DC Lite #319

1. CPI. "Supercore inflation collapsed, huge reversal from January, driven by 4% plunge in airline fares (after 1.2% increase in Jan)."

2. Investor Intelligence. "II bull-bear spread was +19.7 two weeks ago. This week it is -6.9. So after the largest 2-week swing in sentiment since 1987 we have bears > bulls for the first time since Nov 2022. Bulls heading for the exits puts downward pressure on price."

3. Investment Manager Index. "Risk appetite among US equity investors has fallen further in March, dropping to one of the lowest levels recorded by [the] survey to date ... From a sector perspective, sentiment has shifted further to the defensive."

4. Sector correlations. "Over the last 30 days, S&P sector correlations have averaged 0.74. That is still below the long run average of 0.81, and therefore still indicative of a bull market."

5. SPX vs. corrections. "Outside of a recession, history shows that S&P 500 drawdowns are usually good buying opportunities if the economy and earnings continue to grow, which is our base case scenario."

ICYMI

• Tue 3/11 #318: "The street is as bearish crude oil as it was in March 2020 when planet earth effectively locked down"

• Mon 3/10 #317: "European stocks’ outperformance has gone a long way, but in the big scheme of things the recent move remains a blip"

• Fri 3/7 #316: "The history of Trump’s first term suggests a high pain tolerance for equity market weakness"

• Thu 3/6 #315: "The Nasdaq 100 $QQQ closed below its 200-day average for the first time in over a year. Watch the next 2 weeks"