Cross-Asset Strategist & Quantitative Analyst, Pennock Idea Hub

Cam Hui

Cross-Asset Strategist & Quantitative Analyst

Pennock Idea Hub

We are creators of independent equity research. The Pennock Idea Hub team are veterans of the investment industry. Much of our team has spent their careers at Merrill Lynch, Deutsche Bank, RBC Capital Markets and Wood Gundy. We have taken every aspect of research back to the studs and returned to first principles. The Pennock Idea Hub marries the interests of the sell and buy side. 

We offer the best research for institutional investors by:

-Only publishing research from veteran analysts
-Eliminate the inherent conflicts of the traditional sell and buy side relationship
-Ensure our team is always accessible; collaboration with clients nurtures our collective success

Cross-Asset & Quantitative Research

Technical Analysis

Energy Select Sector SPDR Fund / Technical Analysis

Historically, The Economist magazine covers have been excellent contrarian market signals (see <a href="https://www.smartkarma.com/insights/poised-for-a-bond-market-rally" target="_blank" rel="noopener">Poised for A Bond Market Rally</a>). The Economist may have done it again this week with a focus on the global warming effects of heat waves in North American and floods in Germany.We believe coal and energy equities represent potential contrarian buying opportunities for investors. In addition, the stock market appears to have undergone a bullish reversal off a panic bottom, which should resolve in higher prices in the days and weeks ahead.

Historically, The Economist magazine covers have been excellent contrarian market signals (see Poised for A Bond Market Rally). The Economist may have done it again this week with a focus on the global warming effects of heat waves in North American and floods in Germany.We believe coal and energy equities represent potential contrarian buying opportunities for investors. In addition, the stock market appears to have undergone a bullish reversal off a panic bottom, which should resolve in higher prices in the days and weeks ahead.

Cross Asset Strategy

As a chartist, it’s easy to be bearish. After all, the market is experiencing numerous negative breadth divergences and signs of excessive bullish sentiment. Beneath the surface, however, the technical condition of the market can better be described a “glass half full or half empty” dilemma.We continue to believe the market has bifurcated into two distinct markets — value and growth. In aggregate, it’s difficult to make much of a judgment about the direction of the S&amp;P 500 owing to the divided nature of market internals. The internal rotation is continuing and value is poised to gain the upper hand.Short-term breadth and sentiment readings indicate that a rebound is likely, but the bulls shouldn't bring out the champagne just yet as the market could just be at the bottom of a trading range. Until we see a definitive bullish or bearish catalyst, our base case calls for a sideways market with a possible minor upward bias.

As a chartist, it’s easy to be bearish. After all, the market is experiencing numerous negative breadth divergences and signs of excessive bullish sentiment. Beneath the surface, however, the technical condition of the market can better be described a “glass half full or half empty” dilemma.We continue to believe the market has bifurcated into two distinct markets — value and growth. In aggregate, it’s difficult to make much of a judgment about the direction of the S&amp;P 500 owing to the divided nature of market internals. The internal rotation is continuing and value is poised to gain the upper hand.Short-term breadth and sentiment readings indicate that a rebound is likely, but the bulls shouldn't bring out the champagne just yet as the market could just be at the bottom of a trading range. Until we see a definitive bullish or bearish catalyst, our base case calls for a sideways market with a possible minor upward bias.

The stock market may finally be undergoing a minor corrective episode after numerous warnings of negative breadth and excessively giddy sentiment. However, the intermediate-term trend is still up. If history is any guide, downside risk should be limited to -5% or less. Respect the uptrend. Buy the dip.

The stock market may finally be undergoing a minor corrective episode after numerous warnings of negative breadth and excessively giddy sentiment. However, the intermediate-term trend is still up. If history is any guide, downside risk should be limited to -5% or less. Respect the uptrend. Buy the dip.

