Skip to main content

Wondering why stocks can't seem to find any direction recently? Blame duelling news.

Two top headlines in Bloomberg News illustrate this to-and-fro nature quite well. In one: "Short sales decline 53 per cent as bull market enters fifth year." In the other: "Investors least bullish in 4 years pull cash: Commodities."

Remarkably, both articles appeared on Monday and both have clear implications for investors. The problem: The implications conflict.

Story continues below advertisement

The article about short sales says that bearish bets against stocks are at their lowest level since at least 2007. That is, short sales in the S&P 1500 fell to 5.6 per cent of shares available for trading, down from 12 per cent during the financial crisis, according to Bloomberg.

"Bulls say the capitulation by market bears shows the rally remains intact...,'" Bloomberg reported.

However, the article about investors losing their bullishness on commodities suggests another interpretation about the current state of the market. Its premise is that investors pulled $4.23-billion (U.S.) from commodity funds for the week ended Feb. 27 – the biggest outflow for data going back to 2000.

The article quotes Stanley Crouch at New York-based Aegis Capital Corp.: "Commodity markets are worried about China and are sensing possible trouble in the macro picture. Commodities may be out in front of a possible slowdown. The sentiment is changing to cautious."

Commodity prices themselves have expressed similar caution. Consider that the Thomson Reuters/Jefferies CRB index of commodities has fallen 4.6 per cent since the start of February and is back to where it was more than two years ago. In particular, crude oil has fallen 8 per cent since the start of February, and copper – seen as being particularly reflective of global economic activity – has fallen 7.5 per cent.

Of course, it is not at all unusual to see bullish and bearish news battling it out. Some even see it as a sign of a healthy market.

But what's interesting about these Bloomberg News articles is that they appeared in the same place at the same time – signalling that bullish and bearish impulses are indeed sharing the same influence right now.

Story continues below advertisement

Maybe that's what you get when the S&P 500 is close to a five-year high and the Dow Jones industrial average is nearing a record high – yet the U.S. economy is just treading water.

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter