Deep Trouble, (but) Deep Value: despite [or perhaps because of!] all the bad news, challenges, threats -- a big shift has happened in European equities... (1/x)The combined PE ratio (average of the forward PE, trailing PE, and PE10 ratios) has dropped to extreme cheap levels. It is more or less on par with levels seen:-at the bottom of the dot-com bubble burst bear-and the 2020 pandemic panicThat said, it has yet to plumb the absolute lows seen during the global financial crisis and subsequent European sovereign debt "echo-crisis"Two cautionaries: 1. Although cheap, it could get cheaper.2. The “E” side of of the PE ratio is a moving targete.g. if earnings were to fall fast it could make valuations seem a little bit less cheap than what they appear now...But practically speaking, rather tha
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Weekly S&P500 ChartStorm - Bull market correction
Learnings and conclusions from this week’s charts: $S&P 500(.SPX)$ The August price action looks like a bull market correction.However the correction drivers look to be turning down again and the market rebound has stalled at short-term overhead resistance.Seasonal downdrafts are most intense typically in late-Sep/early-Oct.Retail flows, hedge fund positioning, corporate buybacks, analyst earnings estimates are all displaying clear bullish/extreme optimism.Meanwhile the macro remains murky (e.g. from charts this week show JOLTS jobs jitters, student loan payments unpausing).Overall, there’s definitely a case to be made that the August sell-off was a sort of healthy correction, but at the same time, it might be a little healthier if it cleared
Weekly S&P500 ChartStorm - Bull market correction
Weekly S&P500 ChartStorm - Sentiment is increasingly consensus bullish
Learnings and conclusions from this week’s charts: $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $NASDAQ(.IXIC)$ $Invesco QQQ Trust-ETF(QQQ)$ $Nasdaq100 Bull 3X ETF(TQQQ)$ $Nasdaq100 Bear 3X ETF(SQQQ)$ $NASDAQ 100(NDX)$ $DJIA(.DJI)$ $GLOBAL X DOW 30® COVERED CALL ETF(DJIA)$ Sentiment is increasingly consensus bullish.Bears have all but gone extinct.Large and small investors alike are basically all-in.Tec
Weekly S&P500 ChartStorm - Sentiment is increasingly consensus bullish
Weekly S&P500 ChartStorm - The market is heading into a seasonal sour patch
Learnings and conclusions from this week’s charts: $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ The market is heading into a seasonal sour patch.Bullish sentiment is at a 20-year high.A couple of macro/technical warning signs are lighting up.US tech stocks trade at a 2-3x premium vs global.Alternative asset returns can be quite misleading vs public markets.Overall, momentum remains up and to the right — albeit with an increasing number of amber lights and red flags. With folk crowded to the bull side and valuations priced for perfection, anything less could see a changing of many minds1. Seasonal SnipBeen a good run YTD for stocks so far, but beware the second half of February — the market has his
Weekly S&P500 ChartStorm - The market is heading into a seasonal sour patch
European equities are showing up as cheap
European equities are showing up as cheap
Weekly S&P500 ChartStorm - The S&P 500 finally crossed above the 5000 level
Learnings and conclusions from this week’s charts:The S&P 500 $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ finally crossed above the 5000 level.A number of short-term risk indicators are lighting up (sentiment, breadth, financial conditions).Valuations are also getting elevated as confidence surges.Credit spreads and the VIX $Cboe Volatility Index(VIX)$ meanwhile are complacent, calm.In the long-run, stock prices go up (albeit the long-term is simply a collection of many short-terms).Overall, there are ample bullish signs, signals, and stories. And indeed, in the long-run, historically at least, stocks go up. In the current short-run, there are some fa
Weekly S&P500 ChartStorm - The S&P 500 finally crossed above the 5000 level
Weekly S&P500 ChartStorm - 2 July 2023
Learnings and conclusions from this week’s charts:The S&P500 $S&P 500(.SPX)$ closed up +6.5% in June, its 4th consecutive monthly gain.YTD it close up +15.9%, and historically strength in H1 tends to echo into H2 (albeit with some notable exceptions).Although the Nasdaq far outperformed the S&P500 this year, it has been driven entirely by AI hype (with various macro-fundamental warning signs showing).Record high household allocations to equities (in 2021) warns of a potential “lost decade“ (big trading range) for the stock market.Both big and small investors alike are changing their mind on markets.Overall, technically the market looks solid. If you knew nothing about neither AI hype nor murky macro narratives, you’d probably be going
Weekly S&P500 ChartStorm - 2 July 2023
Weekly Macro Themes - Remain bullish small caps
