Breaking News
Get 40% Off 0
👀 Reveal Warren Buffett's stock picks that are beating the S&P 500 by +174.3% Get 40% Off

S&P 500: Signs of a New Bull Market Keep Mounting

By David MoenningStock MarketsApr 24, 2023 01:15PM ET
www.investing.com/analysis/sp-500-signs-of-a-new-bull-market-keep-mounting-200637495
S&P 500: Signs of a New Bull Market Keep Mounting
By David Moenning   |  Apr 24, 2023 01:15PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
ATVI
0.00%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
GOOG
+1.71%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
VIX
-3.18%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
ABBV
-1.10%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
META
+1.26%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CHTR
+1.94%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

The stock market appears to have spent the vast majority of the last week or so doing, well, a lot of nothing. In short, the S&P 500 has moved up into the high end of the recent trading range, which, as our heroes in horns tell us, is certainly an encouraging sign.

However, so far at least, the venerable market index has been unable to break on through to the other side.

Our furry friends in the bear camp contend that stocks are tracing out a "double top" formation and thus, the current rally is doomed to fail. The negative Nancy crowd contends that stocks have lost touch with reality. That the economy is slowing quickly. That a credit crunch is on the way. That a banking crisis is heating up. That valuations are sky high. That the good 'ol USofA is about to default on its debt. And that a nasty recession is sure to follow. Joy.

The bulls counter with the idea that a softish landing remains the base case scenario. Our heroes in horns point to the strong jobs market, the resilient, free spending consumer, and the still-strong housing market as reasons to justify their upbeat view on the economy. They also contend that inflation is clearly heading in the right direction. That the Fed is about to pause. That stress on banks is receding. That VIX levels are trending lower. And that earnings continue to be "just fine, thank you."

So, as I opined last week, the debate in the market continues unabated.

Waiting on the Big Boys

Although the only way to resolve the debate playing out in the market is with a heaping helping of hindsight, my take is that the recent rally is stocks suggests investors are looking beyond all the "known" worries and ahead to better days. But with a slew of very big-name companies such as Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), Meta Platforms (NASDAQ:META), Amazon (NASDAQ:AMZN), Visa (NYSE:V), Boeing (NYSE:BA), eBay (NASDAQ:EBAY), Mastercard (NYSE:MA), Comcast (NASDAQ:CMCSA), Merck & Company (NYSE:MRK), Bristol-Myers Squibb (NYSE:BMY), Eli Lilly (NYSE:LLY), Caterpillar (NYSE:CAT), AbbVie (NYSE:ABBV), Honeywell (NASDAQ:HON), Intel (NASDAQ:INTC), Gilead Sciences (NASDAQ:GILD), Activision Blizzard (NASDAQ:ATVI), Charter Communications (NASDAQ:CHTR), Exxon Mobil (NYSE:XOM), and Chevron (NYSE:CVX) all reporting next week, my contention is that traders are taking a break here and waiting on the reports.

My thinking is the "theme" from the big-name earnings report could very well drive the next meaningful, intermediate term move in the stock market. Be it up or down. If earnings remain decent (as in "not as bad as feared") then I could see stocks breaking out to the upside. And if we hear a bunch of worrisome words from these CEO's then, well, a trip back down within the range would make some sense.

But, from a big-picture standpoint, I believe the market action remains constructive and that, more importantly, some of my main indicators suggest that we may be seeing the beginnings of an important regime change.

A New Bull Market?

As Exhibit A in my argument, I will direct your attention to what I deem to be an important improvement in my Primary Market Models board. This board contains my favorite "big picture" market models, which are all independently built to tell me the state of the primary market cycle. As in bull versus bear.

Long-time readers will recall that our indicator boards have been built to provide the "state of the market" with only a brief glance at the colors on the board.

So, I think it's time to do a quick comparison of the Primary Cycle Boards from the last two weeks. Let's start with last week's board, shown below.


