Small Caps - it doesn’t get much more bullish than this. $E-mini Russell 2000 - main 2412(RTYmain)$ 4 month base breakout on big volume following the US election, followed by a successful retest of the $2300 breakout level.A clean daily reversal formation on top of the range to boot! Very playable. Cheers $iShares Russell 2000 ETF(IWM)$ $iShares Russell 2000 Growth ETF(IWO)$ $Sezzle Inc(SEZL)$ $Innodata(INOD)$ Image
DavidMarlin
NYC Equity Trader | SF Quant HF Adviser | CEO of Marlin Capital | Not Investment Advice.
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Lots of talk about a bubble in AI/Mag 7...
Lots of talk about a bubble in AI/Mag 7... At this point, valuations at the top are no where near as frothy as they were at the height of the Dot Com Bubble. The 5 largest stocks traded at 43x Fwd PE in March ‘00, a 59% premium to the Mag 7’s current multiple of 27x. $Microsoft(MSFT)$ $Apple(AAPL)$ $Alphabet(GOOG)$ $Alphabet(GOOGL)$ $Meta Platforms, Inc.(META)$ $Amazon.com(AMZN)$ $Tesla Motors(TSLA)$ $NVIDIA Corp(NVDA)$ ImageTraders are piling into C
Small Caps - it doesn’t get much more bullish than this
Small Caps - it doesn’t get much more bullish than this
If you ignore the Covid bubble valuations, many growth stocks are not cheap
I warned about Bubble Stocks many times during the Denial Phase of the Bust.2022 was all about valuations coming back to earth.The magnitude of the decline in many growth stocks gives the illusion they are cheap, but not so fast.If you ignore the Covid bubble valuations, many growth stocks are not cheap.Many are actually at ATH valuations, above PEAK pre-Covid multiples.The structure of the Covid Bubble and Bust has closely resembled many historical bubbles, including the early 90s Japanese Nikkei Bubble.https://twitter.com/Marlin_Capital/status/1609231495582851072?cxt=HHwWgICx-ZzhkdUsAAAA
If you ignore the Covid bubble valuations, many growth stocks are not cheap
AAPL buyback program is 169% larger than the average S&P 493 company
1 of the craziest stats in the market right now 👇 $Apple(AAPL)$ announced a $110B stock buyback program in Q1. If you strip out the Mag 7 from the $S&P 500(.SPX)$ , the average market cap for the S&P 493 is just $65B. AAPL buyback program is 169% larger than the average S&P 493 company.ImageWhen the $S&P 500(.SPX)$ trades higher over the first 100 days of a Presidential election year, the rest of the year is up 93% of the time for an average return of 10.1% ($5800).Imagehttps://x.com/Marlin_Capital/status/1795439679652917329
AAPL buyback program is 169% larger than the average S&P 493 company
Bull Market Milestone: Two Years In, Aiming for Five?
We are now 2 years into the current Bull Market that began in October 2022. The average duration of the last 11 Bull Markets has been ~5 years, with 8/11 (73%) making it to the end of the year 3. $.SPX(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $NASDAQ 100(NDX)$ $Invesco QQQ(QQQ)$ $E-mini S&P 500 - main 2412(ESmain)$ $E-mini Nasdaq 100 - main 2412(NQmain)$ $iShares Russell 2000 ETF(IWM)$ $.DJI(.DJI)$ $GLOBAL
Bull Market Milestone: Two Years In, Aiming for Five?
The FAAMG Bubble has plenty more room to deflate after a decade + of outperformance
The FAAMG Bubble has plenty more room to deflate after a decade + of outperformance.What Are FAAMG Stocks?FAAMG is an abbreviation coined by Goldman Sachs for five top-performing tech stocks in the market, namely, Meta$Meta Platforms(Facebook), Inc.(META)$ $Amazon.com(AMZN)$ $Apple(AAPL)$ $Microsoft(MSFT)$ $Alphabet(GOOG)$ $Alphabet(GOOGL)$. FAAMG may also go by the acronym,GAFAM.FAAMG originated from the original acronym FANG, which was coined by CNBC’sJim Cramer. FANG did not include Apple and Microsoft but did include
The FAAMG Bubble has plenty more room to deflate after a decade + of outperformance
Inflation is really deteriorating?
1.The Fed is looking for months of compelling evidence that inflation is deteriorating. So far, there is none.- Core CPI re-accelerated MoM in Aug - Sticky CPI components printed new highs - Wage growth near peak levels - Food/shelter inflation at peak levels$Invesco QQQ Trust(QQQ)$ 2.Housing market stress tends to lag the movements of 30 YR mortgage rates. With 30 YR mortgage rates hitting their highest levels since 2008, the housing bubble bust is just beginning. $SPDR S&P 500 ETF Trust(SPY)$ https://twitter.com/Marlin_Capital/status/1572723326346465281
Inflation is really deteriorating?
