‘So bad, it’s good.’ This beleaguered stock market has one big asset on its side, say strategists.


A tough month for stocks is coming to an end, and many investors will probably not be sad to see the aftermath. And on the last day of April, trade seems weak, as Apple and Amazon failed to raise the bar in a mixed season for tech gains.

Our call of the day comes from Keith Lerner, chief market strategist at Truist Advisory Services, who said investors’ “depressed” sentiment is why he hasn’t shifted to a totally negative position on stocks at the moment.

“In fact, with markets, it’s not good or bad, it’s better or worse than expected. When expectations are low, some good news can go a long way. That’s why markets they tend to go down when fear and uncertainty are at their extreme, ”Lerner said in a recent note to clients.

It downgraded its equity position to neutral in April after two years of a positive position, noting that while the range of potential results is wide, the risk / reward is less positive.

He noted the latest survey by the American Association of Individual Investors (AAII), which showed that the percentage of investors with a negative / bearish outlook rose to 59.4%. It was the highest since early March 2009, just weeks before a major equity fund since the fall of the 2008-09 financial crisis.

“To be fair, investors were rightly negative in January 2008 in the early stages of this market crash,” he said.

The percentage of bullish investors is currently 16%, also close to an all-time low, leaving the bullish / bearish differential at -43%, a level that has been exceeded twice in the last 35 years: autumn 1990 and March 2009. point, Lerner said.

Truist advisory services

A similar issue was heard from Thomas Lee, founder of Fundstrat Global Advisors, who told clients that the AAII sentiment survey was a “significant background signal,” based on the story. “So bad, it’s okay,” he said.

Lee provided this chart showing when such a poor reading marked a background of actions:

A footnote from Lee is that the AAII survey tends to show older investors, not the Reddit crowd.

Reads: Boomers come out of the bag. Here is what happens next.

Lerner adds other evidence of investor negativity, such as the $ 45 billion coming out of equity funds over the past two weeks. “This is an extreme we’ve also seen in times of increasing uncertainty and volatility,” Lerner said.

For example: the post-Lehman Brothers bankruptcy, the downgrade of the US debt rating, the lows of the COVID-19 pandemic and two months before the 2020 US presidential election. Although the Lehman signal Brothers was “premature,” he said, strong price performance followed the other periods.

In short, Lerner said Truist follows the “weight of evidence approach”, which tells him that depressed investor views and a “low barrier to positive surprises” are the stock market’s most important assets.

The buzz

The Federal Reserve-favored inflation indicator — the consumer’s basic spending index — rose 0.9% sharply, and employment costs also rose. The follow-up to the University of Michigan Consumer Sentiment Index is yet to come, and we’ll have a Fed meeting next week.

Amazon AMZN,
+ 4.65%
it has fallen 8% in the pre-market after its first loss in seven years. Apple AAPL,
+ 4.52%
it has fallen more than 2% after the tech giant surpassed its earnings and set a record revenue, but warned of billions of added costs due to supply chain problems.

Tesla TSLA,
-0.45%
Shares are higher after CEO Elon Musk tweeted that there were no more planned sales now, after selling for nearly $ 4 billion.

Chevron CLC Earnings,
+ 3.55%,
Exxon XOM,
+ 3.02%
have left these actions softer, while Honeywell HON,
+ 1.92%
is aware of the results, while AbbVie ABBV,
-0.83%,
Bristol-Myers Squibb BMY,
+ 1.83%
the Colgate-Palmolive CL,
+ 0.66%
they are also all low on results.

Opinion: Big Tech isn’t earning that much anymore, but those two stocks still seem safe

Elsewhere, Intel INTC,
+ 3.58%
low after the results, while investors applaud Roku ROKU,
+ 8.11%
earnings. The shares of Robinhood HOOD are also collapsing,
+ 6.10%,
which lost forecasts and said fewer people were negotiating on its application.

and Digital World Acquisition Corp. DWAC,
+ 7.88%,
the special-purpose acquisition company that buys the company behind former President Donald Trump’s Social Truth is on the rise after Trump resurfaced with a message on the platform.

Ukraine’s leader has accused Russia of trying to humiliate the UN by firing missiles at Kyiv during a visit by Secretary-General António Guterres. And efforts to get trapped civilians out of the assaulted Mariupol continue.

The Chinese government has promised more support to its economy as the country fights out COVID-19 outbreaks.

The Department of Labor is concerned that Fidelity’s plan to allow Bitcoin to enter 401 (k) plans is risky for retirees.

The markets

YM00 share futures,
-0.31%

ES00,
-0.83%

NQ00,
-1.12%
are lower, with yields on TMUBMUSD 10Y bonds,
2.897%

TMUBMUSD02Y,
2.747%
flat and crude oil prices CL00,
+ 0.93%
modestly superior. Gold is getting a pop, while the DXY dollar,
-0.33%
it has cooled after the massive rebound on Thursday, especially against the USDJPY yen,
-0.51%,
which continues to go down. The Russian central bank reduced interest rates to 14% and the USDRUB ruble,
-2.02%
is bouncing.

Bitcoin BTCUSD,
-2.37%
and other crypts are modest.

The graph

Naomi Poole and a team of Morgan Stanley strategists have launched a new market sentiment indicator (MSI) to provide “tactical guidance on ‘risk assets'”.

The MSCI All-Country World Index (you can track it using the iShares MSCI ACWI ACWI exchange traded fund,
+ 2.09%
) is used as an indicator of the performance of risky assets.

“Our analysis suggests that improving / deteriorating sentiment is a stronger signal for future performance than just extreme levels,” Poole and the team said. Using the level and direction of stress, the MSI is currently neutral and still does not emit buy signals, they said.

The tickers

These were the most marketed tickers on MarketWatch from 6:00 AM Eastern Time:

TSLA,
-0.45%

Tesla

AAPL,
+ 4.52%

apple

AMZN,
+ 4.65%

Amazon

GME,
-0.41%

GameStop

AMC,
-1.32%

AMC Entertainment

NIO,
+ 1.01%

NIO

FB,
+ 17.59%

Metaplatforms

BABA,
+ 2.93%

Ali Baba

NVDA,
+ 7.42%

Nvidia

TWTR,
+ 0.97%

Twitter

Random readings

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The pet duck helps solve a murder mystery.

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