fbpx

S&P 500: Stretched But Rising?

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

Websim is the retail division of Intermonte, the primary intermediary of the Italian stock exchange for institutional investors. Leverage Shares often features in its speculative analysis based on macros/fundamentals. However, the information is published in Italian. To provide better information for our non-Italian investors, we bring to you a quick translation of the analysis they present to Italian retail investors. To ensure rapid delivery, text in the charts will not be translated. The views expressed here are of Websim. Leverage Shares in no way endorses these views. If you are unsure about the suitability of an investment, please seek financial advice. View the original at
While a number of banks have highlighted uncertainty in the year ahead on account of the events unfolding in Israel as well as the deepening crisis in Ukraine, markets are generally expected to continue “as-is” for now on account of a variety of macroeconomic factors.

Market Trends This Past Week

Over the past week, crude oil (WTI and Brent) broke its downward trajectory with a quick hike mid-week, following which prices have been holding steady at a little over the $90 mark over the weekend.

Earlier deflationary trends – a byproduct of forward-looking recessionary concerns impacting consumption and driving down demand – were somewhat firmed up due to potential supply disruptions in the future. However, overall concerns aren’t very high.

The past week also recorded a rare and extreme upward streak among U.S. arms manufacturer stocks, which also had fairly recessionary downtrends. Over the past week, U.S. military stocks gained nearly $30 billion in market capitalization – with Lockheed Martin, Northrop Grumman, L3Harris, Raytheon and General Dynamics leading the charge.

However, it bears noting that stock analysts are calling this a momentary blip: there don’t seem to be long-term growth drivers for the sector.

Markets have been largely positive over the past week. In the S&P 500, the Top 25 stocks by momentum outperformed the index +0.57% vs +0.45%.

The majority of the index change was wrought by tech stocks, which was amplified within the Nasdaq-100: the Top 25 list outperformed the index +0.51% vs +0.15%.

While the oil outlook and the present direction of the market might seem contradictory, this is not the case. A prime factor behind the market’s overall market performance has been what Bank of America – in a note dated October 6 – called the “greatest bond bear market of all time“. Bond funds saw $2.5 billion in outflows till the Wednesday of that week due to yields on 30-year Treasuries rising above 5% for the first time since 2007. The current loss in 30-year bonds from the peak in the market in July 2020 to now far outpaces that of any previous bear market, with buy-ins into bond being termed a “humiliation trade”.

However, the bank says there’s no capitulation: Treasuries funds continued to see inflows of $4.6 billion in that week albeit with a preference for shorter-term paper due to which yields on 2-year Treasuries fell 9 basis points.

The overall effect on the market has been extremely poor equity breadth, with pile-ons into select stocks to balance out portfolios now overloaded with increasingly unmarketable long-term bonds. High-yield “junk bonds” have also been taking a beating since these select stocks are implied to be more survivable in a high-rate environment than issuers of junk bonds that are more sensitive to high interest expenses.

Even the Bank of England’s Financial Policy Committee (FPC) meetings on September 26 and October 5 noted thus in its summary released on October 10, “Given the impact of higher interest rates, and uncertainties associated with inflation and growth, some risky asset valuations appeared stretched”. In particular, the FPC noted that a deterioration in the global economic outlook, further increases in risk-free interest rates, or further interest rate volatility could lead to sharp reductions in asset prices – with U.S. dollar-denominated corporate bonds and U.S. technology equities being specifically vulnerable – and further tightening in financial conditions for households and businesses.

In Conclusion

Overall, market trajectories indicate an underlying impression that the Middle East and its current crisis is essentially “factored out” of market estimations for the most part. While U.S. equity markets might look like they’re doing well, several “leading” stocks are increasingly approaching “overheated” due to market flows with no significantly meaningful macroeconomic indicators for the upside. Periodic waves and troughs can be expected, as seen over the past several weeks. Caveat emptor.

Professional investors looking to amplify the relatively weak trajectories might like to consider SP5Y, an Exchange-Traded Product (ETP) that delivers 5X the daily returns of SPY, the “SPDR S&P 500 ETF Trust”.

