Market Momentum: Your Weekly Financial Forecast & Market Prep
Issue 20 / What to expect Nov 04, 2024 thru Nov 08, 2024
⚠️ A Note For New & Regular Readers⚠️
First, thank you for reading. Without your support, I might never have started or continued writing. The feedback and engagement I've received from you have been incredibly motivating and rewarding. I'm glad to know my weekly insights have helped you navigate some challenging times in the markets.
At this point, I’d like to grow this publication into an even more valuable resource. You might wonder, “It’s already free; how can it get better than that?” My goal is to share more in-depth, actionable, and insightful information on institutional order flow and positioning. I’d also like to engage with you on a more personal and conversational level by inviting Substack subs into my Discord to join VL subs in open, productive dialogue. In there, you will be able to ask questions, share ideas, seek feedback, and have a voice in what’s covered in this weekly publication so that it aligns with your needs. Additionally, you’ll gain access to exclusive resources only made available in my Discord.
With that in mind, I want to inform you clearly and openly that the next issue, and those that follow, will only be fully accessible to Substack and VL paid subscribers. If you’re already a VL subscriber at any level, you’ll continue receiving this publication in full at no extra cost. If you’re a Substack-only paid subscriber and later decide to subscribe to VL, I’ll work with you to pro-rate your remaining Substack balance and apply it directly toward your VL subscription. If you remain a Substack-only unpaid subscriber, all my past articles will remain freely available and you’ll only get access to future articles I decide to make free.
I will, of course, continue offering free commentary and insights on Twitter and occasional Substack articles to support the broader trading community. I hope each of you chooses to stay with me and join the VL community for the very best in institutional order flow analysis and thought-provoking conversations. Thank you!
Last Week: Insights & Trends
As the U.S. presidential election approaches on November 5, investors face heightened uncertainty not only around election results but also in the broader economic landscape. The election race remains close, and it may take days to determine the winner, potentially creating market volatility in the interim. Despite this, market fundamentals — notably earnings growth and the labor market — continue to shape market sentiment.
The recent third-quarter earnings reports from S&P 500 companies reveal steady, albeit moderate, growth. Earnings growth was expected to be around 4% but has slightly exceeded expectations, landing closer to 5%. Notably, mega-cap technology firms like Google, Microsoft, Meta, Apple, and Amazon provided mixed results. While these tech giants surpassed revenue and earnings projections, guidance for the next quarter led to fluctuating stock prices, with Microsoft and Apple falling short of investor expectations. Meanwhile, Meta’s increased spending on artificial intelligence (AI) raised concerns about profit margins. AI’s long-term growth potential remains a focal point, yet investors await clearer indications of when these investments will generate returns. Across the board, earnings growth for this year is projected at 9%, significantly higher than last year’s 1% growth rate.
This earnings season’s moderate success was underscored by a volatile week for technology stocks, as concerns over future growth trajectories and AI investments caused the NASDAQ and S&P 500 to close with weekly declines of more than 1%. Nevertheless, a slight recovery on Friday highlighted investor resilience amid mixed earnings from major companies and the ongoing election uncertainty.
In addition to earnings, last week’s labor market report further shaped the outlook. October’s nonfarm payroll report showed a sharp slowdown, with only 12,000 jobs added, far below the anticipated 100,000. This marks the lowest job growth since December 2020. The labor market has been trending toward moderation, with monthly job gains averaging 170,000 this year, down from last year’s average of 250,000. However, last month’s weakness was impacted by factors like the Boeing labor strike and two hurricanes, which skewed the data. The Bureau of Labor Statistics estimates that these disruptions reduced job additions by up to 70,000. Without these anomalies, job growth might have met estimates, but the overall trend indicates a cooling labor market, which should help keep inflation in check.
The Federal Reserve’s monetary policy is at a pivotal juncture. With the upcoming November and December meetings, the Fed is widely expected to continue its rate-cutting cycle, with a projected 0.25% rate cut in November. The Fed’s preferred inflation measure, the Personal Consumption Expenditures (PCE) Index, rose at an annual rate of 2.1% in September, slightly easing from August’s 2.3%. This downward trend supports a case for rate cuts as inflation moderates. If the Fed’s rate cuts are executed gradually, they could support both equities and bonds. Historical data suggests that easing rates during a stable economic period often creates a favorable backdrop for markets, offering potential growth opportunities for both equity and fixed-income investors.
