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REMINDER

THE US MARKETS TAKE TWO SHORTENED WEEKS A YEAR - THANKSGIVING & CHRISTMAS -- WE DO ALSO!

*** HAPPY THANKSGIVING AND SEE YOU IN A WEEK! ***

UnderTheLens - November Video - This Wednesday 11/27/24

Next Release - The Mid-Week Report Thursday AM 12/05/24

MASSIVE RETHINK OF FED RATE CUTS

CUT EXPECTATIONS DOWN FROM 260 bps TO 50% OF ONLY 50-75 bps

CHART ABOVE: US equities saw the largest 3-month inflows since 2021 and potentially one of the largest monthly inflows on record into US stocks.

But even though the S&P 500 is still only a whisker away from all-time highs, its strong post-election rally has also started to lose momentum. Under the surface, breadth for the index has been lackluster after a particularly strong showing on Nov. 5, before jumping steeply again on Thursday. This indicates that below the surface the market is more split — it’s not a rising tide lifting all boats.

CHART ABOVE RIGHT: Bitcoin was the big name this week, continuing its charge towards $100k, (now up 45% since right before the election results). If global liquidity is anything to go by, we touch $135k before we see any serious selling pressure.

1- SITUATIONAL ANALYSIS

SEASONALS

CHART RIGHT: More than one-fifth of the stocks in the S&P 500 Index, Nasdaq 100 and Russell 2000 were at 52-week highs last week. Yet within that same week there were already more stocks at new lows than new highs.

Such a reversal is rare, especially across all three of the gauges at the same time, an analysis by SentimenTrader found.

CHART BELOW: The only time when all three indexes saw this kind of new-high-to-new-low whiplash was in early May 2010, which was not a pleasant time to bet on a rebound, because all three saw heavy losses through July. But, for now, the seasonals are with you until the inauguration.

SENTIMENT

FEAR-GREED INDEX

We have yet to see extreme greed, despite the melt up.

ASSET MANAGERS & HEDGE FUNDS "ALL IN!"

The longer term view shows the crowd is long.

S&P 500 & COMBINATION OF FORWARD PE,VIX & BULLISH SENTIMENT

Bullish sentiment among investors in the U.S. stock market only continues to soar, reaching new all-time highs.

WEEKLY ETF FLOWS (IWM+XLF+HYG)

Recent market behavior indicates a substantial increase in investor optimism, evidenced by notable shifts towards riskier assets including small caps, financials, and junk bonds.

S&P 500 WEEKLY % CHANGES

The S&P 500 posted its best weekly gain of 2024 and its third-strongest Presidential Election week since 1928, rising 4.7% as investors cheered Donald Trump’s victory and the prospect of business-friendly policies.

RETAIL COMING IN HARD

Record $448bn YTD annualized inflows into US stocks. When the retail crowd enters and equity fund cash balances are extremely low we need to ask where will the new buyers come from??

A YEAR-END MELT-UP??

From a factor perspective, the Morgan Stanley quant team examined if we are having a bit of a momentum fatigue here. His conclusion? In the 4 years where US Momentum has been up >20% up to the middle of November since 1999, 3 out of 4 times US Momentum has risen a further 10%+ by the end of the year. So it looks historical experience bodes well for the year end.

3M STOCK DISPERSION

Dispersion in stock returns the highest in over 4 years.

MOMO

US 1M Momo has rallied 18% in a week, pushing the 14D RSI to the most overbought level since 2007. The gap between winners and losers in the US continues to grow with dispersion in stock returns the highest in over 4Y. Is there more room to go in the rally or is the rally over? That’s the $$$ questions on the back of investors’ minds.

SECTOR ROTATION

US equities are currently pricing a very optimistic growth environment. Goldman's sector model leads them to recommend overweight positions in Materials, Software & Services, and Utilities.

EVERYONE IN (ABOVE SENTIMENT CHARTS) - WHO IS LEFT TO BUY (LOWER CHART)?

..and are they?

CHART BELOW: Rolling four-week avg. flows are negative the past four weeks.

