Thursday, May 21st, 2020
Indices: US Stocks closed lower in today’s session with the Dow Jones Industrial Average falling 102 points or 0.41%. The S&P 500 and Nasdaq dropped 0.78% and 0.97%, respectively. Small-Caps outperformed with the Russell 2000 ending in slightly positive territory (0.05%).
Sectors: Consumer Discretionary led, rising 0.36%. Energy lagged, falling 1.60%.
Commodities: The July Crude Oil futures contract gained 1.28% to $33.92 per barrel. Gold futures dropped 1.72% to $1,722 per ounce.
Currencies: The US Dollar Index rose 0.26%.
Interest Rates: The US 10-year Treasury yield moved lower to 0.677%.
Here are the best charts, articles, and ideas being shared on the web today!
Chart of the Day
Greatest near-term risk from my perspective is investor complacency in the face of an uneven and uncertain path for the economy.
Equity P/C ratio dropping below 50% suggests that is what's happening. pic.twitter.com/6MAhZMfAWB
— Willie Delwiche (@WillieDelwiche) May 21, 2020
Today’s Chart of the Day was shared on Twitter by Willie Delwiche (@WillieDelwiche). In blue is a 3-day moving average of the CBOE Equity Put/Call Ratio over the past five years, along with the S&P 500 in the upper pane. The Put/Call Ratio is a short-term sentiment indicator. Protective put buying pushes the ratio higher, signaling fear. On the other hand, speculative call buying pushes it lower, signaling optimism. Like most sentiment indicators, it’s best used as a contrarian indicator, especially at extremes. Willie points out that the Put/Call ratio has fallen below 50%. This essentially means that for every 100 calls bought, less than 50 puts were bought. This is the lowest reading since the S&P 500 peaked in mid-February. This development is raising concerns that market participants are overly optimistic and too complacent in the near-term. Unlike other sentiment gauges, the Put/Call Ratio is unique in that it measures what people are actually doing, rather than what they say they’re doing. As we know, there’s no such thing as a magic indicator that will work 100% of the time. However, this is one of many data points worth considering at the moment.
Quote of the Day
“Many people confuse possibility with probability and the two are almost exact opposites.”
– Jim O’Shaughnessy (Investor)
Old Transports Vs New Transports – All Star Charts
Steve Strazza takes a look at The Dow Jones Transportation Index ($DJT) and the Semiconductor Index ($SOX).
Both Margin Debt And Russell 2000 Point To Lack Of Aggressive Risk-On Sentiment -Hedgopia
Hedgopia explains what margin debt and the Russell 2000 could tell us about risk appetite right now.
Is This Still a Bear Market Rally? – Your Daily Five
In this video, Greg Harmon walks through five charts in order to establish whether or not we’re in a bear market rally.
How Sectors are Driving Value and Growth – The Irrelevant Investor
Michael Batnick discusses how sector weightings have fueled the disparity between growth and value over the years.
Top 10 Tweets
Over the past 3 days, options traders have bought (or sold) twice as many equity calls as puts. The S&P 500 is still below its 200-day average.
This kind of (potential) optimism during a downtrend hasn't happened since November 2002.
— SentimenTrader (@sentimentrader) May 21, 2020
— Andrew Thrasher, CMT (@AndrewThrasher) May 21, 2020
— Mike Zaccardi, CFA, CMT (@MikeZaccardi) May 21, 2020
A bit of excitment in the options market as the CBOE 5-day equity-only put/call comes crashing down from all time high levels of fear and back to levels of complacency. $SPX, $QQQ Fear, greed, rinse and repeat, since the beginning of time. pic.twitter.com/56JcCeRyse
— Mark Arbeter, CMT (@MarkArbeter) May 21, 2020
— ATMBiotechCharts (@ATMcharts) May 21, 2020
Advance Decline Line was the poster-boy of bullishness during the 2011 until 2020 uptrend period.
Every correction (2015, 2016, 2018) the AD Line would lead higher, before indices confirmed.
Recently it’s been very weak. Interestingly, perma bulls have stopped referencing it. pic.twitter.com/ZzTpQGBwCo
— Tiho Brkan (@TihoBrkan) May 21, 2020
— Alistair (@alistair_chart) May 21, 2020
— Chris Verrone (@verrone_chris) May 21, 2020
— Greg Rieben (@gregrieben) May 21, 2020
— Neil Blalock, CMT (@NeilBlalock) May 21, 2020