Research Summary
The report discusses the shifting momentum in cyclical sectors, updates on the risk/reward in stocks, and a potential sell signal in the Nervous & Numb indicator. It also covers fade trades in Ags and other market trends.
Key Takeaways
Bullish Trend in Technical Signals
- Positive Outlook: The report suggests that primary technical signals over the past three months are all bullish, indicating a strong likelihood of a continued bull trend throughout the year, albeit with expected pullbacks and consolidations.
Market Returns and Regime Heatmap
- Strong Performance: Gold miners, energy, and financials all saw strong performance last week, according to the latest market returns and regime heatmap for the globe.
Market Internals Oscillator
- Neutral Territory: The aggregate market internals oscillator shows that while internals are in neutral territory, they’re starting to roll over and trend down a bit. This is not yet a reason to be bearish but is worth monitoring closely.
Nervous & Numb Indicator
- Potential Sell Signal: The report highlights that the weekly Nervous & Numb indicator is getting very close to triggering a sell signal, despite the market being in an elevated Trend Fragility environment for the past two months.
CoT Positioning for Major Markets
- Crowded Positioning: The report shows the most crowded positioning in Brent crude, cotton, and GBPUSD, based on the latest CoT positioning for the major markets. Speculators are most short the soybean complex, platinum, and corn.
Actionable Insights
- Monitor Market Internals: Given the neutral territory of market internals and their downward trend, it would be prudent to keep a close eye on these indicators for any significant changes.
- Watch the Nervous & Numb Indicator: With the Nervous & Numb indicator nearing a sell signal, it would be wise to monitor this closely for potential shifts in market sentiment.
- Consider CoT Positioning: The crowded positioning in Brent crude, cotton, and GBPUSD, as well as the short positioning in the soybean complex, platinum, and corn, could present opportunities for contrarian trades.