* Source: Ned Davis Research (NDR) as of the date of publication. Historical returns are hypothetical average annual performances calculated by NDR.

Now let's move on to this week's board...

Primary Cycle Models
Primary Cycle Models


* Source: Ned Davis Research (NDR) as of the date of publication. Historical returns are hypothetical average annual performances calculated by NDR.

I'm probably not the only one that can see that there is no longer any red on this week's Primary Cycle board. Oh, and there is also a lot more green. Which probably goes without saying, is a good thing.

The key here is that two more of my favorite long-term, big-picture market models flashed buy signals last week. To be sure, these are NOT great "timing" indicators. No, these are "confirmation" indicators, designed to identify which team is in control.

So, with four out of the six models on "buy" signals and the historical annualized returns of the S&P 500 now above +14%, I'm going to argue that maybe, just maybe, we may have a new bull market on our hands.

The Fly in the Ointment

To be sure, the improvement in the Primary Cycle Board is encouraging for anyone seeing the market's glass as at least half full. And then with the current status of the Price Trend indicators being positive (see the Price Trend Indicator board below), one can't be blamed for being downright optimistic about the outlook for the stock market.

But... (You knew that was coming, right?) There are a couple flies in the ointment that should give one pause - at least for now.

First is the status of the Momentum Indicator Board, which helps determine if there is any "oomph" behind a move in the market. Cutting to the chase, the best moves in the stock market are (a) global in nature and (b) accompanied by strong momentum.

We can certainly make a checkmark next to the "global in nature" box given that the EAFE index (using EFA as a proxy) is outperforming the S&P 500 so far this year (EFA is up +11.6% YTD as of Friday's close vs SPY +8.1%). But unfortunately, the state of market momentum - at least as far as our Momentum Board goes - leaves a lot to be desired.

Momentum Indicators
Momentum Indicators


* Source: Ned Davis Research (NDR) as of the date of publication. Historical returns are hypothetical average annual performances calculated by NDR.

So... With the Momentum Board displaying a distinct lack of green in the Current Signal column, investors may want to curb their enthusiasm here. Because the bottom line is this indicator board is best used as confirmation for what is happening with the price action. Thus, my take is that momentum has not (yet?) confirmed the rally and as such, some caution in a market that is overbought and bumping into resistance is certainly warranted.

Before you get too depressed about this, remember that the market has time for confirmation to occur. This is longer-term, big-picture stuff. So, if the bulls can get their act together and create some "oomph" to the upside, the Momentum Board could certainly catch up. But at this stage of the game, this situation serves as a yellow flag.

The Bottom Line

In sum, the conditions in the stock market have improved and are in pretty good shape in terms of the price action seen so far this year. In addition, my big-picture market models suggest that a new bull market may be getting started. But, as detailed above, with momentum not confirming at this point, it is probably best to keep some powder dry - just in case.

Now let's review the "state of the market" through the lens of our market models...

Primary Cycle Models

Below is a group of big-picture market models, each of which is designed to identify the primary trend of the overall "state of the stock market."

Primary Cycle Models
Primary Cycle Models


* Source: Ned Davis Research (NDR) as of the date of publication. Historical returns are hypothetical average annual performances calculated by NDR.

Trend Analysis:

Below are the ratings of key price trend indicators. This board of indicators is designed to tell us about the overall technical health of the market's trend.

Price Trend Indicators
Price Trend Indicators

Market Momentum Indicators

Below is a summary of key internal momentum indicators, which help determine if there is any "oomph" behind a move in the market.

Momentum Indicators
Momentum Indicators

* Source: Ned Davis Research (NDR) as of the date of publication. Historical returns are hypothetical average annual performances calculated by NDR.

Early Warning Indicators

Below is a summary of key early warning indicators, which are designed to suggest when the market may be ripe for a reversal on a short-term basis.

Early Warning Indicators
Early Warning Indicators

* Source: Ned Davis Research (NDR) as of the date of publication. Historical returns are hypothetical average annual performances calculated by NDR.

