Global Major Stock Indices Retraced
Global Major Stock Indices retraced. They climbed higher for the third week in a row. The US S&P 500 Index retraced from its bottom and erased all the losses from this year to date, a little hard to believe considering the scale of the economic shocks brought on by the Covid-19 pandemic.
The Information Technology sector, which has supported much of the rally over the past two months. It appears reopening of financial and industrial exposed stocks are more attractive to new money entering the market. Airlines, cruise lines and mall stocks generally traded higher. The Russel 2000 US Index has outperformed the other major US Indices.
Oil climbed due to reopening of airlines and output cut extension. Gold erased its previous gain and ended more than 3% as a weekly loss.
The Major Indexes from APAC regions significantly gained followed by US and Europe regions. The Australian ASX 200 Index ended higher with the decent weekly change of 4.22%. The market is also upbeat as economists’ upgraded forecasts of Australian GDP retraction for the March Quarter. Korea and Hong Kong Indexes outperformed within the APAC region.
The Europe stock Indices rallied more than 10%, helped by more support from the European Central Bank, which has boosted hopes of a relatively speedy recovery in the region. The below table illustrates the Weekly changes of major global Indices.
Some uncertainties that could trigger higher volatility remain, but the recent market advance highlights the importance of staying invested, even though the most difficult times.
News sentiment data can be approached several ways to make better use of it. I have used 7 days average daily sentiment data for this analysis which is scaled between the range of +5 to -5.
The below figure illustrates the news sentiment trend for major global Indexes. The US Indices S&P 500, Nasdaq 100 and Russel 2000 shows a consistency in the downside move without even a single point of upward direction. I can consider this as a strong negative sentiment for these Indexes. Whereas Dowjones 30 Index has two upsides move out of 7 data points, but still in mild negative trend.
The four out of 7 data points from Europe Indices showing strong upward direction can be considered as moderate up bullish in the sentiment. Whereas FTSE 100 Index showing consistent upward in direction with the strongest uptrend.
The Nikkei 225 and Nifty 5o Indexes are showing the mild uptrend in sentiment. ASX 200, Kospi 200 and China’s Shanghai Indexes show the neutral in news sentiment trend. Hang Seng 30 Index showing the mild downturn.
Note: The sentiment indicator can be used as an additional overlay for your existing models to improve the performance further.
The above table illustrates the sentiment trends. The major Europe Indexes showing positive sentiment and expected bullish in the coming days. On the other hand, the Sentiment trend for US major indices showing the negative sentiment trends. This may halt the current rally or reverse the trend downward in coming days. The Indices from APAC regions have mixed sentiment and can expect volatile whipsaw moves in the market.
Buy & Sell Signals
The below table showing the buy/sell signals generated based on InfoTrie’s proprietary Investment/ Trading models. These models are developed with the combination of technical, fundamental, quantitative techniques and primarily the news-based sentiment score as an additional overlay. I have tabulated the random signals from several InfoTrie’s Trading/Investment model.
The news sentiment score provides significant improvement, significant “Alpha” compared to the traditional investment/trading models. For more details on the analysis, accessing complete tear sheets or white paper for the models, Subscription details for News Sentiment data and other consulting works please contact us with the information provided below.