Despite this, bond yields continued to climb last week, with the 10-year Treasury yield reaching 4.37%, its highest level since July, amid rising expectations of increased government spending and concerns about global inflation. While Treasury yields saw an upward trend, the stock market’s volatility surged, reflected in an elevated Cboe Volatility Index (VIX) at 21.88. Volatility is expected to remain elevated until election results are confirmed.
This week also offered mixed data points on economic growth. The third quarter saw a solid GDP increase of 2.8%, down slightly from the second quarter’s 3.0% but notably above the first quarter’s 1.6% growth rate. This resilience highlights the economy’s strength despite high interest rates and inflation concerns, though inflationary pressures on wages continue. Wage growth was up 0.4% month-over-month, suggesting strong demand for labor. However, prolonged wage inflation could complicate the Fed’s efforts to control overall price levels.
A broader look at market performance shows that the S&P 500 ended October down 1.0%, marking a break in its five-month streak of gains. The NASDAQ and Dow also posted slight declines for the month. October’s choppy market conditions came amid mounting concerns over tech sector growth, as several key technology stocks fell sharply. Notably, Intel surged nearly 8% after exceeding earnings expectations, while Apple experienced a decline following lower-than-expected guidance.
As the election looms, history shows that November and December tend to be positive months for markets, especially in election years. Investors may view market volatility as an opportunity to add quality investments at lower prices. From a strategic perspective, large-cap and mid-cap U.S. stocks continue to look attractive, with earnings growth in both growth and value sectors expected to expand in 2025. In fixed income, cautious optimism remains, with a preference for extending duration within the investment-grade bond space rather than overweighting cash-like instruments, given the anticipated rate cuts.
Looking ahead, the Federal Reserve meeting will conclude on Thursday, diverging from the typical Tuesday-Wednesday schedule. Markets expect a 98% probability of a 0.25% rate cut, adding momentum to the Fed’s easing cycle. Other economic data points, like the ISM Services PMI and the University of Michigan’s preliminary Consumer Sentiment report for November, will provide further insight into the state of the U.S. economy. Additionally, the Treasury’s upcoming debt auctions could influence yields depending on investor demand.
In summary, the U.S. market landscape reflects a complex interplay of earnings growth, moderating labor market conditions, and looming interest rate cuts. As the presidential election adds to market uncertainty, investors may find opportunities amid the volatility, with the expectation that underlying economic fundamentals will support both equities and bonds in the months ahead.
Futures Markets: Indices
Futures Markets: Bonds
Futures Markets: Energy
Futures Markets: Metals
Futures Markets: Currencies
Futures Markets: 1-Week Performance
S&P 500: By Size & Sector
S&P 500: Sectors Scorecard
ETFs
US Investor Sentiment
Insider Trading
Insider trading occurs when a company’s leaders or major shareholders trade stock based on non-public information. Tracking these trades can reveal insider expectations about the company’s future. For example, large purchases before an earnings report or drug trial results might indicate confidence in upcoming good news.
Last Week’s Insider Transactions Over $15M
%Bull-Bear Spread
The %Bull-Bear Spread chart is a sentiment indicator that shows the difference between the percentage of bullish and bearish investors, often derived from surveys or sentiment data, such as the AAII (American Association of Individual Investors) sentiment survey. This spread tells investors about the prevailing mood in the market and can provide insights into market extremes and potential turning points.
Bullish or Bearish Sentiment:
When the spread is positive, it means more investors are bullish than bearish, indicating optimism about the market’s direction.
A negative spread indicates more bearish sentiment, meaning more investors expect the market to decline.
Contrarian Indicator:
The %Bull-Bear Spread is often used as a contrarian indicator. For example, extremely high levels of bullish sentiment might suggest that the market is overly optimistic and could be due for a correction.
Similarly, when bearish sentiment is extremely high, it might indicate that the market is overly pessimistic, and a rally could be on the horizon.
Market Extremes and Reversals:
Historically, extreme values of the spread (both positive and negative) can signal turning points in the market. A very high positive spread can signal market exuberance, while a very low or negative spread may indicate fear or capitulation.
1-Year View
NAAIM Exposure Index
The NAAIM Exposure Index (National Association of Active Investment Managers Exposure Index) measures the average exposure to U.S. equity markets as reported by its member firms. These are typically active money managers who provide their equity exposure levels weekly. The index offers insight into how much these managers are investing in equities at any given time, ranging from being fully short (-100%) to leveraged long (up to +200%).
