This week: technicals check, sentiment vs positioning, economic sentiment, ARKK$ARK Innovation ETF(ARKK)$ indicator, tech flows, seasonality and statistics, profit margins, recession pricing...
Welcome to the Weekly S&P500$S&P 500(.SPX)$ #ChartStorm— a selection of 10 charts which I hand pick from around the web and post on Twitter$Twitter(TWTR)$ .
These charts focus on the S&P500 (US equities); and the various forces and factors that influence the outlook - with the aim of bringing insight and perspective.
If you find it useful be sure to tell your friends! (and enemies)
1. That Trendline Again
Thing about trendlines is that they move even if price doesn't — in other words, you have to face up to your problems sooner or later! That means the red line in the chart below is going to weigh-in again very soon (in other words, once again it is make-or-break time).
2. Saying vs Doing
Despite still heavily Bearish Sentiment, investors have not reduced Equity Allocations (actually, they increased the last 2 months in a row!).
3. Main Street vs Wall Street
On the other hand, economic sentiment has come right down to meet investor sentiment. Main Street now agrees with Wall Street.
(on that note, at least with the surveys, basically at this point everyone agrees how bad and bearish everything is. Interesting... probably right in that recession looks very likely, but at the same time, always pay closer attention when everyone is on one side of the boat!)
4. Allocations vs Consumer Sentiment
Another angle on allocations vs sentiment...
As with chart no. 2 it begs the open question -- who is wrong? (+who will need to do the most work to close that gap?)
5. Hope Springs Eternal
Similar thing on display in the ARKK chart...
"Despite weak performance (-85% from 2021 peak), there are now more shares outstanding in this ETF (a proxy for flows into the fund) than at the peak in 21"
6. Tech Flows
On the other hand, investors pulled a record $18B out of tech funds last year as the tech bubblet burst. This has prompted some to ponder whether or when growth stocks (of which tech are a key part) will become a value play (I amclosely tracking that, and so far on my data: not yet).
7. Presidential Cycle Present?
We knowseasonality works different in bear marketsvs all markets, but still a very interesting chart considering where sentiment is.
8. Bounce Back Stats
Unfortunately (or fortunately?) the S&P500 just missed being down 20% last year ("only" -19.4%). So that leaves us in the Down 10% Or More category where returns were higher the year-after just 63.6% of the time (vs 100% of the time for down 20% or more). Greater than 50%, but not by much.
9. Downs and Ups
I wonder if we will see a spike in Google Searches (or ChatGPT queries!) for: "how to make 900% on my investments"
Bad jokes aside, this is a good follow on from the previous chart — even if markets rebound, they'll need to do about 25% to breakeven (well, a bit less than that when you factor in dividends).
10. Profit Margin Bubble?
S&P500 profit margin expansion was driven by tech, and it raises a not so silly question: will tech go the way of financials? (i.e. arguably the financial sector (and energy/commodities) saw a profit margin bubble pre-08)
In other words, it makes you wonder how much of that margin expansion was driven by cheap and freely available capital + fast adoption phase for many tech names. Maybe it is sustainable, but maybe we also need to exercise some skepticism and thoughtfulness, as change is the only constant.
https://chartstorm.substack.com/p/weekly-s-and-p500-chartstorm-8-january
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