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

Related Posts

Market participants bet on a Fed Pivot, are they right this time?
Market participants bet on a Fed Pivot, are they right this time?
Violeta-540x540-1.jpg
Boyan Girginov
Market participants bet on a Fed Pivot, are they right this time?
Market participants bet on a Fed Pivot, are they right this time?
Market participants bet on a Fed Pivot, are they right this time?
S&P 500 up 8.9%, boosted by lower bond yields. December strong for equities.
S&P 500 up 8.9%, boosted by lower bond yields. December strong for equities.
Violeta-540x540-1.jpg
Boyan Girginov
S&P 500 up 8.9%, boosted by lower bond yields. December strong for equities.
S&P 500 up 8.9%, boosted by lower bond yields. December strong for equities.
S&P 500 up 8.9%, boosted by lower bond yields. December strong for equities.
Fed’s potential rate cuts, boost sentiment. Possible market correction.
Fed’s potential rate cuts, boost sentiment. Possible market correction.
Violeta-540x540-1.jpg
Boyan Girginov
Fed’s potential rate cuts, boost sentiment. Possible market correction.
Fed’s potential rate cuts, boost sentiment. Possible market correction.
Fed’s potential rate cuts, boost sentiment. Possible market correction.
Post the last rate hike, S&P 500 returns go up. Nov-Dec Period strong for US equities.
Post the last rate hike, S&P 500 returns go up. Nov-Dec Period strong for US equities.
Violeta-540x540-1.jpg
Boyan Girginov
Post the last rate hike, S&P 500 returns go up. Nov-Dec Period strong for US equities.
Post the last rate hike, S&P 500 returns go up. Nov-Dec Period strong for US equities.
Post the last rate hike, S&P 500 returns go up. Nov-Dec Period strong for US equities.
Market participants bet on a Fed Pivot, are they right this time?
Market participants bet on a Fed Pivot, are they right this time?
Violeta-540x540-1.jpg
Boyan Girginov
Market participants bet on a Fed Pivot, are they right this time?
Market participants bet on a Fed Pivot, are they right this time?
Market participants bet on a Fed Pivot, are they right this time?
S&P 500 up 8.9%, boosted by lower bond yields. December strong for equities.
S&P 500 up 8.9%, boosted by lower bond yields. December strong for equities.
Violeta-540x540-1.jpg
Boyan Girginov
S&P 500 up 8.9%, boosted by lower bond yields. December strong for equities.
S&P 500 up 8.9%, boosted by lower bond yields. December strong for equities.
S&P 500 up 8.9%, boosted by lower bond yields. December strong for equities.
Fed’s potential rate cuts, boost sentiment. Possible market correction.
Fed’s potential rate cuts, boost sentiment. Possible market correction.
Violeta-540x540-1.jpg
Boyan Girginov
Fed’s potential rate cuts, boost sentiment. Possible market correction.
Fed’s potential rate cuts, boost sentiment. Possible market correction.
Fed’s potential rate cuts, boost sentiment. Possible market correction.
Post the last rate hike, S&P 500 returns go up. Nov-Dec Period strong for US equities.
Post the last rate hike, S&P 500 returns go up. Nov-Dec Period strong for US equities.
Violeta-540x540-1.jpg
Boyan Girginov
Post the last rate hike, S&P 500 returns go up. Nov-Dec Period strong for US equities.
Post the last rate hike, S&P 500 returns go up. Nov-Dec Period strong for US equities.
Post the last rate hike, S&P 500 returns go up. Nov-Dec Period strong for US equities.

Sandeep Rao

Research

Sandeep joined Leverage Shares in September 2020. He leads research on existing and new product lines, asset classes, and strategies, with special emphasis on analysis of recent events and developments.

Sandeep has longstanding experience with financial markets. Starting with a Chicago-based hedge fund as a financial engineer, his career has spanned a variety of domains and organizations over a course of 8 years – from Barclays Capital’s Prime Services Division to (most recently) Nasdaq’s Index Research Team.

Sandeep holds an M.S. in Finance as well as an MBA from Illinois Institute of Technology Chicago.

Julian Manoilov

Marketing Lead

Julian joined Leverage Shares in 2018 as part of the company’s primary expansion in Eastern Europe. He is responsible for web content and raising brand awareness.

Julian has been academically involved with economics, psychology, sociology, European politics & linguistics. He has experience in business development and marketing through business ventures of his own.

For Julian, Leverage Shares is an innovator in the field of finance & fintech, and he always looks forward with excitement to share the next big news with investors in the UK & Europe.

Violeta Todorova

Senior Research

Violeta joined Leverage Shares in September 2022. She is responsible for conducting technical analysis, macro and equity research, providing valuable insights to help shape investment strategies for clients.

Prior to joining LS, Violeta worked at several high-profile investment firms in Australia, such as Tollhurst and Morgans Financial where she spent the past 12 years of her career.

Violeta is a certified market technician from the Australian Technical Analysts Association and holds a Post Graduate Diploma of Applied Finance and Investment from Kaplan Professional (FINSIA), Australia, where she was a lecturer for a number of years.