AAII Investor Sentiment Survey
The AAII Investor Sentiment Survey is a weekly survey conducted by the American Association of Individual Investors (AAII) to gauge the mood of individual investors regarding the direction of the stock market over the next six months. It provides insights into whether investors are feeling bullish (expecting the market to rise), bearish (expecting the market to fall), or neutral (expecting the market to stay about the same).
Key Points:
Bullish Sentiment: Reflects the percentage of investors who believe the stock market will rise in the next six months.
Bearish Sentiment: Represents those who expect a decline.
Neutral Sentiment: Reflects investors who anticipate little to no market movement.
The survey is widely followed as a contrarian indicator, meaning that extreme levels of bullishness or bearishness can sometimes signal market turning points. For example, when a large number of investors are overly optimistic (high bullish sentiment), it could suggest a market top, while excessive pessimism (high bearish sentiment) may indicate a market bottom is near.
SPX Put/Call Ratio
The SPX Put/Call Ratio is an indicator that is used to gauge market sentiment. This is calculated as the ratio between trading S&P 500 put options and S&P call options. A high put/call ratio can indicate fear in the markets, while a low ratio indicates confidence. For example, in 2015, the Put-Call ratio was as high as 3.77 because of market fears stemming from various global economic issues like a GDP growth slowdown in China and a Greek debt default.
1-Year View
CBOE Equity Put/Call Ratio
1-Year View
ISEE Sentiment Index
The ISEE (International Securities Exchange Sentiment) Index is a measure of investor sentiment derived from options trading. Unlike traditional put/call ratios, the ISEE Index focuses only on opening long customer transactions and is adjusted to remove market-maker and firm trades, providing a purer sentiment reading.
The ISEE Index typically ranges from 0 to 200, with readings above 100 indicating more call options being bought relative to put options, suggesting bullish sentiment. Conversely, readings below 100 suggest bearish sentiment, with more puts being purchased relative to calls.
(Sorry, they still haven’t fixed the dark background which makes it hard to read axis values)
New Highs - New Lows
The New Highs - New Lows indicator (NH-NL) displays the daily difference between the number of stocks reaching new 52-week highs and the number of stocks reaching new 52-week lows. The NH-NL indicator generally reaches its extreme lows slightly before a major market bottom. As the market then turns up from the major bottom, the indicator jumps up rapidly. During this period, many new stocks are making new highs because it's easy to make a new high when prices have been depressed for a long time. The NH-NL indicator oscillates around zero. If the indicator is positive, the bulls are in control. If it is negative, the bears are in control. As the cycle matures, a divergence often occurs as fewer and fewer stocks are making new highs (the indicator falls), yet the market indices continue to reach new highs. This is a classic bearish divergence that indicates that the current upward trend is weak and may reverse.
ARMS Index
The Arms Index, also known as the TRIN (Short-Term TRading INdex), was developed by Richard Arms in the 1960s. It is calculated by dividing the ratio of advancing stocks to declining stocks by the ratio of advancing volume to declining volume. Interpreting the Arms Index involves looking at its value in relation to certain thresholds. A value below "1" is considered bullish, indicating that advancing stocks and volume dominate the market. Conversely, a value above "1" is considered bearish, suggesting that declining stocks and volume are more prevalent. Extremely low values (below 0.5) or high values (above 2) are often seen as potential reversal signals.
CME Fedwatch
What is the likelihood that the Fed will change the Federal target rate at upcoming FOMC meetings, according to interest rate traders? Use CME FedWatch to track the probabilities of changes to the Fed rate, as implied by 30-Day Fed Funds futures prices.
CNN 7 Fear & Greed Constituent Data Points + Composite Index
Final Composite Fear & Greed Index Reading
Institutional S/R Levels for Major Indices
When you’re a large institutional player, your primary goal is to find liquidity - places to do a ton of business with the least amount of slippage possible. VolumeLeaders.com automatically identifies and visually plots the exact spots where institutions are doing business and where they are likely to return for more. It’s one of the primary reasons “support” and “resistance” concepts work and truly one of the reasons “price has memory”.
Levels from the VolumeLeaders.com platform can help you formulate trades theses about:
Where to add or take profit
Where to de-risk or hedge
What strikes to target for options
Where to expect support or resistance
And this is just a small sample; there are countless ways to leverage this information into trades that express your views on the market. The platform covers thousands of tickers on multiple timeframes to accommodate all types of traders. Observe for yourself how accurate the levels are by marking-up your charts with the information in the “Trade Levels” boxes I’m giving for free below and play-along in real-time this week. These charts cover recent sessions, but subs will get new levels as they develop, see the latest trades and institutional positioning, have access to levels from other time frames and so much more. When you watch these levels this week, I’m confident you’ll see how clear, intuitive and actionable this information is for yourself.
