by Eli, Rachel
Institutional sweeper came out of the gate with a bang yesterday, tossing aside the playbook for rotation and buying calls across the board. Many underbelly names were in focus and that's where all the damage has occurred off the recent market pullback. Buyers were impressive for the majority of the day, allowing some protection to finally make its way through for the first time into the closing bell.
On the sentiment front
Short-term sentiment flashes a sell signal, some late afternoon selling couldn't save the day by keeping bulls in check. Now this signal tells us the odds of a pullback or some consolidation have increased over the short-term.
AAII Bull/Bear ratio source: sentimentrader
Weekly AAII Bull/Bear ratio also flashed a sell signal Thursday.
source: Bank of America
Surprisingly, the Bank of America Bull/Bear indicator did not tick higher and remains just shy of a strong sell signal.
Will be interesting to see how this market reacts to a fresh tactical sentiment sell signal because it's clear the big money has been front-running stimulus checks which will hit accounts as early as this weekend. You could just feel that risk appetite out there Thursday, especially early in the day and that should continue in individual names over the short-term, even if the indices chill out a bit. Institutional sweeping activity over the fresh names/setups plus some speculative names hit created some strong momentum, so there's definitely a little room left there.
Sector sentiment source: sentimentrader
Besides, Tech and Biotech just came off BUY signals, in regards to sector sentiment. The FOMC meeting is approaching as well, stimulus check period may be over, a tick higher in rates should create some weakness and possible tactical entries in tech/high growth again. So don't chase extended moves, a lot of the best-looking order flow has been in the reopening trade for weeks now but these names have already come a long way and there's risk chasing strength here. Look for quick pullbacks and down days for tactical opportunities in these reopening, inflation and commodity plays.
Notable bettings toward broader market indices ETF on 3/11
Market-wide option volume of 41.5m contracts was 3% below recent average levels, with calls leading puts 13 to 7. ETF and single stock products saw relatively heavy volume, while index flow was moderate.
Individuals breakdown by sectors (3/11 notable bets)
Most active sectors included Industrials, Basic Materials and Telecommunications while Financials and Health Care were relatively light. Of the 3,843 stocks with listed options, 2,930 (76%) closed higher, and 829 (22%) lower. Among the 500 most liquid single stocks, 30day implied volatility was lower for 331 and higher for 114. Unusual total option volume was observed in $General Electric Co(GE.US)$, $Boeing Co(BA.US)$, $ViacomCBS Inc(VIAC.US)$, $Oracle Corp(ORCL.US)$ and $JD.com Inc(JD.US)$.
Tech
Industrial
Consumer Cyclical
Financial
Communication Services
Healthcare
Energy
Real Estate
Basic materials
Consumer Defensive
Utilities
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