2024 is likely to have the 2nd highest SPX P/E
$S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ Historically, valuations have risen during Fed easing cycles, with the SPX P/E Ratio expanding by 2.1 points. The last 3 easing cycles were different, however, with the SPX P/E falling by an avg of 3.2 pts. The key difference in the past 3 cycles was the starting point - the start-of-period P/Es in the last 3 cycles were the highest of all 10 cases. For this cycle, 2024 is likely to have the 2nd highest P/E (1st ‘03) at the start of an easing cycle since 1966.Imagehttps://twitter.com/Marlin_Capital/status/1744429837819777171
2024 is likely to have the 2nd highest SPX P/E
The highest flyers have given up all their gains from the Covid Bubble.
In traditional bubble fashion, the highest flyers - SPACs, FinTech, Crypto, SaaS, Metaverse, etc. have now given up all their gains from the Covid Bubble.Traditional bubble fashion includes a full retrace of all parabolic gains.I studied 5 of the biggest asset bubbles throughout history. The common theme in all 5 bubbles is the asset retracing ALL of its parabolic move. Is ARKK$ARK Innovation ETF(ARKK)$ next? It sure looks like it.The gap between Consumer Sentiment and Equity Exposure is the largest we have seen in the past 30 years.https://twitter.com/Marlin_Capital/status/1612963916224552961
The highest flyers have given up all their gains from the Covid Bubble.
Fed balance sheet expansion is responsible for 51% of the SPX returns
It’s all about liquidity. According to BofA $Bank of America(BAC)$ , Fed balance sheet expansion is responsible for 51% of the SPX $S&P 500(.SPX)$ returns since the GFC, by far the biggest driver of returns. Earnings account for 23%, and multiple expansion most of the remaining. $Invesco QQQ Trust(QQQ)$ $DJIA(.DJI)$ ImageAccording to GS Prime data, hedge fund net exposure remains near 5 year lows and has not moved meaningfully in the last 4 months. Imagehttps://twitter.com/Marlin_Capital/status/1641417917999767553
Fed balance sheet expansion is responsible for 51% of the SPX returns
Market Jitters at Fed Rate Cut Delay, Recession Fears Rise
The beginning of Fed rate cuts is a crossroads moment for the market.If there is no recession, stocks tend to perform quite well. If there is a recession, a Bear Market typically looms. Today’s sell off appears to stem from distress that the Fed didn't cut rates yesterday and that Sept. will be too late. The catalyst for today’s reversal was recessionary type ISM Data released at 10 AM. The ISM jobs subindex cratered to 43.4 from 49.3, the weakest reading since June ‘20, and even lower than the 45.4 reading in Sept ‘08 (the month Leman collapsed). $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $NASDAQ(.IXIC)$ $NASDAQ 1
Market Jitters at Fed Rate Cut Delay, Recession Fears Rise
Some flaws in the Put/Call ratio data circulating on Twitter
CBOE released a great article explaining some of the flaws in the Put/Call ratio data circulating on Twitter. Namely, deep ITM put activity has resulted in a sharp spike in the equity P/C ratio that is nondirectional and unrelated to typical option use cases.1 method listed for normalizing the data involves exclusion of ITM options entirely: P/C using only OTM and ATM contracts.Another alternative is to focus on smaller executions. Small Trade P/C avoids the distortion of large early-exercise activity for a clearer picture of small-trader sentiment.When normalized, P/C ratio is certainly elevated, but not beyond levels seen in each of the previous market downturns of the last 5 yrs. https://twitter.com/Marlin_Capital/status/1610450796247920641
Some flaws in the Put/Call ratio data circulating on Twitter
Meme Stock Mania Has Returned- The Largest 5D Upside Move
A full Dovish Pivot from the Fed is already in, according to the market.Over the last 20 days, Financial Conditions have eased at one of the fastest paces in the last decade.Even faster than the 2018 Powell Pivot.$S&P 500(.SPX)$ $Invesco QQQ Trust(QQQ)$ $Apple(AAPL)$ $Tesla Motors(TSLA)$ $NVIDIA Corp(NVDA)$Meme stock mania has returned with a vengeance.The 5-day upside move in the “GS Most Shorted Stocks” bucket is one of the largest we have seen in the past 5 years.