SPY -0.28%↓
Key Observations for SPY:
1. Largest Trades (Blue Circles)
Clusters in Early October (Oct 10-18): Significant institutional trades were recorded around $577 - $583, particularly notable with RS values of 100.08% and 98.08% on Oct 18 and Oct 16, respectively. These trades suggest strong institutional interest and likely support in this price range.
Late October Trade Cluster (Oct 24 - Oct 29): Additional large trades occurred around $580 to $584, marking a potential resistance zone. The trade on Oct 29 at $580.93 with an RS of 139.81% is particularly significant, indicating substantial selling pressure at this level.
2. Key Institutional Activity Price Levels (Dashed Blue Lines)
$567.70: This level saw the most significant accumulation of activity, with $9.08B traded at a relative size of 1.93x. Given the volume here, this price serves as a key support level and is likely to act as a floor in the short term.
$580.90 and $584.10: These levels represent substantial resistance, given the high-value trades around this range. They are reinforced by institutional selling pressure observed during late October.
3. Volume and Relative Size (RS)
Largest Trade on Oct 29 at $580.93: The trade with an RS of 139.81% at $580.93 highlights significant distribution at this level, which could serve as strong resistance.
Consistent Large Trades in $577 - $584 Range: Multiple large trades with RS values between 88.92% and 100.08% show institutional activity, indicating that this range may act as both support (near the lower end) and resistance (near the upper end).
4. Support and Resistance Zones
Support Levels:
$567.70: This level represents a primary support zone due to the high concentration of trades and RS. If SPY retraces, it is likely to find strong buying interest here.
$577.90 - $579.60: These levels also show support based on consistent large trades. This range is likely to act as the first line of defense before reaching $567.70.
Resistance Levels:
$580.90 - $584.10: This range serves as the major resistance zone, as it has consistently seen large institutional trades. A breakout above $584.10 would require significant volume to overcome this selling pressure.
Conclusion:
Neutral to Bearish Bias with Resistance in Play: The recent institutional trades indicate that SPY has strong resistance between $580 - $584, making further upward movement challenging without a strong push from buyers. On the downside, support around $567 - $577 should provide a cushion.
Key Levels to Watch: Support at $567.70 and $577.90, with resistance at $580.90 and $584.10. If SPY can break above $584.10 with volume, it may signal a bullish breakout, whereas failure to hold support at $567.70 could lead to further downside.
QQQ -0.49%↓
Key Observations for QQQ:
1. Largest Trades (Blue Circles)
Mid-October Cluster (Oct 10 - Oct 18): Large institutional trades around $496 - $498 have relative sizes (RS) up to 70.13% (on Oct 31). These trades indicate significant interest at these levels, suggesting they could serve as a potential resistance zone.
Late October Trades (Oct 30 - Oct 31): Notably large trades on Oct 31 at $497.25 with an RS of 133.44% show substantial selling activity. This level is likely to act as a major resistance point, given the high volume of institutional selling around this price.
2. Key Institutional Activity Price Levels (Dashed Blue Lines)
$481.30 and $482.40: These levels show heavy institutional accumulation, with significant dollar amounts and trade volumes, establishing a support zone.
$496.20 - $498.00: This range has seen substantial institutional trading activity, reinforcing it as a resistance level. If QQQ approaches this range again, it may struggle to break through without a significant increase in buying pressure.
3. Volume and Relative Size (RS)
Largest Trade on Oct 31 at $497.25: The trade at $497.25 with an RS of 133.44% is highly significant, indicating strong institutional distribution. This suggests a key resistance level that could be difficult for QQQ to overcome without substantial buying interest.
Consistent Large Trades Around $496 - $498: Multiple trades with RS values above 60% in this range indicate that institutions are likely taking profits, making this a strong resistance area.
4. Support and Resistance Zones
Support Levels:
$481.30 - $482.40: This range has consistent institutional support based on large trades and RS values. It is likely to act as a solid support level if the price retraces.
$484.70: Another support level reinforced by institutional interest.
Resistance Levels:
$496.20 - $498.00: This range serves as a significant resistance zone, with substantial selling pressure from institutional trades. Any upward move may encounter resistance here, and breaking above this range would require strong momentum.