Despite all of the technical warnings about negative breadth, the S&amp;P 500 has been undergoing a ride along its upper Bollinger Band. While conventional technical analysis would view episodes of negative breadth divergences as bearish, there are good reasons for the bullish resilience of the S&amp;P 500.The top five sectors comprise about 75% of the weight of the index, and their relative performance determines the market’s direction. An analysis of the June relative performance of these sectors shows that three of the five — representing 43.4% of the index weight — are exhibiting positive relative strength. This is in turn putting upward pressure on the index.The stock market is also underlying an internal rotation between value and growth. Ed Clissold of Ned Davis Research wrote, “The back-and-forth leadership is the reason market breadth has been so resilient.”In the short run, count on more back-and-forth value and growth rotation that supports stock prices. History shows that the DJIA seasonal pattern in July is bullish. Enjoy.

Despite all of the technical warnings about negative breadth, the S&amp;P 500 has been undergoing a ride along its upper Bollinger Band. While conventional technical analysis would view episodes of negative breadth divergences as bearish, there are good reasons for the bullish resilience of the S&amp;P 500.The top five sectors comprise about 75% of the weight of the index, and their relative performance determines the market’s direction. An analysis of the June relative performance of these sectors shows that three of the five — representing 43.4% of the index weight — are exhibiting positive relative strength. This is in turn putting upward pressure on the index.The stock market is also underlying an internal rotation between value and growth. Ed Clissold of Ned Davis Research wrote, “The back-and-forth leadership is the reason market breadth has been so resilient.”In the short run, count on more back-and-forth value and growth rotation that supports stock prices. History shows that the DJIA seasonal pattern in July is bullish. Enjoy.

The good news is the S&amp;P 500 rallied to a marginal all-time high last week. The bad news is it was accompanied by numerous negative divergences. How investors react to current conditions will depend on their time horizon.Investment-oriented accounts need to recognize that the primary trend is still up. Stay long equities and don’t worry about minor blips in the market.On the other hand, traders don’t need to be always aggressively long or aggressively short. This is a time to step to the sidelines. Our base-case scenario calls for a period of sideways and choppy sideways price action. Pullbacks should be relatively shallow and limited to drawdowns of 5% or less.

The good news is the S&amp;P 500 rallied to a marginal all-time high last week. The bad news is it was accompanied by numerous negative divergences. How investors react to current conditions will depend on their time horizon.Investment-oriented accounts need to recognize that the primary trend is still up. Stay long equities and don’t worry about minor blips in the market.On the other hand, traders don’t need to be always aggressively long or aggressively short. This is a time to step to the sidelines. Our base-case scenario calls for a period of sideways and choppy sideways price action. Pullbacks should be relatively shallow and limited to drawdowns of 5% or less.

United States

SPDR S&P 500 ETF Trust is an exchange-traded fund incorporated in the USA. The ETF tracks the S&P 500 Index. The Trust consists of a portfolio representing all 500 stocks in the S&P 500 Index. It holds predominantly large-cap U.S. stocks. This ETF is structured as a Unit Investment Trust and pays dividends on a quarterly basis. The holdings are weighted by market capitalization.

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SPDR S&P 500 (SPY US)

Another Magazine Cover Buy Signal?

We believe coal and energy equities represent potential contrarian buying opportunities . As well, the stock market appears to have undergone a...

Cam Hui

A Glass Half Full, or Half Empty?

Short-term breadth and sentiment readings indicate that a rebound is likely, but until we see a definitive catalyst, our base case calls for a...

Cam Hui

Respect the S&P 500 Uptrend

The stock market may finally be undergoing a minor corrective episode after numerous warnings of negative breadth and excessively giddy sentiment....

Cam Hui

The Resilient S&P 500

While conventional technical analysis would view recent episodes of negative breadth divergences as bearish, there are good reasons for the bullish...

Cam Hui

A New S&P 500 High, But...

The S&P 500 rallied to a marginal all-time high but it was accompanied by numerous negative divergences. How investors react to current conditions...

Cam Hui

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