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Michael Santoli Profile picture
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Feb 22 • 4 tweets • 2 min read
I’m off this week but did get a #MysteryBroker update overnight. He’s a buyer into the equity weakness, sees it as essentially a retest of the Jan. 24 low, his sentiment gauge showing a pessimism level last seen near the the late-2018 market low.
The #MysteryBroker says historically markets bottom as an “expected war” begins after stocks were already declining. Little economic risk from Ukraine conflict. Credit, yield curve (3-mo./10-year) and financial-stock outperformance show this is not about coming economic weakness.
The #MysteryBroker says Fed has plenty of room to hike before inverting yield curve or risking recession. Q1 economic lull will be brief. “Buy on the war scare.” Likes companies w/ supply chain issues (over-penalized by investors) and even some hypergrowth names look reasonable.
That’s it for now, except the boilerplate….

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More from @michaelsantoli

Michael Santoli Profile picture
Jan 10
Catching up on #MysteryBroker outlook: He came into 2022 expecting moderate S&P 500 gains, upward tilt into May and again in Q4, tougher in between. Opposite the popular "tough 1H, good 2H" call. Sees value, small/mid-cap outperforming. Cyclicals better in first half, then fade.
Note that #MysteryBroker favored value/cyclicals through 2021 and was calling much of speculative tech a bubble back in December 2020. And this is what he said right as it was peaking...

As for the current tactical setup, he says he expects "a bottom in high-growth tech by tomorrow." Continues to like $QCOM and $INTC, even thinks many busted IPOs are attractive ($COOK, $SGHT, $TMCI). Thinks Covid recovery plays and supply-chain victims will do better soon.
Read 4 tweets
Michael Santoli Profile picture
Dec 8, 2021
The #MysteryBroker weighed in overnight with an update. While he's nagged by the profound divergence between the Russell 2000 and big-cap indexes and a Fed moving toward tightening, he still believes the market is likely to rally further into year-end...
The #MysteryBroker says the recent shakeout in the market has left some genuine values in parts of the market for the first time since late 2020, mainly in cyclical stocks that have declined significantly due to the Covid resurgence and/or supply chain disruptions.
On Russell 2000 weakness, #MysteryBroker points out the only prior times the index fell this hard from a record high were 2000, 2007 and 2020. Ominous, perhaps, given what came next, but he notes that bear markets have never started with housing stocks at highs (ex-2020).
Read 5 tweets
Michael Santoli Profile picture
Sep 20, 2021
The #MysteryBroker checked in overnight. Still cautious, mindful of the consistent tendency for weakness from this point in Sept. into early Oct. Likens the backdrop to Sept. 2020: Poor market breadth for many weeks, growth stocks holding up indexes until they no longer could.
The swing toward bearish sentiment in the AAII survey last week and outsize focus on Sept. weakness by pundits gives #MysteryBroker some pause in his correction call. Says hard for stocks to "really break down" (more than a 10% correction) when AAII bears surge like this.
Though #MysteryBroker says there was a similar shift toward negative retail sentiment the week ended Sept, 10, 2020, and there was further downside from there in that correction. Or maybe a bounce soon and some weakness gets shifted into October.
Read 5 tweets
Michael Santoli Profile picture
Sep 10, 2021
Catching up on the latest from #MysteryBroker, who checked in near the end of August. I was away for a bit, he didn't really change his outlook, and I never got around to an update. Until now...
The #MysteryBroker continues to think summer breadth divergences in the stock market have been "unhealthy" and more likely to drag down indexes than resolve to the upside. Still doesn't like overall equity-index risk/reward, believes real economy is fine, prefers value stocks...
The #MysteryBroker thinks "stay-at-home" stocks are still overvalued/over-loved.

Expects the market to start discounting a semiconductor glut early next year. Likes $QCOM, thinks $NVDA way too crowded/expensive...
Read 5 tweets
Michael Santoli Profile picture
Aug 4, 2021
Off and unplugged this week but sharing a no-real-change #MysteryBroker update from Monday. He notes Delta surge has fed a Goldilocks trade (bond rally, growth stocks carry S&P) but could flip with a mid-Aug. US Delta peak, which would match the UK case-growth trajectory.
The #MysteryBroker says ongoing weak market breadth/seasonal headwinds keep him cautious on the broad market. Any relative-performance shift from growth back to his favored value/cyclicals could come in the context of a weaker tape. Remains firmly upbeat on the real economy.
Final note, #MysteryBroker takes a bit of a victory lap on one of his contrarian/pre-pandemic and then mid-pandemic stock picks, L Brands. With its split executed into Bath & Body Works and Victoria’s Secret, their combined share prices now about at his LB fair-value target.
Read 4 tweets
Michael Santoli Profile picture
Jun 14, 2021
The #MysteryBroker says he's not changing his view, still sees very little further S&P upside and significant correction before long.

Continues to believe outperformance of cyclical/value over growth will resume and persist longer than most expect, if by a more moderate degree.
Since #MysteryBroker turned cautious two months ago, S&P 500 is +1.5% and had a 4-5% pullback. The growth-stock bounce has been unconvincing, he says. He sees Treasury yields resuming their climb by July as employment strengthens, thinks somewhat higher inflation will be sticky.
While #MysteryBroker says stocks may lift into the Fed meeting, as they often do, he sees a risk that the Fed decision could be the prompt for a selloff given how investor complacency has grown lately.
Read 4 tweets

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