Conclusion:
Neutral to Bearish Bias: The recent institutional trades suggest that QQQ faces strong resistance around $496 - $498, making further upward movement challenging. However, support around $481 - $482 provides a solid base for QQQ if it retraces.
Key Levels to Watch: Monitor support at $481.30 and $482.40 and resistance at $496.20 - $498.00. A breakout above $498 would suggest potential for further gains, while a break below $481 could lead to more downside.
IWM 0.10%↑
Key Observations for IWM:
1. Largest Trades (Highlighted Circles)
High Activity Around $226 - $227 (Oct 16): The largest trade in this range occurred on Oct 16 at $226.76 with a relative size (RS) of 31.65%, suggesting substantial institutional selling at this level. This price zone is likely to serve as a resistance point given the high selling pressure.
Support Trades in the $218 - $220 Range: There were significant trades at $218.89 and $219.40, especially on Oct 23 and Oct 30, with RS values around 25% to 30%. These trades indicate institutional interest in buying within this range, establishing it as a potential support zone.
2. Key Institutional Activity Price Levels (Dashed Blue Lines)
$222.50: With cumulative trade activity of $5.97B and an RS of 2.71x, this level is a critical resistance level. This range represents strong institutional selling pressure, which could act as a ceiling for any upward movements.
$218.60 - $219.40: This range saw consistent institutional buying activity, marking it as a likely support zone. If the price pulls back to this level, it may encounter strong buying interest.
3. Volume and Relative Size (RS)
Largest Trade on Oct 16 at $226.76: The trade with an RS of 31.65% shows significant distribution at this price level, likely to act as resistance.
Consistent Trades Around $218 - $220: Multiple large trades with RS values around 25% - 30% in this range suggest that institutions see value at these prices, establishing strong support.
4. Support and Resistance Zones
Support Levels:
$218.60 - $219.40: This range has demonstrated solid institutional support. If the price approaches this area, it is likely to encounter buying interest, making it a critical support zone.
$221.70: Another potential support level reinforced by significant trading activity.
Resistance Levels:
$222.50 - $226.76: This range serves as a major resistance zone. The high trading volume and distribution observed around $222.50 and $226.76 suggest that breaking above these levels will be challenging without strong buying momentum.
Conclusion:
Neutral to Bearish Bias: The recent institutional trades indicate that IWM faces significant resistance around $222.50 - $226.76, making upward movement difficult. However, the support around $218.60 - $219.40 should provide a cushion against further downside.
Key Levels to Watch: Support at $218.60 and $219.40, with resistance at $222.50 and $226.76. A breakout above $226.76 would suggest bullish momentum, while a failure to hold above $218.60 may indicate further downside.
DIA 0.24%↑
Key Observations for DIA:
1. Largest Trades (Orange Circles)
Support Cluster (Oct 30 - Nov 1): There were large institutional trades around $417 - $418 during late October and early November. The trade on Oct 31 at $417.67 with a relative size (RS) of 30.80% is particularly significant, indicating strong buying interest in this range. This area is likely a key support zone.
Earlier Resistance at $429.30 (Oct 18): There was notable institutional activity at $429.30 with an RS of 5.48% on Oct 18, suggesting that this level could serve as a resistance if the price retraces back up.
2. Key Institutional Activity Price Levels (Dashed Blue Lines)
$417.70: This level saw substantial institutional support with a total volume of $423M traded and an RS of 2.15x. This price level acts as a strong support and is likely to hold if DIA continues to consolidate or retrace.
$429.30: Given the heavy institutional trading at this level in mid-October, it represents a potential resistance level in case of a rebound.
3. Volume and Relative Size (RS)
Largest Trade on Oct 31 at $417.67: This trade with an RS of 30.80% represents substantial institutional interest, establishing $417.67 as a primary support level.
Additional Trades Around $418 - $421: The consistent RS values in this range further reinforce it as a strong support zone, where institutions have shown buying interest.
4. Support and Resistance Zones
Support Levels:
$417.70 - $418.50: This area has strong institutional support, backed by high trade volume and relative size. It is expected to serve as a robust support level in the near term.
$421.80: Another level of support with institutional buying, although not as strong as the $417-$418 zone.
Resistance Levels:
$429.30: This level is likely to act as resistance due to prior selling activity by institutions. A move back toward this level would require strong buying momentum to break through.
Conclusion:
Neutral to Bullish Bias Around Support: The recent institutional trades suggest that DIA has strong support around $417 - $418, which could provide a base for a potential rebound. However, the $429.30 level remains a significant resistance zone.