CHART BELOW: Hedge Funds in the process of trimming Mag-7 portfolio holdings.

Hedge funds have been selling & selling. Note, The Mag 7 stocks represent a 31.71% weighting in the S&P 500 index.

Funds have trimmed exposure to the Magnificent 7 in aggregate (data 6 weeks old).

STILL A KNIFE'S EDGE AS OF WEEK'S CLOSE

NASDAQ

WHAT WE HIGHLIGHTED IN THE WEEKEND REPORT:

The NASDAQ has almost retraced the entire Trump bump. Nasdaq saw its worst week in the last ten weeks. We are breaking below the 21 day, approaching the 50 day and the positive trend line. 20400 (futures) is the make or break area. (CHART)

WHAT WE HAD AS WEDNESDAY CLOSE: (CHART)

Very important trend line as well as the 50 day coming up. Make or break.

S&P 500

WHAT WE HIGHLIGHTED IN THE WEEKEND REPORT:

The S&P 500 has so far reversed perfectly on that upper trend line. We are hitting the first supports as of writing, the 5900 area, give or take. This is where the 21 day comes in as well as being half the big post Trump candle. 50 day is still way lower, down at the lower part of the trend channel. (CHART)

WHAT WE HAD AS WEDNESDAY CLOSE: (CHART)

SPX is approaching must hold levels again. The lower touch of the trend channel comes in around 5900 (futures) and the 50 day around 5850. Despite the bullish "feeling", the SPX is at mid October levels, not showing much of that year end melt up mojo so many are waiting for...

CHART BELOW: SOX at the very important trend line, trading below the 200 day, but still trying to hang in there. Let's see what NVDA brings, but SOX "can't afford" to close much lower. That Head & Shoulders formation could be huge.

2- FUNDAMENTALS

HISTORIC S&P 500 PERFORMANCE - May Not Last Much Longer Before a Corrective / Correction

The S&P 500 is currently posting its strongest performance of the 21st century, with historical trends suggesting that this momentum MAY continue to drive further gains. NOTE: This is measured in DAYS done and to go!

S&P 500 PERFORMANCE

The S&P 500’s exceptional performance in 2024 ranks among its strongest since 1928, with historical trends indicating potential for continued momentum.

AS A CONSEQUENCE, VALUATIONS ARE EXTREMELY STRETCHED!

CHART BELOW: 4th highest S&P 500 trailing P/E in the past 124 years!

VALUATION - FORWARD 12-MONTH PE FOR S&P 500

While U.S. equities are trading at a premium to global stocks, this situation reflects both the strength of the U.S. market and economy. But there are potential risks associated with high valuations and market concentration.

S&P 500 VALUATION MULTIPLE

Despite the U.S. stock market’s robust performance, the growing gap between earnings growth and price increases has inflated valuations to potentially unsustainable levels, warranting caution based on historical trends.

VALUATION - S&P 500 NTM P/E

The increasing term premium warrants close attention due to its substantial effects on equity valuations and overall market behavior.

VALUATIONS - REAL S&P 500 INDEX WITH RECESSIONS & S&P 500 SHILLER CAPE RATO

While valuations alone do not guarantee market movements, current elevated valuations of the S&P 500 are a point of concern that investors should be aware of.

DON'T FORGET CORPORATE BUYBACKS: The strongest 2 month period of the year for the biggest buyer. The buyback "delta" is huge. Open orders for Q4 are $5B/day.

1. November is the top month for corporate buybacks, with November/December as the strongest two-month period.

2. November historically accounts for 10.4% of annual spend, with ~$100B in share repurchases expected this month.

3. Estimated ~$6B daily VWAP demand over 19 trading days, potentially amplified during late-month low liquidity around Thanksgiving.

THE BUYBACK BAZOOKA!

NOTE

NEW IMAGE CHANGES ARE LABELED WITH A BLUE TRIPLE ***STAR***

OLD IMAGE CHANGES ARE LABELED WITH A RED TRIPLE ***STAR***

OLD IMAGES REFLECT MINIMAL CHANGE (Wasted Time!), but Narrative is ALWAYS updated.