This week I covered the following topics/ideas:1. Precious Metals: The gold bull market continues onwards and upwards, with silver also looking stronger, gold miners ticking along, and oil reaching an extreme low vs gold. 2. Defensive Value: Bullish on defensive stocks relative to $S&P 500(.SPX)$ as a bullish technical inflection point takes place against a backdrop of extreme cheap relative value, record low positioning/cap weight.3. Small Caps: Remain bullish small caps $iShares Russell 2000 ETF(IWM)$ given cheap absolute and relative valuations, potential upside from rotation out of tech and prospective monetary/macro tailwinds.4. Upside Downside: Reviewing the various upside vs downside risks helps
Stock & Bond Bears: 10 Charts to understand S&P500 Weekly performance
This week a look at some timeless charts from the past couple of years 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$Twitter(TWTR)$ .This week it’s a slightly different focus than usual given the quieter time-of-year — looking at some of the more timeless and thought provoking charts of the weekly ChartStorms of the past year or so.1. Lost DecadesPlenty of folk out there telling you to buy and hold and dollar cost average and focus on the long-term. Which is all well and good, but just be mindful that lost decades are actually relatively common... (especially if you expand the sample to oth
Stock & Bond Bears: 10 Charts to understand S&P500 Weekly performance
Weekly S&P500 ChartStorm - 2 October 2022
This week: monthly charts, volatility, sentiment, technicals, market bottoms, bear markets, valuations, IPOs, Big Passive, global equity bearmarketometer...1. Happy New Month:The S&P 500 closed September down -9.34% on the month, and is now down -25.25% YTD. In real (CPI adjusted) terms it is back below the pre-pandemic highs.2. Rate Shock:2022 has been a story of extreme interest rate volatility. As the rate shock ripples through the economy it's likely that volatility drifts higher across assets.3. Bear Market Topography:Just a friendly reminder that bear markets happen across space and time...4.Stark Sentiment:No more bulls (aka — a lot of minds that could be changed...)5. Extreme Oversold:The 24-month Williams%R Oscillator is showing up increasingly extreme oversold......albeit, th
Weekly S&P500 ChartStorm - 2 October 2022
Weekly S&P500 ChartStorm - Euphoria is the dominant market mood
Learnings and conclusions from this week’s charts: $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ Euphoria is the dominant market mood.Hedge funds are all-in on growth and momentum.Global stocks are looking much improved.The AI new paradigm is following a similar path to the dot com new paradigm (something to keep in mind for bulls AND bears).China is stepping up stimulus (important for global macro and markets).Overall, the things that stand out to me are the increasing parallels to the dot-com bubble — which is not necessarily a bearish comment. You may be wary of high valuations, euphoric sentiment, and mixed macro… but in the face of new highs, new paradigms, and the unpredictability of bubbles
Weekly S&P500 ChartStorm - Euphoria is the dominant market mood
Bear markets are more of a process than a percent change
Using the popular media definition of a bear market as the stockmarket being down more than 20% — at this point 40% of the world’s stockmarkets are in an “official bearmarket“.As regular readers will know I don’t really like that arbitrary percent change definition, I thinkbear marketsare more of a process than a percent change …and depend on shifts in underlying business and financial cycles.But it is still an interesting breadth indicator, which can be useful in generating technical analysis insights (e.g. if indicator is rising/falling, reaching extremes).But as for real bear markets, in the context of slowing global growth, global monetary policy tightening, and correcting of previous extremes in valuations, sentiment and positioning, the current backdrop is very much consistent with w
Bear markets are more of a process than a percent change
Stock & Bond Bears: 10 Charts to understand S&P500 Weekly performance
This week: trendline update, breadth thrusts, intermarkets, global vs US, fund manager allocations, profit margins, "techy sectors", earnings call swearing, and energy sector hatred... Welcome to theWeekly S&P500$S&P 500(.SPX)$ #ChartStorm— a selection of 10 charts which I hand pick from around the web and post exclusively on Substack.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.Hope you enjoy!1.Still Make or Break Time!A quick update on the most-watched trendline in markets. As of Friday’s close the market managed to nudge just above its 200-day moving average, but is still yet to make a move above that do
Stock & Bond Bears: 10 Charts to understand S&P500 Weekly performance
Chart of the Week - The oil vs gold ratio is trending consistent with recession risk
$S&P 500(.SPX)$ $Gold - main 2306(GCmain)$ $WTI Crude Oil - main 2306(CLmain)$ $Micro WTI Crude Oil - main 2306(MCLmain)$ $E-mini Crude Oil - main 2306(QMmain)$ The crude oil vs gold ratio has peaked at a key level and turned down – threatening to break further lower...ImageAside from being interesting with respect to the relative attractiveness of gold miners vs energy stocks and relative trades within commodities, this chart is also interesting as a macro indicator…If the global economy does rollover into recession, that’s going to be negative for energy d
