- Extreme bearish sentiment and supportive midterm seasonality suggest the weight of the evidence may favor equity resilience, even if selectivity is key in the months ahead.
- With sentiment slipping but strength still broad, investors should tune out the noise, focus on price and trend, and keep perspective on what truly matters—in markets and in life.
Ahhhhh… it’s good to be back - and this time, with the CMT Association and Market Mosaic!
I’m proud to say that this is my 6th “round” writing for Alayna and the team, and I have to say - I’m excited about the new look and feel (and I hope you are too!).
Alright - let’s get to it…
I’m going to start this week’s 5-part installment with something I’ve never done before. I’m going to share a few of the top charts I’ve found among my everyday R&R (i.e., “reading & research”).
The first is a chart from SentimenTrader that shows how the NDX aggregated put/call ratio recently experienced its second-highest spike - second only to the 2022-23 bear market, and while the sample size is small, notice the average returns a year later, not to mention the win rate.
Success in the market is all about looking for the good and the bad, finding evidence, and weighing the evidence to find a thesis that makes objective (if not common) sense, and this is most certainly not bad evidence.
I’m a long-time subscriber to the Stock Trader’s Almanac and some of their best work includes seasonality.
As you can see below, the S&P500 tends to rise through mid-March during a midterm election year and then base out and chop sideways for a good six months or so before finally finding some traction and heading higher through year-end.
Does this mean we should sell everything and wait for sunnier skies in seasonality studies?
No! …but it does mean we need to pay more attention and be more selective, watching for whether the market follows these patterns.
If history rhymes, well… we got what we expected. If it doesn’t? Well, that’s some good information that could be a big “hint” to what could come in the future. Again, more evidence!
Lastly, I found this chart (below) from Callum Thomas to be quite interesting.
Sentiment is starting to slip again, people are freaking out, and meanwhile, as Callum put it, “There’s always a bull market somewhere, and in this case, it’s everywhere!”
So as you gander at this chart, it should serve as yet another reminder to turn off the news (especially political news) and focus on what really matters.
Oh - sorry… what really matters?
In my opinion, it’s two things:
If we’re talking about the markets, what really matters is not the news, earnings reports, or the apocalypse du jour on TV. It’s simply price, trend, momentum, volume, supply and demand.
On the other hand, if we’re talking about what really, really matters? It’s spending time with your boyfriend, girlfriend, spouse, or partner. It’s going for a walk outside and listening to a book. It’s doing the things you love while spending time with the people you love.
So with that, wherever you are, I hope you focus on the latter - and if you do focus at all on the former, well… I still hope you focus on what matters most!
Shared content and posted charts are intended to be used for informational and educational purposes only. CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. CMT Association does not accept liability for any financial loss or damage our audience may incur.