ALL IMAGES UPDATED WEEKLY (EITHER THE MID-WEEK OR WEEKEND REPORTS).

REMEMBER: SIMPLY CLICK YOUR LIVE SUBSCRIBER LINK TO SEE THE LATEST CHART.

3- TECHNICAL ANALYSIS.

***THE MATASII BANK INDEX***

• The MATASII Bank Index exploded higher on the Trump win and has continued higher closing at a new high on Friday.
• In the bottom panel the MATASII Proprietary Momentum Indicator tested support this week (dashed orange trend line) as part of its climb higher.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

***THE MATASII FINANCIAL INDEX***

• The MATASII Financial Index exploded higher on the Trump win and has continued higher, closing near its prior high on Friday.
• In the bottom panel, the MATASII Proprietary Momentum Indicator suggests the index wants to move higher to test overhead resistance at the Black Dashed Trend Line.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

***IWM - LONG iShares Russell 2000 ETF - Daily***

• The IWM - LONG iShares Russell 2000 ETF rose sharply this week nearings its prior high.
• The IWM Proprietary Momentum Indicator (lower panel) suggests the IWM is looking to test overhead resistance at the Black Dashed trend line shown on the chart.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

***NVIDIA - NVDA - DAILY***

CHART RIGHT: Nvidia has repurchased $55 billion in stock since 2022.

With a market cap of $3.61tn and nearly as big as the entire DAX and CAC combined, earnings is going to be a big event. To give you a scale for their astonishing earnings trajectory over such a short period of time, at the recent lows in Jan 2023 Nvidia earned $4.4bn over the preceded last 12m. However, today the consensus will see them earn $61.4bn over the last 12 months. Then, by the time we hit 2027, they are expected to earn $118.1bn LTM.

Today's Note:

• Shares of Nvidia fell as much as 5% in after hours trading following its earnings announcement Wednesday, before settling about 2% lower, far below the 8.8% straddle. They previously closed at $145.89 in New York.
• During the remainder of this week, NVDA showed overall weakness and closed at lower levels.
• NVDA found support Friday at the dotted black trend line of its MATASII Momentum Indicator (lower panel).

Longer Term Note:

• At some point, the major unfilled gaps (at much lower levels) must be filled. We anticipate a likely test of the 200 DMA in Q1 2025.
• NVDA therefore may no longer become a Short to Intermediate Long Term hold, but rather a position trading stock, as other competitors enter the space and force margins and the earnings growth rate to contract. 

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

CONTROL PACKAGE

1. APPLE - AAPL - DAILY (CHART LINK)
2. AMAZON - AMZN - DAILY (CHART LINK)
3. META - META - DAILY (CHART LINK)
4. GOOGLE - GOOG - DAILY (CHART LINK)
5. NVIDIA - NVDA - DAILY (CHART LINK)
6. MICROSOFT - MSFT - DAILY (CHART LINK)
7. TESLA - TSLA - DAILY (CHART LINK)

AS GOES NVDA SO GOES THE MAG-7!

AS GOES THE MAG-7 SO GOES THE MARKET!

***MAGNIFICENT 7***

CURRENT DAY'S VIEW:

• The Mag-7 continues to hover around support at the mid-point of its long term rising trend channel. (dotted black line).
• Overall weakness was seen in AMZN, GOOG and NVDA tis week.
• Meanwhile the MATASII Proprietary Momentum Indicator (lower pane) has yet to reach overhead resistance at the dotted black trend line and has drifted horizontally as we enter the Thanksgiving shortened trading week.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above: SUBSCRIBER LINK

"CURRENCY" MARKET (Currency, Gold, Black Gold (Oil) & Bitcoin)

***10Y REAL YIELD RATE (TIPS)***

Real Rates have broken through its upper trend channel line (shown in the chart to the right - as of close 11/15/24). (LATEST)

CONTROL PACKAGE

There are TEN charts we have outlined in prior chart packages, which we will continue to watch closely as a CURRENT Control Set:

1. US DOLLAR -DXY - MONTHLY (CHART LINK)
2. US DOLLAR - DXY - DAILY (CHART LINK)
3. GOLD - DAILY (CHART LINK)
4. GOLD cfd's - DAILY (CHART LINK)
5. GOLD - Integrated - Barrick Gold (CHART LINK)
6. SILVER - DAILY (CHART LINK)
7. OIL - XLE - MONTHLY (CHART LINK)
8. OIL - WTIC - MONTHLY - (CHART LINK)
9. BITCOIN - BTCUSD -WEEKLY (CHART LINK)
10. 10y TIPS - Real Rates - Daily (CHART LINK)

***US DOLLAR - DXY - DAILY***

CHART RIGHT: Moving in Tandem

Rising Treasury Yields and a Rising Dollar are currently the same trades!

MATASII CHART BELOW:

CURRENT DAY'S VIEW -

• The dollar exploded higher on the Trump win, hitting 12-month highs at its peak overnight.
• This was the dollar's biggest daily gain since Feb 2023. The dollar then rallied for the seventh straight week top, its highest since Nov 2022.
• The dollar has only continued to rise further with the DXY decidedly breaking its overhead black dashed trend line shown on the DXY chart and closing Friday above the high of September 2023.
• The DXY since the Trump win has closed above the overhead resistance (large black dashed trendline) in a very decisive manner.

THE BREAKING OF THESE TREND LINES SUGGEST POTENTIAL MAJOR CHANGES ARE UNDERWAY IN THE PERCEPTION OF THE US DOLLAR.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:   SUBSCRIBER LINK

***GOLD***

CHART RIGHT:

Gold is waking up to a "new" world where it simply can't take the dollar strength that the Trump win brought to the party. However, Trump also brings major deficit spending (inflationary).

SPOT GOLD

Gold now trades near a two-month low as investors digest Powell’s remarks and adjust their monetary policy outlook. Lower interest rates are less likely to benefit the precious metal.

CHART BELOW:

• Gold found support last Friday at the 100 DMA and bounced hard this week, back well above its 50 DMA.
• Gold ran up against its MATASII Momentum Indicator resistance trend line (dotted orange trend line) on Friday.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

***SILVER***

• Having found support at the 100 DMA, Silver has pushed higher approaching overhead resistance near the 50 DMA.
• In the lower panel we see Silver is hovering at the lower support MATASII Momentum Indicator (orange dotted trendline). We suspect Silver needs to test the lower Momentum Indicator support level last tested in late summer.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

US EQUITY MARKETS

CONTROL PACKAGE

CHART RIGHT: We have reached our first level of the Cup & Handle at approximately 5930 on the S&P 500.



There are FIVE charts we have outlined in prior chart packages that we will continue to watch closely as a CURRENT "control set":

1. The S&P 500 (CHART LINK)
2. The DJIA (CHART LINK)
3. The Russell 2000 through the IWM ETF (CHART LINK)
4. The MAGNIFICENT SEVEN (CHART ABOVE WITH MATASII CROSS - LINK)
5. Nvidia (NVDA) (CHART LINK)

***S&P 500 CFD***

• The S&P 500 cfd moved to a new high on the Trump victory putting in a new high. Since then it has hovered around its 21 DMA but closed above it Friday at 5976.
• The MATASII Proprietary Momentum Indicator (middle panel) offered overhead resistance at a longer term overhead resistance trend line (dotted black line) during the initial post Trump victory, before falling back. The trend is still up, but momentum appears to be fading gradually.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

***S&P 500 - Daily Our Thought Experiment***

OUR CURRENT ASSESSMENT IS THAT THE INTERMEDIATE TERM IS LIKELY TO LOOK LIKE THE FOLLOWING:

CHART RIGHT: In its base case scenario, Goldman Sachs projects a year-end 2024 price target of 5,600 for the S&P 500 index, supported by robust earnings growth and a stable price-to-earnings ratio.

