In a continuation with my correlation with credit series .. 🧑💼
$HYB (junk bonds) vs $QQQ (NASDAQ 100) 🤔
Interesting to note that risk appetite remained relatively strong for both $HYG and $QQQ, while it was noticeably diminished for $LQD, $TLT, $IWO, and many growth stocks. 🧐
$HYG vs $SPY
$JNK vs $EEM
$BSV vs $FXI
$IEF vs $GOLD
$HYG vs $ARKK
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44% of small cap companies are unprofitable vs 19% of midcaps and just 7% of large caps.
This is one reason that there's no reason for a rotation into small caps. The value really isn't there.
One of the catalysts for $IWM's surge was a record amount of retail call buying. This is not how rotations tend to look. Instead, this appeared to have been speculative excess chasing momentum.
Another driver of the $IWM rally was significant de-grossing by hedge funds, who favored the Russell 2000 as a macro short to offset concentrated positioning in mega caps and $NDX.
Sabotage of all kinds has been a common theme against Iran in the past. Whether this time is part of that trend remains to be seen, but it's always interesting to look back.
Another example was Stuxnet, a sophisticated piece of malware that targeted Iran's nuclear capabilities
That $META earnings call was an absolute disaster. Zuck tried to convince his investors that AI is the future, when there's no real clear path to how it makes profit.
Then he tried to tie it into the metaverse.
At that point I bet a lot of people got PTSD, because the selling accelerated further...
The company plans to keep aggressively spending on their AI initiatives. I think Zuck said AI about 100 times without really articulating a vision as to how this converts to higher revenue and earnings.
But he did make it clear that the costs would be much higher than expected..
A lot of people probably remember similar talk regarding the metaverse.
At the time it was the future, it was an area of aggressive spend, but nobody could explain how all this spending would provide a return on the investment.
Oh boy, managed money is REALLY long US equities now. With the highest exposure since July, per NAAIM data.
Extremes in NAAIM positioning have often been decent opportunities to fade over the intermediate term (not the next 5 minutes).
I wonder, will this time be any different?
@TraderadeTweets It looks like a lot of hedges and short positions must have been removed as the bearish responses went from -200 (leveraged short) to 1 (flat-ish exposure).
@TraderadeTweets That jives well with skew data, which shows the put-to-call premium on $SPX fell rather appreciably over the last couple of days.
Which tells us there's, overall, less demand for puts vs calls.
In fact, 3M ATM $SPX puts are about the cheapest they've ever been.