Meme Stock Mania Has Returned- The Largest 5D Upside Move
Historically, the December through February period typically favors small caps over large caps
Historically, the December through February period typically favors small caps over large caps $S&P 500(.SPX)$ $Invesco QQQ Trust-ETF(QQQ)$ $iShares Russell 2000 ETF(IWM)$ ImageBig businesses have avoided the pain of higher interest rates (so far) by locking in cheap debt before the rate hiking cycle began. According to the BEA, net interest paid by US corporations on debt has actually fallen to a 45 year low of $114B.ImageHistory shows that equities tend to perform quite poorly in the immediate aftermath of Fed rate cuts. On average, stocks have bottomed 10-14 months after the first Fed rate cuts (dating back to 1969). Imagehttps://twitter.com/Marlin_Capital/s
Historically, the December through February period typically favors small caps over large caps
Dip buyers have returned with a vengeance
1. Dip buyers have returned with a vengeance.BofA$Bank of America(BAC)$ - Over the last 3 weeks, inflows to single stocks were in the 99th percentile (since ‘08) and 2 standard deviations above average.2.We have just witnessed the largest 2 day decline of Mega Cap tech stocks on record.$Meta Platforms, Inc.(META)$ $Apple(AAPL)$ $Amazon.com(AMZN)$ $Microsoft(MSFT)$ $Alphabet(GOOG)$ $Alphabet(GOOGL)$ $Netflix(NFLX)$ 3.
Dip buyers have returned with a vengeance
Hedge Funds were big buyers during last week’s rally
Hedge Funds were big buyers during last week’s rally. According to GS Prime, last week’s buying in Tech was the largest in 16 months (since Dec ‘22) and ranks in the 99th percentile vs. the past 5 years. $Invesco QQQ(QQQ)$ $Tesla Motors(TSLA)$ $Alphabet(GOOG)$ $Alphabet(GOOGL)$ $Microsoft(MSFT)$ $Apple(AAPL)$ ImageHere's what I posted a few days ago to compare:Over the past month, we have seen a sharp decrease in positioning across Hedge Funds, Retail, Asset Managers, CTAs, and ETF Flows. The 4wk decrease in positioning reached the most
Hedge Funds were big buyers during last week’s rally
The percentage of stocks currently oversold is nearing historic levels
We are witnessing the fastest Fed tightening cycle in 40 years. The only 2 faster included a great deal of pain1. 1980 Volcker shock - severe global recession, unemployment spikes to 11%2. Early 70s - stagflation with a lost decade for equities2.The percentage of stocks currently oversold is nearing historic levels.Over the last decade, the proportion of stocks signaling oversold readings has been higher only 3 times.$S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $Cboe Volatility Index(VIX)$ $Invesco QQQ Trust(QQQ)$ https://twitter.com/Marlin_Capital/status/1574856882866589696
The percentage of stocks currently oversold is nearing historic levels
In March, the Fed’s balance sheet expanded by $370B
In March, the Fed’s balance sheet expanded by $370B. The only comparable instances in history: 1. March 2020 Covid Crisis 2. Fed’s policy response to Lehman Bro’s failure during the 2008 GFC $S&P 500(.SPX)$ $Invesco QQQ Trust(QQQ)$ $DJIA(.DJI)$ Imagehttps://twitter.com/Marlin_Capital/status/1641800628744716289
In March, the Fed’s balance sheet expanded by $370B
On the Bear Market: We're Not in Kansas Anymore
Summary PointsWe are in a Bear MarketThe bubble started to burst last FebruaryMost speculative assets peaked 1st (SPACs, FUBO, etc.)Breadth weakened while some growth stocks had 1 last melt upThe Fed pops bubblesThe indices will be the last domino to fallBe prepared for tougher sledding aheadThe type of generational gains we saw in 2020 don’t last forever. Detailed analysis below.In The Wizard of Oz, Dorothy suddenly finds herself in a strange and unfamiliar environment. Investors who easily outperformed the market in 2020 are finding themselves in a similar situation right now. Following the March 2020 Covid lows, the potential of easy money has powered an explosive run, culminating in generational gains for many tech stocks. But now, the music has stopped.Last week, I o
On the Bear Market: We're Not in Kansas Anymore
The lowest interest rates in 5000 years
We are just under 15 months into the current SPX Bear Market. Dating back to 1920, the median Recessionary Bear Market has lasted 19 months in duration.$S&P 500(.SPX)$ $NASDAQ(.IXIC)$ $Invesco QQQ Trust(QQQ)$ $DJIA(.DJI)$ 5000 years of global history shows just how extraordinary the last decade of monetary policy was.https://twitter.com/Marlin_Capital/status/1638646666440986624
The lowest interest rates in 5000 years
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