![nvivo 12 discover emerging themes and sentiment nvivo 12 discover emerging themes and sentiment](https://www.qsrinternational.com/getmedia/c3972d01-256c-4d0a-81a9-2bc88dc31293/3-NVivo-about-organize-stars-(2).png)
Another interesting foible of the week ahead of us is the calculated seasonality. When markets are drained, developing a trend becomes very difficult to do – though sharper bouts of volatility can develop. While it is principally the United States that sees a definitive market drain for its Thanksgiving holiday closure, the world has grown accustomed to downshifting around the absence of this large speculative participant. With the S&P 500 due a break while the Dow and Nasdaq need to reconcile their differences, I am also expecting a notable downshift in liquidity through the second half of the coming week. This deviation represents the heaviest negative correlation (-0.88) since August 11 and a very rarified situation overall.Ĭhart of Nasdaq 100 Overlaid with Dow Jones Industrial Average and 5-Day Correlation (Daily ) An extraordinary divergence has in fact opened between the ‘growth index’ Nasdaq 100 (up 2.3 percent) and the ‘value index’ Dow Jones Industrial Average (down -1.4 percent). In fact, the perseverance isn’t even uniform across American equities. That doesn’t speak well to the persistent enthusiasm that seems increasingly unique to key US indices.
![nvivo 12 discover emerging themes and sentiment nvivo 12 discover emerging themes and sentiment](https://cdn-images-1.medium.com/fit/t/1600/480/1*zOzL0HyILslCQlV0b-x2GQ.jpeg)
The same flagging was registered in junk bonds (HYG -0.3 percent), carry trade ( AUDJPY – 1.3), emerging markets (EEM -2.1) and commodities (WTI crude -6.0) among other assets that take guidance from investor sentiment. For ‘rest of world’ equities (I like the VEU ETF as an aggregate), this past week saw a -1.5 percent retreat. While the S&P 500 and its heavily-traded derivatives are one of my favorite benchmarks for ‘risk’, it is not the definitive word on sentiment for the broader market. A break is inevitable given that we will soon run out of viable room before the index’s trendlines converge, but follow through would be better served to start from a rooted fundamental spot.Ĭhart of S&P 500 with 20-Day SMA, 5-Day Historical Range and Daily Wicks (Daily) Ideally, the fundamental sparks will resolve the S&P 500’s rapidly deteriorating wedge, but that would be an ideally convenient scenario. In addition to the seasonality distortions, there are lurking fundamental threats waiting for a spark to drive sentiment to an extreme such as the expected President Biden decision on the next leader of the Federal Reserve. There is a lot going on in the week ahead which could represent difficult trading conditions for those that are simply falling back on the steadfast FOMO or buy-the-dip strategy. Seasonally, the 47 th week of the year registers significant losses from the S&P 500, but we have the Thanksgiving holiday drain is an evitable event while the divergence between the Dow and Nasdaq 100 is likely to close with clear implications for the view on ‘risk appetite’. The week ahead looks like it will pass through multiple, contrasting phases. Get My Guide A Break, A Convergence and A Liquidity Drain