I Honestly Can’t Say What’ll Happen
Nothing points to a particular direction. Indicators are pointing sideways, tensions are rising (again and stronger) in the middle east, and broader macroeconomic conditions are downright strange. Quite frankly, I don’t know what to expect from this week. Nevertheless, I plan to continue my equity and quantitative research.
The McClellan Oscillator is coming down from a very short positive stint, almost a “blip” at that.
The war in Iran is more of the same, which means more volatility. I expect all good news to become bad in roughly a week. I also recommend watching Meet Kevin’s video on the most recent developments. My brain is a bit too friend to explain what’s going on — ignore the clickbait thumbnail and title, as we’re in late-stage YouTube era.
On the economy… what the heck. Facebook fired 8,000 people two weeks ago, but banks are still hiring, but also firing. Literally nobody knows what’s going on.
Margin Debt
New margin debt data came out a few weeks ago, so apologies for the late report. It’s more of the same though.
My margin debt analysis page is showing a high likelihood of another positive month.
Margin debt YoY growth is 53.3% (above the 80th percentile threshold of 28.3%), but the 3-month deceleration has not crossed the warning threshold. The S&P 500 is within 10% of its 12-month peak. Leverage is elevated but still accelerating.
Next month’s regime probabilities:
Expansion: 69%
Recovery: 21%
Late cycle: 8%
In other words, we’re not reaching the top of the bubble… yet.