Key Levels to Watch: Monitor support at $417.70 and resistance at $429.30. If DIA holds above $417, it may consolidate or attempt a move upward; however, failure to maintain this support could signal further downside.
Top Institutional Order Flow
Many excellent trade ideas and sources of inspiration can be found in these prints. While only the top 30 from each group are displayed, the complete results are accessible in VolumeLeaders.com for your convenience to explore at any time. Remember to configure trade alerts within the platform to ensure you never overlook institutional order flows that capture your interest or are significant to you. The blue charts encompass all types of trades, including blocks on lit exchanges; the purple charts exclusively depict dark pool trades; and the green charts represent sweeps only.
Top Aggregate Dollars Transacted by Ticker
Largest Individual Trades by Dollars Transacted
Top Aggregate Dark Pool Activity by Ticker
Largest Individual Dark Pool Blocks by Dollars
Top Aggregate Sweeps by Ticker
Top Individual Sweeps by Dollars Transacted
Investments In Focus: Bull vs Bear Arguments
Please read “Institutional S/R Levels For Major Indices” at the top of this stack to understand the nature and importance of what we’re looking at here visually. Institutions leave footprints that VolumeLeaders.com can illustrate for you while providing context to assess things like institutional conviction and urgency. Theses and data given below are not financial advice, just personal observations that may be wrong; consult a certified financial advisor before making any investment decisions.
XLI 0.38%↑
🐂 Bull Thesis for XLI 🐂
Economic Recovery and Growth Potential: XLI benefits from economic expansion, as industrials are often highly correlated with GDP growth. A strong economic recovery or infrastructure spending can boost demand for industrial products and services.
Infrastructure Spending Initiatives: Increased government spending on infrastructure projects, particularly in sectors like construction, transportation, and clean energy, can provide a tailwind for industrial companies within XLI.
Manufacturing Rebound and Reshoring Trends: With reshoring and onshoring trends gaining momentum, there is increased demand for domestic manufacturing and production, which could benefit U.S.-based industrial companies in XLI.
Advancements in Automation and Technology: Many companies within XLI are investing in automation, robotics, and IoT solutions to increase efficiency and reduce costs. These investments can lead to better margins and operational efficiencies.
Global Expansion and Export Growth: Industrial companies in XLI, such as those in aerospace and defense, have significant international exposure, allowing them to capitalize on emerging market growth and increased demand for industrial exports.
🐻 Bear Thesis for XLI 🐻
Sensitivity to Economic Cycles: The industrial sector is cyclical and can experience significant volatility during economic slowdowns. A recession or declining GDP growth could lead to reduced demand for industrial products and services, negatively impacting XLI.
Supply Chain Disruptions and Cost Pressures: Ongoing supply chain challenges, material shortages, and rising costs for inputs like steel and fuel can squeeze margins for industrial companies. This can result in higher expenses and potential profit margin erosion for XLI’s holdings.
Rising Interest Rates Impact on Debt-Heavy Companies: Many industrial firms have high capital expenditures and rely on debt financing. Rising interest rates can increase borrowing costs, which may affect profitability and limit growth for these companies.
Environmental and Regulatory Challenges: Industrial companies face growing environmental regulations and pressure to reduce emissions. Compliance costs and shifts toward sustainable practices can strain financial resources, impacting bottom-line growth.
Increased Competition from Emerging Markets: As emerging economies develop their own industrial capabilities, U.S. companies face stiffer competition abroad. This increased competition can lead to pricing pressures and loss of market share, affecting XLI’s holdings.
AMZN -1.35%↓
🐂 Bull Thesis for AMZN 🐂
E-commerce Market Leadership: Amazon dominates the e-commerce sector in the U.S. and many global markets. Its vast logistics network, Prime membership program, and customer loyalty provide a strong foundation for continued e-commerce growth.
High-Growth Cloud Business (AWS): Amazon Web Services (AWS) is one of the largest cloud computing providers globally, with strong profitability and high growth. AWS remains a key driver of Amazon's revenue and operating income, benefiting from digital transformation trends across industries.
Expanding into High-Margin Businesses: Amazon is rapidly expanding into high-margin areas like advertising and subscription services. The advertising segment, in particular, has grown significantly and now contributes meaningfully to overall profitability.
Continuous Innovation and Investment: Amazon’s willingness to invest in new technologies and sectors, such as AI, healthcare, and logistics automation, positions it well to capture future growth opportunities and diversify its revenue streams.