Oktay Kavrak

Head of Communications and Strategy

Oktay joined Leverage Shares in late 2019. He is responsible for driving business growth by maintaining key relationships and developing sales activity across English-speaking markets.

He joined Leverage Shares from UniCredit, where he was a corporate relationship manager for multinationals. His previous experience is in corporate finance and fund administration at firms like IBM Bulgaria and DeGiro / FundShare.

Oktay holds a BA in Finance & Accounting and a post-graduate certificate in Entrepreneurship from Babson College. He is also a CFA charterholder.

Markets vs the Fed

Bonds Rally

Gold Soars to Record Highs

How do Leverage Shares ETPs differ from other leveraged ETP issuers

How Do Leverage Shares ETPs Trade in Multiple Currencies

What is the difference between ETF and ETP?

Build your own ETP Basket
Leverage Shares: Europe’s top leveraged and inverse ETP provider.
Main ETP benefits
Common investor questions

Get the Newsletter

Never miss out on important announcements. Get premium content ahead of the crowd. Enjoy exclusive insights via the newsletter only.

Upcoming Webinar

Why Invest in Commodities?

by Violeta Todorova & Sandra Ivanova

06.12.2023
3.00 AM GMT

Welcome to Leverage Shares

Terms and Conditions

Notice

If you are not classified as an institutional investor, you will be categorised as a private/retail investor. At this time, we cannot send communications directly to private/retail investors. You are welcome to view the contents of this website.

If you are an ‘Institutional investor’, you affirm either that you are a Per Se Professional Client, or that you wish to be treated as an Eligible Counterparty Client, both as defined under the Markets in Financial Instruments Directive, or an equivalent in a jurisdiction outside the European Economic Area.

Risk Warnings

The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investor as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer.

This website is provided for your general information only and does not constitute investment advice or an offer to sell or the solicitation of an offer to buy any investment.

Nothing on this website is advice on the merits of any product or investment, nothing constitutes investment, legal, tax or any other advice nor is it to be relied on in making an investment decision. Prospective investors should obtain independent investment advice and inform themselves as to applicable legal requirements, exchange control regulations and taxes in their jurisdiction.

This website complies with the regulatory requirements of the United Kingdom. There may be laws in your country of nationality or residence or in the country from which you access this website which restrict the extent to which the website may be made available to you.

United States Visitors

The information provided on this site is not directed to any United States person or any person in the United States, any state thereof, or any of its territories or possessions.

Persons accessing this website in the European Economic Area

Access to this site is restricted to Non-U.S. Persons outside the United States within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Each person accessing this site, by so doing, acknowledges that: (1) it is not a U.S. person (within the meaning of Regulation S under the Securities Act) and is located outside the U.S. (within the meaning of Regulation S under the Securities Act); and (2) any securities described herein (A) have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction and (B) may not be offered, sold, pledged or otherwise transferred except to persons outside the U.S. in accordance with Regulation S under the Securities Act pursuant to the terms of such securities. None of the funds on this website are registered under the United States Investment Advisers Act of 1940, as amended (the “Advisers Act”).

Exclusion of Liability

Certain documents made available on the website have been prepared and issued by persons other than Leverage Shares Management Company. This includes any Prospectus document. Leverage Shares Management Company is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, Leverage Shares Management Company shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes no guarantee as to the accuracy of any information or content on the website. The description of any ETP Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on the website and should be read prior to making any investment.

Leverage Investment

Leverage Shares exchange-traded products (ETPs) provide leveraged exposure and are only suitable for experienced investors with knowledge of the risks and potential benefits of leveraged investment strategies.

Cookies

Leverage Shares Management Company may collect data about your computer, including, where available, your IP address, operating system and browser type, for system administration and other similar purposes (click here for more information). These are statistical data about users’ browsing actions and patterns, and they do not identify any individual user of the website. This is achieved by the use of cookies. A cookie is a small file of letters and numbers that is put on your computer if you agree to accept it. By clicking ‘I agree’ below, you are consenting to the use of cookies as described here. These cookies allow you to be distinguished from other users of the website, which helps Leverage Shares Company provide you with a better experience when you browse the website and also allows the website to be improved from time to time. Please note that you can adjust your browser settings to delete or block cookies, but you may not be able to access parts of our website without them.

This website is maintained by Leverage Shares Management Company, which is a limited liability company and is incorporated in Ireland with registered offices at 2 Grand Canal Square, Grand Canal Harbour, Dublin 2. 

By clicking you agree to the Terms and Conditions displayed.