Amazon is alerting bullish trading activity. Below are the MAP buy signals in 2018.
**Data provided by MAP, IEX, FactSet, & Tiingo
Read the full article here.
Read the full article here.
Archives for August 2018
MAP: UPDATE – Potential Bullish move ahead (8/16/2018)
We have been light on the mic recently with updates. That’s simply a function of there not being much to alert you to. No news is good news, right?! However, something did occur in the data yesterday that we want to bring to your attention.
The level of sell signals that we monitor each day returned an abnormally high result yesterday. This is interesting to us for 2 reasons:
- A 1 year chart of SPY looks rather muted recently, which doesn’t jive with what we are measuring.
- The last time we had this level of selling in a day was March 23rd, 2018. We’ve included an arrow for you to see exactly where SPY was then. Clearly it marked an exhaustion point for selling in the market. The market marched higher shortly after. We believe the market could be setting up for a run higher.
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MAP: Energy sector triggers overbought signal (5/15/2018)
Our MAP ratio for the Energy sector triggered an overbought signal. Looking back at history, these signals have indicated extensive institutional buying, which is unsustainable. We expect the Energy sector to pullback and bearish action is ahead.
A couple of points of reference:
A couple of points of reference:
- The average 6-week return for the Energy sector post the signal is -4.21%.
- The last time we had this signal was on 1/17/18 and XLE fell 13.47.% three weeks later (Feb 8th).
MAP: CAUTION! SPEED BUMPS AHEAD (3/2/2018)
SUMMARY: Caution, speed bumps ahead. Below we are attaching yesterday’s message as we believe the markets should see further downside. As a follow-up to yesterday’s email –
Our ratio dropped to 42.6% this morning and now, based on our data, suggests we should be in for more downside in the market. This, however, will be a great buying opportunity once the selling subsides.
What we are monitoring going forward are:
- Any sign of institutional buying
- Any sign of institutional selling slowing
- An oversold reading in the ratio
We will keep you updated as the current events play out.
The MAP Team
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***FROM 3/1/2018
SUMMARY: Our ratio is close to reaching a level that suggests a potential buying opportunity is right around the corner.
Currently the MAP ratio sits at 45.7% and is nearing a level that has historical precedent, 45.6%. We went through our data to see what the forward returns were for IWM (Russell 2000 ETF) in each instance where the ratio decelerated and fell below 45.6%. Because we are near the 45.6% level, we will be monitoring should we break below that level in the coming days.
Below are stats on the 45.6% level and why we feel it is important:
We have had only 6 instances where the ratio has been in a downtrend and then fell below 45.6%. This is out of 1400 trading days of data, so this is a very rare event.
A few observations on market returns post this 45.6% trigger:
1) the market traded lower in all instances
2) the average trading days till reaching the local bottom = 13.33
3) the average return of IWM following each of the 6 instances till the local bottom = -6.65%
Below details the 6 instances where the ratio decelerated and fell below 45.6%:
BOTTOM LINE: Our data suggests that a falling ratio reading below 45.6% should lead to further downside in the market. Typically, levels reaching oversold (25%) have been great buying opportunities. Our long-term view is bullish on the market and feel that any pullbacks are buying opportunities.
Below are the historical instances highlighted by a red circle with yellow fill:
Below are the historical instances highlighted by a red circle with yellow fill:
MAP: First day of more buying than selling appears (2/15/2018)
As stated in the body of this week’s MAP View, “The 2 things we are on the lookout for in the coming week are any signs of buying and/or any exhaustion of selling. We are bullish on equities long-term and see pullbacks, like we are witnessing, as buying opportunities once the storm passes.”
Today’s results showed the first sign of more unusual institutional buying versus selling since Thursday February 1st. Additionally, we are noticing selling signals as slowing.
Bottom Line:
Looking ahead, we feel the eye of the storm has passed and most likely the lows made on Friday were the retest (ie near-term lows). Looking at the data today, based on history we are heading higher.
Today’s results showed the first sign of more unusual institutional buying versus selling since Thursday February 1st. Additionally, we are noticing selling signals as slowing.
Bottom Line:
Looking ahead, we feel the eye of the storm has passed and most likely the lows made on Friday were the retest (ie near-term lows). Looking at the data today, based on history we are heading higher.
