By Eli, Jimmy
An interesting week, we witnessed the crypto bubble finally pop, which brought with it some weakness in equities. Decent sentiment squeeze in equities by mid-week, especially in Nasdaq which has become the most hated of the indices. Individual names have been an extremely difficult read and that didn't get any easier last week with a ton of May positions being replaced.
Last Friday, there was some good looking institutional sweeper buying into select names, such as $Unity Software Inc(U.US)$, $Expedia Group Inc(EXPE.US)$, $American Airlines Group Inc(AAL.US)$, $Cardinal Health Inc(CAH.US)$, all saw some solid flow the week before the past week but like most of the recent buying, it came with an asterisk next to it, was it "fresh buying" or just simply players replacing May exposure. There's a big difference between the two, it did seem a bit fishy that we finally saw some impressive order flow as we approached the last Friday of May and we will get a better idea this week as buying will be a lot cleaner.
Sentiment has been cooling off nicely as a lot of froth out there in risk assets has been totally unwound and crypto was the last of them. Now, while this is all good news longer term, it could be a negative drag on markets over the short term.
On the Fed front
We can now see the Fed starting to get us more acclimated with the word "taper", how will the markets react to that? Chairman Powell will testify in front of Congress this week, not to mention a bunch of economic numbers that will be widely watching again alongside interest rates this week. Under this atmosphere we can still play for sentiment when they set up and look for intraday opportunities into weakness when bands of institutional players start buying, the only real impact is for swing trading and for those of us who were starting to get excited about finding new names to build positions in with some time, as that goes on hold for this week, we don't need to see a market crash here, but institutional gangs are simply hinting the risk/reward from here is currently just not worth it.
Notable bettings toward broader market indices ETF on 5/21
Individuals breakdown by sectors (5/21 notable bets)
Tech
Industrial
Consumer Cyclical
Financial
Communication Services
Healthcare
Energy
Basic materials
Consumer Defensive
Utilities
