Cross-Asset Strategist & Quantitative Analyst, Pennock Idea Hub

Cam Hui

Cross-Asset Strategist & Quantitative Analyst

Pennock Idea Hub

We are creators of independent equity research. The Pennock Idea Hub team are veterans of the investment industry. Much of our team has spent their careers at Merrill Lynch, Deutsche Bank, RBC Capital Markets and Wood Gundy. We have taken every aspect of research back to the studs and returned to first principles. The Pennock Idea Hub marries the interests of the sell and buy side. 

We offer the best research for institutional investors by:

-Only publishing research from veteran analysts
-Eliminate the inherent conflicts of the traditional sell and buy side relationship
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Cross-Asset & Quantitative Research

Cross Asset Strategy

<ul>
<li>Global markets went risk-off in the face of the Omicron variant news Friday.</li>
<li>Every variant sell-off has turned out to be a buying opportunity this year. To be bearish here is a bet on another COVID Crash.</li>
<li>The latest risk-off episode represents a washout panic and a probable near-term bottom.</li>
</ul>


Global markets went risk-off in the face of the Omicron variant news Friday.
Every variant sell-off has turned out to be a buying opportunity this year. To be bearish here is a bet on another COVID Crash.
The latest risk-off episode represents a washout panic and a probable near-term bottom.


<ul>
<li>The U.S. economic expansion is changing from early cycle to mid-cycle, marked by rising EPS estimates and P/E compression owing to rising rates.</li>
<li>U.S. small caps saw rising EPS estimates and P/E compression in 2021. They were range-bound for most of this year but rallied late in the year.</li>
<li>The small cap experience serves as a template for large cap stocks in 2022. Expect a volatile but range bound market in H1 and better strength in H2.</li>
</ul>


The U.S. economic expansion is changing from early cycle to mid-cycle, marked by rising EPS estimates and P/E compression owing to rising rates.
U.S. small caps saw rising EPS estimates and P/E compression in 2021. They were range-bound for most of this year but rallied late in the year.
The small cap experience serves as a template for large cap stocks in 2022. Expect a volatile but range bound market in H1 and better strength in H2.


How Small Caps Are Foreshadowing the 2022 Market

<ul>
<li>The S&amp;P 500 is attempting an upside breakout from a narrow trading range.</li>
<li>The market is facing a number of negative divergences which could be cautionary signals for investors.</li>
<li>Investors should monitor the market for a loss of momentum, and a decisive violation of small-cap support, which would be cautionary signals to de-risk portfolios.</li>
</ul>


The S&amp;P 500 is attempting an upside breakout from a narrow trading range.
The market is facing a number of negative divergences which could be cautionary signals for investors.
Investors should monitor the market for a loss of momentum, and a decisive violation of small-cap support, which would be cautionary signals to de-risk portfolios.


<ul>
<li>The S&amp;P 500 suffered a minor corrective setback last week.</li>
<li>Despite last week’s market weakness, the upside breakouts of the major market indices are holding.</li>
<li>The stock market is poised for further gains into year-end.</li>
</ul>


The S&amp;P 500 suffered a minor corrective setback last week.
Despite last week’s market weakness, the upside breakouts of the major market indices are holding.
The stock market is poised for further gains into year-end.


Both the Dow and the Transports made all-time highs last week. The technical pattern is consistent with the description of a Dow Theory buy signal.While the Dow Theory buy signal is bullish for stock prices, a number of key risks are lurking as we look forward to 2022.We reiterate our view that the stock market is in a late-phase bull cycle, though that does not mean the economy is in the late-cycle phase of an expansion (see <a href="https://www.smartkarma.com/insights/trading-the-late-cycle-advance" target="_blank" rel="noopener">Trading the Late Cycle Advance</a>).Our base-case scenario calls for a stock market rally into year-end led by reflation stocks. We are entering a period of positive seasonality and the market has been tracking the seasonal pattern relatively well in 2021. Expect a growth deceleration soon afterward, a rotation into growth and a possible correction in Q1, but no bear market.

Both the Dow and the Transports made all-time highs last week. The technical pattern is consistent with the description of a Dow Theory buy signal.While the Dow Theory buy signal is bullish for stock prices, a number of key risks are lurking as we look forward to 2022.We reiterate our view that the stock market is in a late-phase bull cycle, though that does not mean the economy is in the late-cycle phase of an expansion (see Trading the Late Cycle Advance).Our base-case scenario calls for a stock market rally into year-end led by reflation stocks. We are entering a period of positive seasonality and the market has been tracking the seasonal pattern relatively well in 2021. Expect a growth deceleration soon afterward, a rotation into growth and a possible correction in Q1, but no bear market.

United States

SPDR S&P 500 ETF Trust is an exchange-traded fund incorporated in the USA. The ETF tracks the S&P 500 Index. The Trust consists of a portfolio representing all 500 stocks in the S&P 500 Index. It holds predominantly large-cap U.S. stocks. This ETF is structured as a Unit Investment Trust and pays dividends on a quarterly basis. The holdings are weighted by market capitalization.

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SPDR S&P 500 (SPY US)

COVID Crash 2.0?

Buy the dip: The latest mRNA technology is well-positioned to react to new variants should current vaccines and treatments fail. Central bankers...

Cam Hui

How Small Caps Are Foreshadowing the 2022 Market

The behaviour of small caps this year is likely to serve as a template for large caps next year. Expect a period of choppy sideways action in H1...

Cam Hui

How to Trade the Seasonal Melt-Up

The U.S. stock market is poised for another year-end rally while enjoying the tailwinds of positive momentum, bullish seasonality and supportive...

Cam Hui

The Seasonal Rally Is Intact

Despite last week’s market weakness, the upside breakouts of the major market indices are holding. The stock market is poised for further gains...

Cam Hui

A Dow Theory Buy Signal, But...

While the recent Dow Theory buy signal is bullish for stock prices, a number of key risks are lurking as we look forward to 2022.

Cam Hui

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