SignalPlus Macro Analysis: ETF Sees Two Consecutive Weeks of Outflows, Mainstream Momentum Significantly Weakened

2024-04-23 15:41

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Original title: "SignalPlus Macro Analysis (20240423): US stock market awaits corporate earnings data"

Original source: SignalPlus

Geopolitical tensions did not escalate further over the weekend, while oversold positions led to a risk rebound, and risk markets rose across the board yesterday. Fixed income investors appear to be choosing to remain on the sidelines ahead of Friday's PCE data, the FOMC meeting in eight days, and SPX's busiest earnings week of the quarter. Despite the positive price action, trading activity remains light, with fixed income volumes at only 60–70% of normal levels. 44% of SPX companies will report earnings this week, including five of the "Magnificent 7", with Tesla on Tuesday, Meta on Wednesday, and MSFT, Google, and Amazon on Thursday.

As bonds sold off last week, stocks continue to be quite expensive relative to fixed income at all-time highs (based on implied yields), despite this, Wall Street believes that investors are still comfortable with long positions, with the long position indicator reaching a 4-year high, and the SPX/Nasdaq short ratio reaching a near 10-year low.

However, last week's negative price action still caused some technical damage to the stock, and SPX futures have fallen below the 55-day moving average, and are more than 5% away from the next 200-day moving average support. From a weekly perspective, the slow stochastic indicator has turned negative and accelerated downward, while the SPX monthly candlestick is also likely to form a bearish outside monthly line at a record high, which needs more attention during the earnings season.

In terms of cryptocurrencies, based on CME futures contracts, JPM believes that BTC positions are also overweight, while ETFs have experienced outflows for two consecutive weeks (although on a smaller scale), and mainstream momentum has weakened significantly. Inflows rebounded slightly to +62 million USD on Monday, but had no impact on the market, and we will continue to pay close attention to market trends.