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Weekly S&P 500 Chart Storm: Sticking To The Seasonality Script For VIX Too?

By Callum ThomasStock MarketsNov 22, 2021 12:22AM ET
www.investing.com/analysis/weekly-sp-500-chart-storm-sticking-to-the-seasonality-script-for-vix-too-200609069
Weekly S&P 500 Chart Storm: Sticking To The Seasonality Script For VIX Too?
By Callum Thomas   |  Nov 22, 2021 12:22AM ET
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The S&P 500 ChartStorm is a selection of 10 charts which I hand pick from around the web and post on Twitter.The purpose of this post is to add extra color and commentary around the charts.

The charts focus on the S&P 500 (US equities); and the various forces and factors that influence the outlook—with the aim of bringing insight and perspective.

1. S&P 500 Seasonality Chart: It’s everyone’s favorite chart updated again (maybe for the last time this year?). The S&P 500 has been sticking to the seasonality script through most of this year… makes me think about Murphy’s Law tho—maybe the market will start to improvise and go off-script? Either way, the next few weeks seasonally look like sideways action.

S&P 500 vs Its Seasonal Pattern
S&P 500 vs Its Seasonal Pattern

Source: @topdowncharts

2. Volatility Seasonality: A twist on the previous chart—same concept, but this time with implied volatility. I find it interesting to note that the VIX has actually been a bit lower than usual for this time of the year (and trending up short-term…). One last VIX spike before year-end?

VIX Index
VIX Index

Source: @topdowncharts

3. Stockmarket Statistics: What happens after the market goes up a “crazy overheated” 20%+ over the course of a year?

More Gains.

Historically most of the time if the market closed up 20%+ for the year, the next year was also positive (84% of the time). As of writing, the market is up some 27% YTD (albeit, this year ain't over yet!).

S&P 500 Index Returns
S&P 500 Index Returns

Source: @RyanDetrick

4. Bad Breadth? Fully 1/3rd of stocks are in a downtrend. (defined as trading below their respective 200dma)

Will this bearish divergence be a problem?

S&P 500 Stocks Above 200 DMA
S&P 500 Stocks Above 200 DMA

Source: Index Indicators

5. GAARP vs GAAAP: On this metric, growth stocks are the most expensive ever vs value stocks. So it begs the question… Growth at a reasonable price? or Growth at *any* price? (but then again, who defines what "reasonable" is in a market like this!)

GAARP vs GAAAP
GAARP vs GAAAP

Source: @TheOneDave

6. Low Energy: Energy stocks are attempting to turn the corner vs the rest of the market, but face high hurdles from the raging tech bull market, rise of ESG investing and regulatory/political hurdles, not to mention commodity market volatility.

What comes down must go up? (or something else?)

Energy Companies vs S&P 500
Energy Companies vs S&P 500

Source: @dissectmarkets

7. Buybacks Back: New all-time high for buybacks in Q3 (with 95% reported). Always makes me wonder these trends — you see the majority of buybacks occurring near market peaks… i.e. when valuations are extreme expensive. The opposite of value investing: buy more when its expensive, buy less when it’s cheap—seems like upside-down logic to me, but then again I am a simple man.

S&P 500 Dividends vs Buybacks
S&P 500 Dividends vs Buybacks

Source: @hsilverb

8. Payout Ratio: As an interesting follow-on to the ATH in buybacks/dividends, it’s interesting to note that the dividend payout ratio is actually below average...

Scope to return more cash to investors?

S&P 500 Dividend Payout Ratio
S&P 500 Dividend Payout Ratio

Source: @ChrisDagnes

9. Buffett Indicator: Looks like this indicator has reached a permanently higher plateau! (kidding of course—echoing the famous last words of Irving Fisher back in 1929) Interesting stat to note: to make this indicator as cheap as where it got to during the financial crisis lows the market would need to fall over 70%. Definitely not a prediction, but interesting nonetheless. I would say I have multiple quibbles with this indicator, I think CAPE and ERP are better valuation metrics, but that’s a topic for another day.

The Buffett Valuation Metric - Market Cap To GDP
The Buffett Valuation Metric - Market Cap To GDP

Source: @KailashConcepts

10. Buffett the Compounder: Speaking of Buffett, a lesson in compounding.

Buffett's Net Worth
Buffett's Net Worth

Source: @DividendGrowth

Thanks for following, I appreciate your interest!

Weekly S&P 500 Chart Storm: Sticking To The Seasonality Script For VIX Too?
 

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Weekly S&P 500 Chart Storm: Sticking To The Seasonality Script For VIX Too?

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Comments (2)
dan Radko
dan Radko Nov 23, 2021 1:52AM ET
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Hey umm im enjoying the article and havnt really had any problem since #1 but chart #6 is utterly useless, better off just spewing numbers than the mess created from splitting 4 years into 5 parts. Not really convenient calculating each hash as 292.2 days
dan Radko
dan Radko Nov 23, 2021 1:05AM ET
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Sorry, My gf thinks im autistic, but i say special. Anyway although im very interested in this topic, i couldnt make it past the 3rd paragraph. You cited fig 1 expecting the market to trade sideways the next few weeks on a publish date of nov 22. Writing this comment in the early hours of nov23.You are reading the chart wrong, go back and look at the hash marks dividing the months it is very clear that the last week of november and early dec historically are one of the bigger faster upticks after trading sideways in november. Thanks will finish the rest and look forward to your new take based on accurate data if this is no longer applicable.
 
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