NOTE: To reiterate - "the black labeled activity shown below, between now and September, looks like a "Killing Field", where the algos take Day Traders, "Dip Buyers", the "Gamma Guys" and FOMO's all out on stretchers!"

• The S&P 500 moved to a new high on the Trump win. Since then it has hovered around its 21 DMA, but closed above it Friday at 5969.
• The MATASII Proprietary Momentum Indicator (middle panel) offered overhead resistance at a longer term overhead resistance trend line (dotted black line) during the initial post Trump victory, before falling back. The trend is still up but momentum appears to be fading gradually.
• 
  

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

STOCK MONITOR:  What We Spotted

BOND MARKET

LOWER BOND YIELDS CORRECTLY SPOT A WEAKER MACRO

CONTROL PACKAGE

There are FIVE charts we have outlined in prior chart packages that we will continue to watch closely as a CURRENT "control set":

1. The 10Y TREASURY NOTE YIELD - TNX - HOURLY (CHART LINK)
2. The 10Y TREASURY NOTE YIELD - TNX - DAILY (CHART LINK)
3. The 10Y TREASURY NOTE YIELD - TNX - WEEKLY (CHART LINK)
4. The 30Y TREASURY BOND YIELD - TNX - WEEKLY (CHART LINK)
5. REAL RATES (CHART LINK)

FISHER'S EQUATION = 10Y Yield = 10Y INFLATION BE% + REAL % = 2.352% + 2.063% = 4.415%

20YR AUCTION: The US Treasury sold USD 16bln of 20yr bonds at a high yield of 4.680%, tailing the when issued by 3bps, the largest tail for the 20yr auction since February's 3.3bps tail. The bid-to-cover saw a notable drop to 2.34x from 2.59x prior and the six auction average of 2.6x. The breakdown was also weak with dealers, forced surplus buyers, taking 22.6% of the auction, up from the 14.5% prior and six auction average of 11.2%. Direct demand was very weak at just 7.9%, while indirect demand rose to 69.5%, but beneath the six auction average.

CHART BELOW:

Rates have definitely overshot the normal pattern post the first cut.

"...perpetually deeper Deficit spending trajectory with Fiscal policy dominance”—which in a forward “macro vacuum” then risks “sticky higher inflation” = “sticky high nominal GDP” at least in the US—and also then implies a meaningfully higher “Neutral Rate” than is currently being acknowledged by folks at the Fed —and thus, a shallower “Easing Path” / a higher “Terminal Rate” than is currently being assumed by many in the Market".

***10Y UST - TNX - WEEKLY***

CURRENT DAY'S VIEW:

• Yields closed this week 4.41% up against an overhead resistance trendline (dotted black trendline).
• The Proprietary MATASII Momentum Indicator (lower pane) is now showing momentum has broken decisively through its overhead resistance trendline (dotted black line) but is now losing momentum.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

***10Y UST - TNX - HOURLY***

CURRENT DAY'S VIEW:

• Yields closed Friday at 4.41% level and up against an overhead resistance trendline.(dotted black trendline)
• The Proprietary MATASII Momentum Indicator (lower pane) is now showing momentum, having found support at the long term black dashed trendline.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

COMMODITIES

***CRB COMMODITY INDEX - MONTHLY***

• The overall Commodity Indexes, as measured by the CRB Commodity, reflect a Corrective / Consolidation is presently nearing completion.
• However, many of the individual sectors (not shown here) have already completed the Corrective / Consolidation and broken higher over the last 30-60 days.

• Examples:
• Invesco DB Agricultural Fund (DBA)
• VanEck Agribusiness (MOO)
• Food Producers (FT350 Food Producers - NMX45)
• Teucrium Agricultural Fund ETV (TAGS)
• Advisory Shares Restaurant ETF (EATZ)
• Invesco Food & Beverage ETF (PBJ)
• Teucrium Wheat Fund ETV (WEAT)
• Teucrium Corn Fund ETV (CORN)
• Teucrium Soybean Fund ETV (SOTB)
• Teucrium Sugar Fund ETV (CANE)

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

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