In Case You Missed It: Charts of the Week

By Mark Masterson on January 26, 2023

It has been said “a picture is worth a thousand words.”  With that in mind, below below are a few of the most important or interesting charts from the past week…..

Charts from this past week:

Despite lackluster earnings so far, and another Fed hike next week – consensus has now pushed towards bullish.

• I showed you last week that the dumb money is now extremely optimistic/bullish from Sentimenttrader.com.
• Hedgeye noted this morning that Hedge Funds are now quite bullish and REALLY leaning Levered LONG (like they were in JAN of last yr).  The Fundamental Long/Short Fund Gross leverage = +180% (97th percentile on a 1yr look back) while the Net LONG Leverage = +51% (75th percentile).

For the crowd that says “everyone is bearish” – take a look at the below charts.

First – shows retail investors are buying a lot, not selling….

Vandatrack 1/23/23

As you can see below, investor sentiment follows price.

Price up = investors getting bullish

Price down = investors getting bearish.

The read line is the AAII sentiment survey, while the blue is the S&P 500…..

Does not look like anyone is bearish today.

Trahan Research 1/23/23

Speculation is rampant in short term options.

You can see that 50% of $SPX options traded expire in 6.5 hours or less. A new record suggesting that every day is now lotto Friday.

So, folks are trading massive volume in bets that expire as a win or loss in less than 7 hours.

Bye bye long term investing….

Goldman Sachs 1/23/23

That dollar chart still looks interesting.

I mentioned that it broke out above the previous two tops.

It then back-tested the breakout.

But….it broke below the blue line – and has remained below that line.  This opens the door for a false breakout – and implies that the 200 week moving average is acting like a magnet. (that blue line below)

A few interesting charts from overnight….

The Fed may not like the below chart. 

Each time the market rallies, financial conditions loosen.  With looser conditions, inflation pressures will rise.   The China re-opening story is keeping the commodity complex floating higher and will add pressure over time to the Fed if inflation does not moderate….

As an aside – I saw the below stat about China this morning.  What do you think of this…. “China currently holds 96% of global copper inventories, 75% of global aluminum, 70% of corn, 54% of wheat, 30% of soybeans  and 22% of crude oil: JPM”

Daily Shot 1/24/23

Yes – CPI is reported at 6.5%.

I posted the below a while back and wanted to see where the ShadowStats inflation measure is today.  You may recall ShadowStats takes today’s inflation data and runs it through the same formulas that were used to calculate CPI in 1990 and in 1980.  Why?  John Williams of ShadowStats believes the government changes the calculation for CPI to make it appear lower. 

As you can see, using the 1990 formula – CPI is north of 10%.  Using the 1980 formula, CPI is almost 15%.

Hmmmmm

Shadowstats 1/24/23

The potential for stagflation remains real as inflation stays elevated, and growth slows.

To those who expect a soft landing or no recession, I’d highlight the below chart showing Leading Economic Indicators slowing yet again…..

MacroCompass.com 1/24/23

I keep reading how everyone is bearish.

I’m doing my best in my Morning Roundup to show you that in fact, that is false.

Speculation is rampant today in the options market.

Meme stocks are surging again, along with Bitcoin.

And….Sentiment for dumb money/retail is at extreme optimism…..

See below

Sentimenttrader.com 1/24/23

A few notable charts from yesterday and last night…..

First – the M2 (money supply) data came out late yesterday.  As expected, it shows that growth in the money supply has gone negative over the past year as the Fed has stopped the printing press and reversed it.

The below data has a lot of folks suggesting the Fed has gone too far and needs to stop now or risk something breaking….

Northmantrader.com 1/14/23

Now, putting the above into context……

This is M2 since 1960.

Just look at it since 2020.

Now what do you think?  Has the Fed gone too far?  The answer is yes, but not in reducing M2, they went way too far in expanding M2

Northmantrader.com 1/14/23

Here is the performance of Bitcoin since 2010…..

Wild stuff indeed.

@Charliebillelo 1/25/23

About that housing market…..

Looks like the combination of high prices, high mortgage payments and lower income make housing as unaffordable as it was in 2006 at the peak of the housing bubble….

Re:venture  1/25/23

Headline GDP was slightly higher than expectations…..

• 4Q22 U.S. real GDP +2.9% (q/q ann.) vs. +2.6% estimate

You would think the markets would not like that number as it suggests the Fed will have to do more, not less – to bring inflation down.  Perhaps investors are looking below the surface at the personal consumption data that suggests the consumer is slowing….

• 4Q22 personal consumption component of GDP +2.1% vs. +2.9% est. & +2.3% prior

Top it off with the jobs data remaining strong this morning…..

• US Jobless Claims for w/e 21-Jan 186K vs. StreetAccount consensus 205K

The jobs number  fell to the lowest since April 2022 last week.

Again – how does the Fed view this data?

Here is the initial jobless claims….

Lisa Abramozicz 1/26/23

We will find out next week at the Fed meeting I suppose.

How about the below chart….

You just have to love the banks…..

Money markets today are paying nearly 4%, yet bank savings accounts are sub 1%….

FDIC 1/26/23

I hear it every day….”Investors are all bearish – so that is bullish.”

The theory is valid.

The problem is – its just not true today.

I saw this meme below today and it resonated with me….

Mayhem4Markets 1/26/23

Here is the reality.

The dumb money/retail is the most bullish they have been in 18 months. 

While that may remain bullish for a period of time, it is not typically bullish in the intermediate term.  The only exception to that is if we are indeed in a new bull market.  In those instances, it can get over extreme bullish sentiment and stay there for a while like it did at the end of 2021 when the market topped…..

Sentimenttrader.com 1/26/23