Apple Is Over Four Standard Deviations Overbought!

When once caught in the maelstrom of stock speculation the average man becomes more or less mesmerized, and at critical moments his conservatism, his resolutions and his theories all take flight. Under the discomposing influence of a rapid succession of changing values and alternating impulses he loses his perspective, is incapable of calm reasoning, and is likely to do precisely the opposite of what he had intended to do. ~ Henry Howard Harper, “The Psychology of Speculation”

Good morning!

In this week’s Dirty Dozen [CHART PACK] we cover COVID data that lends support to the low HIT theory and then dive into UST growing funding needs. Following that, we discuss what the market is saying about bond yields (hint: they should be higher), cover positioning and technical setups in some major FX pairs, and end with an overbought apple and a bluebird that’s ready to fly, plus more….

Let’s dive in.

  1. At MO we try to keep a finger on the pulse of the narrative and positioning machine that is the market. Both have been a strong tailwind for risk-assets these past few months, but no more. Sentiment and positioning are becoming substantial headwinds and trend fragility has increased (chart via Yardeni).

  1. When COVID cases are rising, the news is ALL over it. But when it starts to decline, nothing… Now, perhaps they’re just trying to instill a healthy sense of caution and paranoia. Or maybe they have an agenda and their business model is founded on producing click-bait type headlines. I don’t know, but the recent turn in new case growth and hospitalizations seems noteworthy (chart via DB).

  1. Plus, there’s growing evidence in support of the lower herd-immunity-threshold (HIT) theory. This is the idea that HIT might be reached around 50% or less which would explain why the states that were hit hard in April are not seeing a second wave this summer. Also, why Sweden is doing so well on a relative basis (chart via DB).
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Disclaimer: All statements are solely opinions and are for educational purposes only.

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