa1eIev85U
— RenMac: Renaissance Macro Research (@RenMacLLC) January 27, 2022
— Ian Culley (@IanCulley) January 27, 2022
— David Rath (@DJwrath) January 27, 2022
Here’s some perspective on former levels of interest where the buyers might finally show up pic.twitter.com/fHnP0iLcRo
— J.C. Parets (@allstarcharts) January 27, 2022
Somehow Robinhood is in an even bigger drawdown than the meme stocks:
AMC -77% pic.twitter.com/f5bN3ip6Yt
— Ben Carlson (@awealthofcs) January 27, 2022
— Jay R. Ligon (@TheeDisruptor) January 27, 2022
What is sentiment like?
* We have magazine covers with bulls stuck in a snow storm.
* Historic put/call ratios earlier this week.
* AAII bears above 50% for the first time since May '20.
This doesn't mean stocks can't go lower, but a lot of bad news is being priced in here. pic.twitter.com/PWBYZJhinb
— Ryan Detrick, CMT (@RyanDetrick) January 27, 2022
You’re all caught up now. Thanks for reading!