Russell 2000

When it comes to the stock market, there is no single greater observable divergence right now than that between GAAP and non-GAAP earnings. As the chart below shows, while on a non-GAAP basis earnings have been hurting in recent years, with the LTM EPS of the S&P has declined to 116.4, down from 118.1 as of December 31, 2014, the real surprise is in GAAP EPS, which are back down to 88, a level last seen in 2007 when the market was about 500 points lower.

In a world in which hedge funds are increasingly struggling to come up alpha, not to mention original investment ideas, last week we showed what the top stock holdings of the 50 top hedge funds are.

Today, using Goldman data, we flip this data, and show the Top 50 stock holdings among the entire hedge fund universe. Not surprisingly, the usual suspects regain their top positions, led by the FAG stocks, namely the Facebook; Allergan, and Google, with Apple and Microsoft in 4th and 5th spot. Here is the result.

We are now in the worst seasonal period for stocks.

The old adage “sell in May and go away” does have some merit. According to the Ned Davis (NDR) database, had you invested $10,000 in the S&P 500 every May 1st starting in 1950 and sold October 31 of the same year, your initial position would only be worth $10,026 as of 2008. Put another way, by investing only from May through October, a $10,000 stake invested in 1950 would have only made $26 in 57 years.

With the recent rally showing increasing signs of exhaustion and the market topping, traders have begun to wonder if the S&P500 will suffer the same fate in the coming months as it did in August 2015, and - more apropos - in December, when the S&P failed to make a new high before starting a more significant correction leg into January.

Yeah ok - the best day in US equities in 2 months... on what? Data has been crap (even JOLTS 'good news' does nothging but corner The Fed into rate hikes even more), earnings have done nothing, bonds are rallying, and oil rallied on the back of a surge in production (perhaps front-running API inventory data)..."it's all good" up here right?