{"id":61758,"date":"2025-04-24T14:52:18","date_gmt":"2025-04-24T14:52:18","guid":{"rendered":"https:\/\/mycryptomania.com\/?p=61758"},"modified":"2025-04-24T14:52:18","modified_gmt":"2025-04-24T14:52:18","slug":"the-hard-data-is-holding-up-for-now","status":"publish","type":"post","link":"https:\/\/mycryptomania.com\/?p=61758","title":{"rendered":"The \u201chard\u201d data is holding up for now."},"content":{"rendered":"

More victims of the trade war and rising tensions between the White House and U.S. central bank is driving more stock market volatility<\/strong>.<\/p>\n

The week started with optimism after a large portion of product imports from China would be exempt from reciprocal tariffs<\/strong>. That included smartphones and other consumer electronics.<\/p>\n

But just days later, the Trump administration banned Nvidia from selling its H20 processor to China<\/strong>. The chip is utilized in artificial intelligence applications, while Nvidia said that it will record a $5.5 billion charge due to the\u00a0ban<\/strong>.<\/p>\n

While the trade war with China drags on, tensions are rising elsewhere following comments from Federal Reserve Chair Jerome Powell. In prepared remarks last week, Powell stated that \u201cwe are well positioned to wait for greater clarity before considering any adjustments to our policy\u00a0stance.<\/strong>\u201d<\/p>\n

Powell\u2019s comments reinforce the Fed\u2019s current stance to hold interest rates steady over fears that tariffs will boost inflation<\/strong>. Trump disagrees, and is threatening to fire the central bank chairman if the Fed doesn\u2019t start cutting interest\u00a0rates.<\/p>\n

The ongoing uncertainty helped push stocks lower last week, with the S&P 500 closing down 1.5% and the Nasdaq Composite losing 2.6%. The S&P also saw it\u2019s first \u201cdeath cross\u201d since 2022\u2019s bear market<\/strong>, where the 50-day moving average (MA) crosses below the 200-day MA (arrow on the\u00a0chart).<\/p>\n

But despite the negative headlines, there have been positive developments under the stock market\u2019s hood along increasing evidence that investor positioning is reaching bearish extremes<\/strong>.<\/p>\n

This week, let\u2019s look at signs of improving market breadth <\/strong>and why the trade war isn\u2019t showing up in the hard data just yet. <\/strong>We\u2019ll also examine a recent move in VIX that could help spark buying pressure despite volatility staying elevated.<\/strong><\/p>\n

The Chart\u00a0Report<\/h3>\n

The impact of economic uncertainty around tariffs is showing up in the \u201csoft\u201d data, but has yet to really make an appearance in the \u201chard\u201d data. Soft data (orange line below) includes survey-based indicators of economic activity and the outlook. Consumer sentiment surveys as well as purchasing managers\u2019 indexes have seen sharp deterioration in the wake of tariffs and retaliatory measures<\/strong>. But for the most part, actual economic data (blue line below) is still holding up. Most hard measures are trailing, so the impact of tariffs might not be showing up just yet<\/strong>. But it\u2019s worth noting that coincident indicators like initial jobless claims are running at levels associated with a strong\u00a0economy<\/strong>.<\/p>\n

Chart from Jim Bianco<\/a> on\u00a0X<\/p>\n

Similar to soft versus hard economic data, investor sentiment can be measured through surveys (soft) as well as actual positioning (hard) data. Survey-based indicators were among the first to show extreme bearishness among investors<\/strong>. The AAII survey asks retail investors about the outlook for stock prices. The percent of respondents with bearish views first jumped above 50% back on February 26. Bearish views have stayed above 50% for eight consecutive weeks<\/strong> now, which is the longest streak ever as you can see\u00a0below.<\/p>\n

Chart from Bespoke Investment Group<\/p>\n

For the most part, actual investor positioning has been much slower to indicate extreme bearishness among investors<\/strong>. But more measures have been catching up, like positioning among systematic equity funds that I shared here<\/a>. Active investment managers are finally dropping exposure to low levels as well<\/strong>. The National Association of Active Investment Managers releases a weekly index of average equity exposure. That figure dropped to 35 last week (chart below), which is a sharp drop from the prior reading of 57. That\u2019s the lowest level of equity exposure since the last correction in late\u00a02023<\/strong>.<\/p>\n

Just as more positioning data is turning excessively bearish, there are signs of improving breadth from oversold levels<\/strong>. Despite the S&P 500 moving lower last week, the percent of stocks across the market trading above their 20-day moving average continued to move higher<\/strong>. The improvement in the average stock is showing up in the McClellan Summation Index as well, which sums an oscillator tracking advancing versus declining stocks on the NYSE. The Summation Index is inflecting higher in the chart below, and is close to trigging a bullish crossover above its 10-period MA<\/strong>.<\/p>\n

Volatility levels coupled with equity positioning data could help fuel more upside<\/strong>. Volatility-targeting strategies are forced to reduce equity exposure when equity volatility levels pick up. Systematic selling forces more downside and higher VIX levels in a negative feedback loop<\/strong>. But it works the other way around as well where falling volatility levels allows for systematic buying. In the near-term, keep close watch on the 30 level with VIX (chart below) which has held over the past few trading sessions. A move below could unleash a wave of buying from volatility-targeting funds<\/strong>, who have dropped their equity exposure to the lowest levels since the pandemic.<\/p>\n

Tracking commodity prices could hint at where the hard economic data could be heading<\/strong>. Copper prices in particular are sensitive to the economic outlook given their broad exposure to various construction and infrastructure end markets. Copper prices are holding up near the prior all-time highs, and are creating a bullish breakout pattern<\/strong>. The weekly chart below shows copper prices back to 2018. Since 2022\u2019s pullback, copper prices are making a series of higher lows while testing resistance around $5 per pound on several occasions. A breakout could be a positive signal on the economic\u00a0outlook<\/strong>.<\/p>\n

Heard in the\u00a0Hub<\/h3>\n

The Traders Hub features live trade alerts, market update videos, and other educational content for\u00a0members<\/strong>.<\/p>\n

Here\u2019s a quick recap of recent alerts, market updates, and educational posts:<\/p>\n

Lessons from another D.C.-driven market meltdown.<\/strong>Tracking systematic investors and their next big\u00a0move.<\/strong>How the S&P 500 performs following a waterfall decline.<\/strong>Industries that are the best candidates for new stock\u00a0trades.<\/strong>Breaking down past market action around breadth thrust indicators.<\/strong><\/p>\n

You can follow everything we\u2019re trading and tracking by becoming a member of the Traders\u00a0Hub<\/strong>.<\/p>\n

By becoming a member, you will unlock all market updates and trade alerts reserved exclusively for\u00a0members.<\/p>\n

\ud83d\udc49You can <\/strong>click here to join\u00a0now<\/strong><\/a>\ud83d\udc48<\/strong><\/p>\n

Trade Idea<\/h3>\n

Stantec (STN)<\/p>\n

Infrastructure services company setting up a base under the $90 level. The stock is making a smaller pullback off resistance. I would prefer to see one more smaller pullback from here that resets the MACD at the zero line, followed by a breakout over\u00a0$90.<\/p>\n

Key Upcoming\u00a0Data<\/h3>\n

Economic Reports<\/em><\/p>\n

Earnings Releases<\/em><\/p>\n

I hope you\u2019ve enjoyed The Market Mosaic, and please share this report with your family, friends, coworkers\u2026or anyone that would benefit from an objective look at the stock\u00a0market.<\/p>\n

Become a member of the Traders Hub<\/strong> to unlock access\u00a0to:<\/p>\n

\u2705Model Portfolio<\/strong><\/p>\n

\u2705Members Only\u00a0Chat<\/strong><\/p>\n

\u2705Trade Ideas & Live\u00a0Alerts<\/strong><\/p>\n

\u2705Mosaic Vision Market Updates +\u00a0More<\/strong><\/p>\n

Our model portfolio is built using a \u201ccore and explore\u201d approach, including a Stock Trading Portfolio and ETF Investment Portfolio.<\/p>\n

Come join us over at the Hub as we seek to capitalize on stocks and ETFs that are breaking\u00a0out!<\/strong><\/p>\n

Come join the\u00a0Hub!<\/a><\/p>\n

Disclaimer: these are not recommendations and just my thoughts and opinions\u2026do your own due diligence! I may hold a position in the securities mentioned in this\u00a0report.<\/em><\/p>\n

The \u201chard\u201d data is holding up for now.<\/a> was originally published in Coinmonks<\/a> on Medium, where people are continuing the conversation by highlighting and responding to this story.<\/p>","protected":false},"excerpt":{"rendered":"

More victims of the trade war and rising tensions between the White House and U.S. central bank is driving more stock market volatility. The week started with optimism after a large portion of product imports from China would be exempt from reciprocal tariffs. That included smartphones and other consumer electronics. But just days later, the […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-61758","post","type-post","status-publish","format-standard","hentry","category-interesting"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/61758"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=61758"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/61758\/revisions"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=61758"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=61758"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=61758"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}