– Market Risk Index is unchanged at 81.1%
– Smart money option traders are increasing hedges in face of euphoric retail call option buying.
– Our regression based equity return forecast fell below 0% this week.
– The dollar’s short-term behavior is growing more important.
– …this week’s best charts.
– Major asset classes moved higher, except for Real Estate which had a difficult week.
– US Equities rallied mostly on strength of big cap Tech. Five of 11 sectors, small stocks, and value stocks struggled.
– Stocks in China rallied 7.5% last week to close up 17.2% ytd. Speculation and trading on margin have surged in the country.
– Economically sensitive copper and lumber prices made substantial gains again last week.
– Psychology edges closer to bottom 10% of readings
– Spread between Smart and Dumb option activity is widening.
– Breadth has turned anemic, with the biggest tech stocks responsible for most of the market’s strength.
– Monetary conditions improve, but excessive growth lending and leverage holding it back.
– A stagflationary combination. A bullish price trend is forming in commodities, while we’re seeing little indication of a coming downturn of our bond momentum gauge.
– And, the best charts this week.
– US Equities outperformed all major asset classes in Q2, but Treasuries still hold the lead year-to-date.
– A handful of stocks are driving US equity returns and doing the same for the leading styles and factors – Tech, Growth, Momentum, Large Cap.
– US Equities are also beating all world regions, but there are three countries with positive ytd returns – Denmark, New Zealand & China.
– It wasn’t a great quarter for oil or natural gas, but it was for lumber and copper. Both economically sensitive commodities jumped by more than 25% in Q2.
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Market Risk Index scales from 0 to 100%. Higher readings correspond with higher risk markets. Scores below 25% are bullish. Scores between 25-75% are neutral, and scores above 75% are markets vulnerable to major drawdowns.
Model Category Readings (Percentiles)
