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1. Dumb Money

If there’s a group even dumber, unfortunately, it would be foreign retail investors. And they’re buying U.S. stocks like they’re going out of fashion.  Ed Yardeni, president of Yardeni Research, crunched the numbers and found foreigners purchasing U.S. equities at a record pace of $76.5 billion over the last three months. The chart tells the story: non-Americans have absolutely awful timing with regard to U.S. stocks, buying right before the 1987 crash, the bursting of the dot-com bubble in 2000, and the 2008 global financial crisis. As he puts it: “Their buying has a record of being a contrary indicator. They tend to be big buyers right before bear markets,” he wrote.

 It’s not just the great unwashed buying American stocks: the suits are too. Historian Niall Ferguson was at the Davos conference this week. “Almost everyone at the World Economic Forum in Davos, Switzerland is long United States, short European Union,” he wrote for the Free Press. “The new Davos consensus is that Europe cannot get its economic act together and never will, whereas America is rocking and rolling, and if you don’t own the big U.S. stocks, then the [fear of missing out] may kill you,” he said.  “The trouble is that the Davos consensus is nearly always wrong,” he said.

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2. Retail Stock Buying Last Week +2.3 Standard Deviations Above Average

From the Daily Chart Book: Retail flows. Retail investors bought $7.8bn in cash equities over the past week, +2.3 standard deviations above the 12-month average.

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3. S&P 500 Stocks Leverage Low

Via Advisor Perspectives: Stocks May Have Less Risk Than You Think - There’s no getting around the fact that stocks are expensive. With the 10-year Treasury yield near its long-term average of 4-4.5%, a typical range for a stock’s trailing price-to-earnings (P/E) multiple would be 18-20X^.2 It currently stands at roughly 25X.³ What might have changed to make an elevated P/E multiple be less risky for investors? The answer is leverage. Stocks have less than a quarter of the leverage today than they had 20 years ago, with S&P 500 net debt/EBITDA falling from 5X to close to 1X today. That is a substantial reduction in financial risk.

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4. Stats On QQQ Record Time Above 200-Day

Via Nasdaq Dorsey Wright: The Nasdaq-100 Index (NDX) has been a stalwart over the last two years. A classic trend indicator, the 200-day moving average, has shown that the NDX has been in a positive trend for 487 consecutive days, the second-longest streak on record. This is only the fifth time the NDX has held above its 200-day moving average for more than 400 days since 1992 with its longest streak lasting 589 days, ending on 10/10/2018. Looking to the future, an end to such a long streak above its 200-day moving average has been a mixed bag. On the negative side, May 2000 and January 2022 foreboded poor returns one year out. The May 2000 instance is interesting because the short-dated returns are strong, but this is likely due to the index reaching washed-out territory as it fell over 30% from its high during its 409-day streak until it finally broke the 200-day moving average. October 2014 and October 2018 proved to be not as poor for forward returns. However, in 2018, there were still some large downside moves over the next two months. In the case of 2014, the NDX broke below its 200-day moving average for just a single day before regaining it which explains the strong forward returns across all time frames moving forward.

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5. Apple Stock -12% in One Month…Earnings Next Week

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6. Forward P/E By Sector S&P

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7. Gold vs. Stocks Globally 2024

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8. Follow the Money…ByteDance Owns Tik Tok…Who Owns ByteDance?

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9. Where is Tik Tok Banned?

From the Indian Express.

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10. Six Types of Rumination

Via Psychology Today: Using an online sample of 725 adults aged 19 to 77 years (average age = 42), the research team administered a series of well-validated clinical measures to assess the presence of Cluster B personality disorders. Sample items from the six rumination scales are shown here below (each is rated either from 1 to 4, or 1 to 5):

• Anger rumination (think of an anger-provoking situation): I have long-living fantasies of revenge after the conflict is over.

• Depressive rumination: I can't stop thinking about how you don’t feel up to doing anything.

• Rumination on sadness: I have difficulty getting myself to stop thinking about how sad I am.

• Self-critical rumination: My attention is often focused on aspects of myself that I am ashamed of.

• Rumination on interpersonal offenses: I can’t stop thinking about how I was wronged by this person.

• Worry: Once I start worrying, I cannot stop.

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