MAP: Market update – Like Clockwork (2/6/2018)
It has been quite a while since I wrote anything other than my usual MAP VIEW commentary, “institutional buying continues to outstrip selling…” talking points. In fact, it’s been practically a year since any unusual selling has occurred. Each week’s data has been the same, like clockwork… At MAP, we just kept waiting for the alert to come…the signal. That day finally came January 24th – the market was now officially overbought. Finally, there’s something new to talk about. And the best part is we can look historically at our data and see how these events tend to play out. Believe it or not, there are consistent patterns we’ve noticed over the years – I’d also call the patterns, clockwork.
As I write this, I want to point out a few patterns we pay attention to as it relates to the current meltdown happening in equity markets. There are 3 distinct data points that reveal themselves in times of stress that can shed light on potentially what’s to come in the days/weeks ahead. The first thing is that our overbought signal for the market, time and time again, is prescient in alerting us to when extreme readings of institutional buying is occurring, and thus unsustainable. These overbought signals, simply stated, are both rare and short-lived. Once the levels shift away from equilibrium and to extreme, it’s a warning. That warning came on January 24th.
The 2nd thing we can point to in times of market stress as it relates to our data is that when sell-offs of this magnitude hit, the 4% kind, we typically see multiple gyrations in the market in the short-term. There tends to be a ripple effect within the supply and demand mechanics of the market– thus keeping volatility elevated and resulting in high share turnover for days/weeks. What’s important here is the market is going through a much needed reset as institutional demand for shares is no longer a match to the level of increased supply. In the upcoming MAP View report, it will come as no surprise the level of institutional selling happening this week.
The 3rd thing we can point to, and most important to you the reader, is the level of selling we are experiencing now will eventually exhaust itself – ie buying opportunity. Looking at past intense selling, the spike in institutional activity tends to slow as we approach oversold levels. There is usually one sector that begins to lead as institutions start buying shares. This is what we’ll be paying attention to most in the coming days/weeks. We are going to want to see a waning in selling suggesting a rally is ahead. We will update you once the data shifts to oversold. Stay tuned and grounded.
As I write this, I want to point out a few patterns we pay attention to as it relates to the current meltdown happening in equity markets. There are 3 distinct data points that reveal themselves in times of stress that can shed light on potentially what’s to come in the days/weeks ahead. The first thing is that our overbought signal for the market, time and time again, is prescient in alerting us to when extreme readings of institutional buying is occurring, and thus unsustainable. These overbought signals, simply stated, are both rare and short-lived. Once the levels shift away from equilibrium and to extreme, it’s a warning. That warning came on January 24th.
The 2nd thing we can point to in times of market stress as it relates to our data is that when sell-offs of this magnitude hit, the 4% kind, we typically see multiple gyrations in the market in the short-term. There tends to be a ripple effect within the supply and demand mechanics of the market– thus keeping volatility elevated and resulting in high share turnover for days/weeks. What’s important here is the market is going through a much needed reset as institutional demand for shares is no longer a match to the level of increased supply. In the upcoming MAP View report, it will come as no surprise the level of institutional selling happening this week.
The 3rd thing we can point to, and most important to you the reader, is the level of selling we are experiencing now will eventually exhaust itself – ie buying opportunity. Looking at past intense selling, the spike in institutional activity tends to slow as we approach oversold levels. There is usually one sector that begins to lead as institutions start buying shares. This is what we’ll be paying attention to most in the coming days/weeks. We are going to want to see a waning in selling suggesting a rally is ahead. We will update you once the data shifts to oversold. Stay tuned and grounded.
MAP: Market triggers overbought signal (1/24/2018)
Our MAP ratio for the U.S. market triggered an overbought signal. Looking back at history, these signals have preceded large drops in the market. Basically, institutional buying is too high and unsustainable. We expect the market could be primed for a pullback, or the velocity of the recent rally could slow. We are long-term bullish on the market and feel any meaningful pullbacks should be used as a buying opportunity.A couple points of reference:
- The average 5-week return for IWM post the signal is -1.25%.
- The last time this signal triggered was 2/21/2017 and IWM returned -4.52% four weeks later.
MAP: Energy sector triggers overbought signal (1/17/2018)
Our MAP ratio for the Energy sector triggered an overbought signal. Looking back at history, these signals have been powerful predictors of pullbacks. It’s basically saying the level of institutional buying is too high and unsustainable. We expect the Energy sector to pullback and expect bearish action is ahead.The average 6-week return for the Energy sector post the signal is -2.67%.
