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Weekly S&P 500 ChartStorm: Stock Stats; Bear Market Rallies; Risk Indicators

By Callum ThomasStock MarketsMay 29, 2022 02:13AM ET
www.investing.com/analysis/weekly-sp-500-chartstorm-stock-stats-bear-market-rallies-risk-indicators-200624993
Weekly S&P 500 ChartStorm: Stock Stats; Bear Market Rallies; Risk Indicators
By Callum Thomas   |  May 29, 2022 02:13AM ET
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Welcome to the Weekly S&P500 #ChartStorm—a selection of 10 charts which I hand pick from around the web and post on Twitter.

These 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. Scintillating Stock Market Statistics: The market was up 6% last week. Historically, on average, subsequent returns were positive most of the time, and often materially so.

(albeit note the outliers/exceptions: 2008 financial crisis, 1974 inflation shock, early-2000’s dot-com bubble bursting, and 1980 when Fed Chair Volcker hiked the economy into recession to get inflation under control…)

S&P 500 Weekly Gains
S&P 500 Weekly Gains

Source: @RyanDetrick

2. Recession Session: In terms of Recessionary vs Non-Recessionary stock market corrections, it sure does look like we are skewing toward the recessionary end of the scale in this chart. But the key point is that the answer as to whether this is going to be a more drawn out and deeper bear market will depend on recession: yes or no.

Size Of S&P 500 Corrections
Size Of S&P 500 Corrections

Source: @SamRo via @ISABELNET_SA

3. Bear Market Rallies: Beware of the #BearMarketRally

As a reminder, if this is actually a bear market that we are in right now, it will likely feature numerous and very seductive and very confusing bear market rallies.

Good for trading/positioning, but can also be a trap.

Bear Market Rallies
Bear Market Rallies

Source: @MichaelKantro

4. Upside-Downside Ups and Downs: Here's the rolling counts of extreme upside vs downside volatility (percent changes above/below a certain threshold: the original was daily and 1% +/- threshold). I mentioned this indicator a while back, and @exposurerisk has run with this alternative indicator, dubbing it the Thomas Counts.

But anyway, the key point is it puts on clear display the shifts in market regime from upside frenzy to downside fear. It's charts like this (and the macro backdrop) that make me think we're still early in the bear phase, and that this does represent a market regime change rather than a reversion to “buy the dip“.

SPY vs Thomas Counts
SPY vs Thomas Counts

Source: @exposurerisk

5. Valuation Heights: Some folk are already saying "Hi, Value" …while others are still saying "High Value!" Meanwhile, I look at this chart and say it still looks a ways to go before all the excesses are worked through.

US Stocks Valuation
US Stocks Valuation

Source: @MichaelAArouet

6. S&P 500 Job Listings: Glance at this chart, looks like the labor boom has peaked…

"total new job postings for the S&P 500 companies further fell in April to 853K, the lowest level since July 2021"

S&P 500 Job Listings
S&P 500 Job Listings

Source: @MikeZaccardi @RevelioLabs

7. Peak Problems—Supply Chain Edition: Seems like companies are starting to complain less about supply chain issues... peak supply chain problems?

Said it before: one way to fix supply chain problems is to fix (stimulus-driven) excess demand: after all, taken to the extreme: no demand = no backlogs. And that's what will get the green line down.

# S&P 500 Cos. Citing Inflation, Supply Chain, Ukraine
# S&P 500 Cos. Citing Inflation, Supply Chain, Ukraine

Source: @FactSet

8. Great Rotation: only comment I have on this one (it speaks for itself) is to remind you that this chart is benchmark-relative… and the benchmark is still heavily skewed to those techy sectors (dark blue line).

Great Rotation
Great Rotation

Source: @Mayhem4Markets

9. Retail Over and Out: Maybe a grim paraphrasing of the term from last week “VTI and Chill“ to "Liquidate and Chill"

Retail Over And Out
Retail Over And Out

Source: @zerohedge

10. European Equities: 2008 or 2011?

(the last times sentiment moved like this was in 2008 when it foreshadowed a much deeper fall to come, but also in 2011 where it fell in reflection of real macro challenges but the stock market ranged and stagnated for a bit rather than crashing further …remember, bull markets and bear markets are not the only answer: crab markets are also a thing (where markets just range and go sideways)

Europe - Sentiment vs Stocks
Europe - Sentiment vs Stocks

Source: @topdowncharts

BONUS CHART >> got to include a goody for the goodies who subscribed.

Macro Sentiment and the Stock Market: One of the things we need to remember is that the macro backdrop has been steadily worsening over the past year, and it represents a flip or a coming full-circle of the momentous macro backdrop that we enjoyed in the wake of the pandemic stimulus packages.

This chart shows global equities (MSCI All-Country World Equity Index, in local currency terms) against a composite of macro-related sentiment indicators from Consensus Inc. (Treasuries, commodities, currencies, equities). Key point is it’s gone from extreme optimism to now slightly net-bearish.

Global Equities vs Macro Sentiment
Global Equities vs Macro Sentiment

Now, some might say this is a nice and good healthy reset. But my experience is that sentiment indicators like this don’t just reset down to neutral and then take-off again, they usually overshoot, get washed out, and then turn up when something in the macro actually changes (i.e. usually when the monetary policy cycles turn).

Also, technicians should have picked up that the indicator made a lower high while the index made a higher high—a classic bearish divergence.

Pattern recognizers will also note that it kind of looks eerily similar to 2008.

All this is to say I don’t think we’re out of the woods just yet. I don’t think we get let off that lightly after such a prolonged (and more recently: preposterous) period of excess. Proceed with caution.

Weekly S&P 500 ChartStorm: Stock Stats; Bear Market Rallies; Risk Indicators
 

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Weekly S&P 500 ChartStorm: Stock Stats; Bear Market Rallies; Risk Indicators

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Comments (4)
King Agamemnon
King_Agamemnon May 29, 2022 5:34PM ET
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2 major areas of support in this 4000 area and we catch this reversal bar following 7 weeks of selling going into the last week of may. If you cross reference this against the big 4 Trillionaire market cap club they are all oversold into support as well. Prob catch a bounce for summer starting next week
Steve Bojo
Steve Bojo May 29, 2022 5:26PM ET
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Friday was a suckers rally
Javier BB
Javier BB May 29, 2022 5:46AM ET
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Bear marketing still makes more sense... however that has been the case for many months.....
Elmahdi Oummih
Elmahdi Oummih May 29, 2022 2:21AM ET
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Agree 100% I believe that the S and P will turn Blood Red by Tuesday Afternoon and will be red for some time until the conflict in Europe comes to a close.
Ming Zhou Goh
Ming Zhou Goh May 29, 2022 2:21AM ET
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Exactly my thoughts
 
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