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
-Ensure our team is always accessible; collaboration with clients nurtures our collective success

Cross-Asset & Quantitative Research

Cross Asset Strategy

The stock market may be on the verge of an important Zweig Breadth Thrust buy signal, which would be a powerful and bullish indicator of price momentum. Even if the ZBT buy signal were to fail, other indicators make us constructive on the outlook for U.S. equities.

The stock market may be on the verge of an important Zweig Breadth Thrust buy signal, which would be a powerful and bullish indicator of price momentum. Even if the ZBT buy signal were to fail, other indicators make us constructive on the outlook for U.S. equities.

Technical Analysis

A week ago, we highlighted the risk of stock market weakness because the correlation between the S&amp;P 500 and VVIX, or the volatility of the VIX, had spiked. The pullback duly arrived and the S&amp;P 500 briefly tested its 50 dma.Short-term market conditions have become sufficiently oversold that, barring an unexpected negative shock, the stock market should rebound. Based on our analysis of market internals, cyclical and reflation sectors are poised to be the next leadership and growth stocks have become increasingly vulnerable.If we are right in our tactical assessment, the minor panic last week was just a brief summer squall.

A week ago, we highlighted the risk of stock market weakness because the correlation between the S&amp;P 500 and VVIX, or the volatility of the VIX, had spiked. The pullback duly arrived and the S&amp;P 500 briefly tested its 50 dma.Short-term market conditions have become sufficiently oversold that, barring an unexpected negative shock, the stock market should rebound. Based on our analysis of market internals, cyclical and reflation sectors are poised to be the next leadership and growth stocks have become increasingly vulnerable.If we are right in our tactical assessment, the minor panic last week was just a brief summer squall.

Our review of market internals shows that the value and reflation trade is gaining ground. If this trend continues, it would translate into a bullish intermediate-term outlook for equities. However, investors have to be aware of the supply chain disruption risks from the Delta variant, the chances of a political impasse in Washington, and the negative effects of a possible corporate tax increase.

Our review of market internals shows that the value and reflation trade is gaining ground. If this trend continues, it would translate into a bullish intermediate-term outlook for equities. However, investors have to be aware of the supply chain disruption risks from the Delta variant, the chances of a political impasse in Washington, and the negative effects of a possible corporate tax increase.

Constructive Value and Reflation Green Shoots

Regular readers will know that we have been calling for a sideways holding pattern for the S&amp;P 500. That remains our base-case scenario for the rest of August. Continuing concerns about the Delta variant stalling growth are likely to put downward pressure on risk appetite. On the other hand, an improving EPS growth outlook is putting a floor on stock prices.The most likely scenario is a continued sideways pattern for another month until it becomes evident that the worst of the Delta variant has run its course, which would be followed by a cyclical and value stock rally. The bearish scenario is a legislative impasse in Washington, either over the debt ceiling or the infrastructure bill. In that case, watch for renewed concerns over economic growth, dovish Fed, falling bond yields and rising risk aversion.

Regular readers will know that we have been calling for a sideways holding pattern for the S&amp;P 500. That remains our base-case scenario for the rest of August. Continuing concerns about the Delta variant stalling growth are likely to put downward pressure on risk appetite. On the other hand, an improving EPS growth outlook is putting a floor on stock prices.The most likely scenario is a continued sideways pattern for another month until it becomes evident that the worst of the Delta variant has run its course, which would be followed by a cyclical and value stock rally. The bearish scenario is a legislative impasse in Washington, either over the debt ceiling or the infrastructure bill. In that case, watch for renewed concerns over economic growth, dovish Fed, falling bond yields and rising risk aversion.

As the S&amp;P 500 advanced to fresh highs despite widespread evidence of negative RSI and breadth divergences, the market faces a number of unanswered questions that may be indicative of possible impending leadership rotation.On one hand, the market is exhibiting a series of bearish divergence from breadth indicators and risk appetite indicators. On the other hand, a number of reflationary green shoots are appearing, indicating that the cyclical trade is about to get a second wind. How the market resolves those questions will be clues to the next major leg for stock prices.

As the S&amp;P 500 advanced to fresh highs despite widespread evidence of negative RSI and breadth divergences, the market faces a number of unanswered questions that may be indicative of possible impending leadership rotation.On one hand, the market is exhibiting a series of bearish divergence from breadth indicators and risk appetite indicators. On the other hand, a number of reflationary green shoots are appearing, indicating that the cyclical trade is about to get a second wind. How the market resolves those questions will be clues to the next major leg for stock prices.

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)

The Zweig Breadth Thrust Watch

The stock market may be on the verge of an important Zweig Breadth Thrust buy signal, which would be a powerful and bullish indicator of price...

Cam Hui

The S&P 500 Endures A Summer Squall

Short-term market conditions have become sufficiently oversold that, barring an unexpected negative shock, the stock market should rebound.

Cam Hui

Constructive Value and Reflation Green Shoots

Our review of market internals shows that the value and reflation trade is gaining ground. If this trend continues, it would translate into a...

Cam Hui

A Range-Bound August?

We have been calling for a sideways holding pattern for the S&P 500. That remains our base-case scenario for the rest of August.

Cam Hui

A Whiff of Rotation in the Air

As the S&P 500 advanced to fresh highs despite evidence of negative divergences, the market faces a number of unanswered questions that may be...

Cam Hui

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