Fundamental Factor Indicators

Below is a summary of key external factors that have been known to drive stock prices on a long-term basis.

Fundamental Factors
Fundamental Factors

* Source: Ned Davis Research (NDR) as of the date of publication. Historical returns are hypothetical average annual performances calculated by NDR.

Thought for the Day:

Turn every bit of adversity into fuel for improvement -Nassim Taleb

Wishing you green screens and all the best for a great day.

S&P 500: Signs of a New Bull Market Keep Mounting
 

Related Articles

S&P 500: Signs of a New Bull Market Keep Mounting

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (12)
Jeff Dukett
Jeff Dukett Apr 28, 2023 12:29AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Why are we raising rates if we are going into a new bill market.. that would be the 1st time in history… where do you get these analysts??
Burhonjon Po
Burhonjon Po Apr 25, 2023 9:42AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Hello, this is me I just came in. I'm from Uzbekistan
Michael Byrne
Michael Byrne Apr 24, 2023 11:20PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The bottom line is that every single asset class, Dow, Nasdaq, Russell 2000 , Gold and Crypto are at significant points of resistance. They are all clearly in a distribution phase and not an accumulation phase. At some point, something will change this calm distribution into panic selling. Will it be the debt limit? Will China launch an attack on Taiwan? Will Russia escalate the war in Ukraine? Will there be another major conflict in the Near East? Who knows, but it does feel like something is about to blow. This is not a time to be risk-on.
Mark Gess
Mark Gess Apr 24, 2023 11:20PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Agreed! The dollar is in serious trouble globally, yet all these business 'news' sites are trying to convince us that all is well, and that we're at the beginning of another bull run. (which is utter and complete nonsense) They aren't fooling anyone.
Alexandros Masoutis
Alexandros Masoutis Apr 24, 2023 11:20PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
we are going to4000S&P
Carl Tom
Carl Tom Apr 24, 2023 11:20PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
rigged
Jack Sailor
Jack Sailor Apr 24, 2023 10:31PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
give hunter his pipe back
George David
George David Apr 24, 2023 10:11PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Is this guy on crack or what?
Jeffrey Whittinghill
Jeffrey Whittinghill Apr 24, 2023 9:21PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Yeah buy stocks now… moronic idea
taylor jason
taylor jason Apr 24, 2023 8:15PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
another bs ta analyst on this site that is completely disconnected from the real world and that is using a style of analysis that hasnt been relevant since rhe 90s. i can see why this author is not a writer at the economists that's for sure
gary leibowitz
gary leibowitz Apr 24, 2023 8:15PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Did anyone, besides myself, see the Pandemic?  I mean it had a 100 year old chart, known scientific deadly outcome and yet 5 weeks and one death in USA started the slide?  We are a slow witted species.  First republic just reported a PROFIT after losing 100 BILLION deposits.  What a world we live in. I fed Funds rate at 4.5% is so dire that the street is demanding they stop raising and immediately lower something is very wrong. 40 years of disinflation we became addict's and asset bubbles all over the place. 2023 will go down is history as perhaps the worse year ever!
Jim Kelly
Jim Kelly Apr 24, 2023 7:18PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Wow David i don’t think there believing you
gary leibowitz
gary leibowitz Apr 24, 2023 7:07PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Just have one word for ya INFLATION!  the last 40 years allowed for this type of BS. Cheap money, ever lower future rates and all assets went from bubbles to even bigger bubbles.  We are addict's needing our fix, disinflation. No rate CUT, no stopping Inflation a CHINA has just broken out BIG TIME!  Thanks to the three year lockdown.  they will make sure INFLATION for commodities goes thru the roof! 2023 will go down in history as the most devastating in the stock market history. 50% is a given.
Derick Lim
Derick Lim Apr 24, 2023 6:36PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
A simple manipulative news from dock puppet analysts or fortune telling prediction upgrades from IBs analysts will rallies the market without any chart mumbo jumbo......
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email