Strong Cash Flow Generation: Amazon generates substantial cash flow from its operations, providing the company with financial flexibility to invest in growth initiatives, expand its logistics network, and weather economic downturns.
🐻 Bear Thesis for AMZN 🐻
E-commerce Growth Deceleration: As Amazon’s e-commerce business matures, growth rates in this segment have slowed, especially post-pandemic. Slowing online retail growth could weigh on the company’s overall revenue growth, particularly as it represents a significant portion of sales.
Rising Regulatory and Antitrust Pressures: Amazon faces scrutiny from regulators globally concerning antitrust issues, data privacy, and labor practices. Increased regulations or potential fines could impact profitability and limit Amazon’s market power.
Profit Margin Pressure from Rising Costs: Amazon’s low-margin e-commerce business is particularly vulnerable to rising costs, including wages, transportation, and supply chain expenses. These pressures could continue to erode profit margins, especially in the retail segment.
Intensifying Competition Across Sectors: Amazon faces fierce competition in e-commerce from players like Walmart and Target, in cloud computing from Microsoft and Google, and in advertising from digital giants like Google and Facebook. This competition could pressure Amazon’s growth and market share.
Dependence on AWS for Profitability: AWS contributes a large portion of Amazon's operating income, meaning the company is highly dependent on its cloud business to offset lower margins in retail. Any slowdown in AWS growth or increased competition in cloud computing could significantly impact Amazon’s overall profitability.
MSTR 12.05%↑
🐂 Bull Thesis for MSTR 🐂
Significant Bitcoin Holdings: MicroStrategy has accumulated substantial Bitcoin holdings, positioning itself as a proxy for Bitcoin investment. As Bitcoin's value appreciates, the company's asset base strengthens, potentially enhancing shareholder value.
Pioneering Corporate Bitcoin Adoption: By integrating Bitcoin into its corporate strategy, MicroStrategy has set a precedent for other companies, potentially leading to increased institutional adoption and validation of Bitcoin as a corporate asset.
Potential for Bitcoin-Linked Financial Products: MicroStrategy's significant Bitcoin reserves could enable the development of Bitcoin-backed financial products, offering new revenue streams and attracting investors seeking cryptocurrency exposure.
Strategic Capital Allocation: The company's issuance of stocks and bonds to acquire more Bitcoin demonstrates a proactive approach to leveraging capital markets for asset accumulation, aiming to enhance long-term returns.
Market Perception as a Bitcoin Proxy: Investors view MicroStrategy as a vehicle for Bitcoin exposure, which can lead to increased demand for its stock during bullish cryptocurrency markets, potentially driving up share prices.
🐻 Bear Thesis for MSTR 🐻
High Valuation Relative to Bitcoin Holdings: MicroStrategy's market valuation has surged to nearly three times the value of its Bitcoin assets, raising concerns about overvaluation and potential vulnerability to market corrections.
Concentration Risk: The company's heavy reliance on Bitcoin exposes it to significant volatility and market risk, as fluctuations in Bitcoin's price can materially impact MicroStrategy's financial health.
Regulatory Uncertainty: The evolving regulatory landscape for cryptocurrencies poses risks. Potential regulations could affect Bitcoin's value and, by extension, MicroStrategy's asset base and business model.
Debt-Financed Bitcoin Purchases: MicroStrategy has incurred substantial debt to finance its Bitcoin acquisitions. If Bitcoin's value declines, the company may face challenges servicing its debt, leading to financial strain.
Core Business Performance Concerns: The focus on Bitcoin investments may overshadow MicroStrategy's core software business. Any underperformance in its primary operations could raise concerns about the company's overall business health.
BA -2.70%↓
🐂 Bull Thesis for BA 🐂
Dominant Market Position: Boeing operates in a near duopoly with Airbus in the global aerospace industry, providing a substantial competitive moat. This dominance is reinforced by a backlog of over 6,250 planes, ensuring nearly a decade's worth of revenue even without new orders.
Positive Free Cash Flow Trends: After returning to positive free cash flow in 2022 and 2023, Boeing is projected to achieve a share price of $420.70 by 2029, implying a 130% return, making it a compelling long-term investment.
Stable Industry Outlook: Military spending is expected to grow around 3.5% annually, while Boeing’s Global Services division has been growing at 4.5% per year, indicating reliable growth prospects.
Operational Efficiency Initiatives: The integration of Spirit AeroSystems is expected to enhance vertical integration, potentially improving operational efficiency over the long term.
