Business

Crescast Happy Holidays With Some Bearish Charts

Crescat Capital holiday letter to investors

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Individual investors have the lowest allocation to cash since the 2000 market peak:


Source: FBN Securities

Active investment managers have their highest ever long equity exposure in history of this series. Even the bears are net long:

Schwab’s overall client cash is at the lowest levels in the history of the data. This was a key indicator at prior market tops in Q1 2000 and Q3 2007, also prior to the 2015 selloff:


BAML fund manager survey shows record risk taking:

The put/call ratio is a great contrarian market timing signal and is signaling extreme bullish over-crowding:


Source: FBN Securities

Intra-day trading action in December has deteriorated, much more selling into the close compared to most months all year:


Source: FBN Securities

Hedge funds are the most leveraged and the most net long in the last five years and may be starting to sell.


Volatility in corporate credit is signaling the top of a business cycle:

We have shown across six different measures encompassing the totality of the income statement, balance sheet, and cash flow statement why the US stock market is at all-time high valuations, higher than 1929 and higher than 2000:

https://www.crescat.net/wp-content/uploads/Crescat-Capital-Q3-2017-Quarterly-Letter.pdf

We have established that China is the largest currency and credit bubble of our lifetime:

https://www.crescat.net/wp-content/uploads/Crescat-Capital-Q2-2017-Quarterly-Letter.pdf

We have illustrated the importance of selling at or before an historical market top and the fruits to be gained by selling short:

https://www.crescat.net/wp-content/uploads/Dec-2017-1929-Revisited.pdf

Investors today are the most net long and the most bullish they have ever been. These set-ups happen but a few times in a hedge fund manager’s career.

We wish you and your families the best this holiday season.

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