Weekly S&P500 ChartStorm - Foreigners are disproportionately buying US Stocks
Learnings and conclusions from this week’s charts: $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$
The weekly “doji” denotes indecision following a strong run.
Euphoric sentiment indicators suggest a speculative frenzy taking hold.
Smart money remains skeptical (albeit reluctant FOMO bulls).
Foreigners are disproportionately buying US Stocks.
US tech stocks trade at a 2-3x premium vs global tech stocks.
Overall, I feel like not that much has changed since I unplugged just over a week ago for a family vacation — the market politely went sideways during that time, thanks market :-) There’s still things to be concerned about, and still bullish momentum.
But what does stand out: the doji formation, the sideways movement, toppiness in tech/bitcoin …coming at a time where sentiment is all on one side of the boat, and seasonality is turning slippery. Maybe some market volatility is set to pile-on to my email backlogs!
1. Enter the Doji
First up is the appearance of an interesting pair of weekly candles known as “doji” (where the open/close are almost identical). These represent an element of indecision, and can indicate exhaustion and possible reversal risk following an extended move (like the one we have just seen).
2. Euphoria Rising
But while the weekly candles show some indecision, investor sentiment is decidedly bullish — investor euphoria at the upper end of the range.
3. Flows Show
Similarly, US equity fund flows show clear FOMO.
4. Speculative Frenzy
Trading activity in leveraged long vs short US equity ETFs has reached frenzied levels — at this point one of two paths lie ahead: either a repeat of the pandemic stimulus/liquidity-fueled bubble of 2021, or the market takes a short-term breather.
5. Stockmarket vs Economy
Interestingly, when it comes to investor sentiment (surveys of investors); optimism and bullishness is the overwhelming feeling… when it comes to economic sentiment (surveys about economic activity, expectations); pessimism and recession remain the mood. One of these is going to have to do some moving the close that gap.
https://www.chartstorm.info/p/weekly-s-and-p500-chartstorm-17-mar
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