Resilient Demand for Aircraft: Despite recent challenges, the long-term demand for commercial and defense aircraft remains robust, providing Boeing with opportunities for sustained revenue growth.
🐻 Bear Thesis for BA 🐻
Financial Strain and Debt Load: Boeing carries $57 billion in debt, with significant maturities in 2025 and 2026. Despite raising $24 billion by selling stock, the company faces financial challenges, including a third-quarter loss of $6 billion and burning through $2 billion in cash.
Operational and Quality Control Issues: The company has faced numerous scandals, including 737 Max crashes and issues with the ISS. Its largest union is on strike, manufacturing costs are rising, supply chain problems persist, and there's potential for selling off its space business.
Labor Disputes Impacting Production: A seven-week strike by 33,000 machinists has halted production of key models like the 737 MAX, 767, and 777 jets, resulting in significant financial losses and delays in deliveries.
Regulatory and Safety Concerns: Ongoing scrutiny from regulatory bodies, including the FAA, due to past safety incidents, could lead to increased compliance costs and potential delays in product approvals.
Competitive Pressures: While Boeing maintains a strong market position, competition from Airbus and emerging players, along with geopolitical factors affecting international sales, could impact market share and profitability.
Institutionally-Backed Gainers & Losers
If you’re going to bet on a name, consider one that is officially endorsed by an institution! These are the top percent gainers (green) and percent losers (red) from this week’s open-to-close that had a trade price greater than $20 and institutional involvement. Continue watching tickers from this and prior stacks as these names frequently turn into multi-leg trades with a lot of movement!
Top Institutionally Backed Gainers
Top Institutionally Backed Losers
Billion Dollar Prints
Tickers that printed a trade worth at least $1B last week get a special shout-out… Welcome to the club. Subs should login to VolumeLeaders.com to get the exact trade price and relevant institutional levels around the trade - these are massive commitments by institutions that should not be ignored.
Summary Of Thematic Performance YTD
VolumeLeaders.com provides a lot of pre-built filters for thematics so that you can quickly dive into specific areas of the market. These performance overviews are provided here only for inspiration. Consider targeting leaders and/or laggards in the best and worst sectors, for example.
S&P By Sector
S&P By Industry
Commodities: Energy
Commodities: Metals
Commodities: Agriculture
Country ETFs
Currencies
Global Yields
Factors: Size vs Value
Factors: Style
Factors: Qualitative
Social Media Favs
Analyzing social sentiment can provide valuable insights for investment strategies by offering a pulse on public perception, mood, and market sentiment that traditional financial indicators might not capture. Here’s how social sentiment analysis can enhance investment decisions:
Market Momentum: Positive or negative social sentiment can signal impending momentum shifts. When public opinion on a stock, sector, or asset class changes sharply, it can create buying or selling pressure, especially if that sentiment becomes widespread.
Early Detection of Trends: Social sentiment data can help investors spot trends before they show up in technical or fundamental data. For example, increased positive chatter around a particular company or sector might indicate growing interest or excitement, which could lead to price appreciation.
Gauge Retail Investor Impact: With the rise of retail investor platforms, collective sentiment on social media can lead to significant price movements (e.g., meme stocks). Understanding how retail investors view certain stocks can help in identifying high-volatility opportunities.
Event Reaction Monitoring: Social sentiment can provide real-time reactions to news events, product releases, or earnings reports. Investors can use this information to gauge market reaction quickly and adjust their strategies accordingly.
Complementing Quantitative Models: By adding a social sentiment layer to quantitative models, investors can enhance predictions. For example, a model that tracks historical price and volume data might perform even better when factoring in sentiment trends as a measure of market psychology.
Risk Management: Negative sentiment spikes can be a signal of potential downturns or increased volatility. By monitoring sentiment, investors might avoid or hedge against investments in companies experiencing a public relations crisis or facing negative perceptions.
Long-Term Sentiment Trends: Sustained sentiment trends, whether positive or negative, often mirror longer-term market cycles. Tracking sentiment trends over time can help identify shifts in investor psychology that could affect longer-term investments or sector rotations.
For these reasons, sentiment analysis, when combined with other tools, can provide a comprehensive view of both immediate market reactions and underlying investor attitudes, helping investors position themselves strategically across various time frames. Here are the most mentioned/discussed tickers on Reddit from some of the most active Subreddits for trading:
Events On Deck This Week
Here are key events happening this week that have the potential to cause outsized moves in the market or heightened short-term volatility.