Most since August
S&P 500 +18% from the lows 4 weeks ago. More than 88% of S&P 500 stocks are trading above their 20 day moving average, the most since August. However, many sentiment & positioning indicators are still massively lagging, which would indicate room for more buying. Let’s have a look.
Source: @barchart
Very low net leverage
Fundamental L/S net leverage fell this week to 47.8% (5th percentile 1-year).
Source: GS Prime
Not even back to zero
GS US Equity Sentiment Indicator of investor positioning has not even managed to get back to zero.
Source: Goldman
Below average
The JPM “US TPM” – level is below average, but it has of course rebounded from mid-April lows.
Source: JPM PI
Remains pessimistic
Average investor sentiment remains pessimistic as momentum signal indicates more upside.
Source: Macrobond
Will extreme shorting flip to large covering?
Short additions on a 4 week rolling basis reached their highest level of the past few years in the US as of early April (about +2.5z). We saw a modest amount of covering into late April, but absolutely not a large short covering event.
Source: JPM PI
Small net long
CTAs are now back to being (small) net long global equities. A lot more buying potential.
Source: JPM
2008 or 2020?
GS: “YTD Nasdaq performance (light blue line) is tracking a very similar trajectory to both 2020 (green line) and 2008 (dark blue line); in 1 instance, Nasdaq finished +40% for the year; in the other, it closed down 40% for the year … “
Source: GS
Tech inflows
Inflows to tech got that 2020 rebound feel – continue for the 7th week.
Source: BofA
Mag7 is so back
Positioning in Mag7 stocks rebounded into earnings, with the L/S ratio ending the month at the 85th%-tile vs long term history.
Source: JPM PI
Largest retail buying on record
Retail investors were very large buyers last month – April was actually the largest net buying on record.