Chart of the Week - The oil vs gold ratio is trending consistent with recession risk
My Worst Charts of 2022
$S&P 500(.SPX)$ Last week I shared with you some of my Best Charts of 2022... i.e. the charts and calls that worked really well in either building the picture or presenting a specific idea.Of course, it wouldn’t be complete without a look at some of the charts that *didn’t* work(or shall we say the ones that worked “less well!”).As noted in my previous article, I think it's good to review what worked well -- I believe in learning from success. But naturally it's also good to review what didn't work, to see if we can improve processes, thinking, and to make sure we stay humble.But also it's important to keep the gaze looking forward: some of the themes and ideas listed below might not have worked this year, but they may well become all the
My Worst Charts of 2022
Overall, the resilience of the market in the face of various threats and headwinds
Learnings and conclusions from this week’s charts: $S&P 500(.SPX)$ $Invesco QQQ Trust(QQQ)$ $NASDAQ 100(NDX)$ The market has ticked another box for bulls by recapturing its short-term uptrend line (along with retesting the breakout vs downtrend line and failed breakdown vs its 200-day moving average).Seasonality is historically excellent in April (one of the best months for stocks).Small & Micro cap stocks are so far holding onto key support levels (big for bulls in that a breakdown would have confirmed bear market: but still a big ol’ trading range to clear).The sustainability or otherwise of any new bull is going to depend bigly on whether the market can
Overall, the resilience of the market in the face of various threats and headwinds
Weekly Macro Themes End of Year - Charts That Didn’t Work
Of course, it wouldn’t be complete without a look at some of the charts that didn’t work (or shall we say the ones that worked “less well!”). $S&P 500(.SPX)$ $NASDAQ(.IXIC)$ $DJIA(.DJI)$ 1. No recession, well at least not in the hard data – the PMI did come down, but did not follow the leading indicators to the implied depths of doom.“it was justified for the Fed to cut rates into the pandemic… and they should have removed the emergency measures shortly after – but again, they opted for the risk of overcooking growth/inflation/risk-taking vs the risk of tightening too early. And one consequence of all this and everything else that’s gone on is the various le
Weekly Macro Themes End of Year - Charts That Didn’t Work
S&P500 is taking a breather after briefly hitting 6000
Learnings and conclusions from this week’s charts:1. $.SPX(.SPX)$ is taking a breather after briefly hitting 6000.2. Numerous investor surveys have hit record (bullish)highs.3. Market measures of sentiment show extreme confidence/complacency.4. A clear vibe-shift is underway in economic confidence.5. High growth once is easy, consistently high growth is hard.Overall, the market is taking an inevitable breather after an extended run, and I think one way to reconcile it is if nothing else; just a period of digestion and correction of extreme confidence, optimism, and bullish euphoria (as the data and charts below show). It does mean there are a lot of minds that could change given the right prompt, but in the immediate term the predominant market m
S&P500 is taking a breather after briefly hitting 6000
Stock & Bond Bears: 10 Charts to understand S&P500 Weekly performance
This week: technical check, recession trading, sentiment snippets, flows, positioning, strategist split, central banks, mid-cap stocks, economic vs market sentiment... 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.Hope you enjoy! 1. “Let’s Take This Offline“First glance, this looks short-term bearish. That downtrend line has basically been confirmed, and that blue support line has been breached. With the Fed
Stock & Bond Bears: 10 Charts to understand S&P500 Weekly performance
Main Street vs Wall Street: S&P500 Profit Margin Bubble?
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 AgainThing about trendlines is that they move even if pr
Main Street vs Wall Street: S&P500 Profit Margin Bubble?
Detecting Opportunities in Commodities
Learning GoalsUnderstand valuation concepts for commodity marketsUnderstand indicator design in non-traditional asset classesApply principles to identify risk and opportunities in commoditiesConceptsFollowing on from my previous post introducing the concept of valuations for market timing and risk management, this post focuses on the application of value signals for navigating the cycles in commodity markets.The same basic concept applies – we want to buy low (cheap) and sell high (expensive). It’s of course more nuanced in practice, but that’s the key objective and the core purpose of valuation indicators.When it comes to commodities, figuring out a reliable and sensible valuation indicator can be quite challenging. For equities it’s comparatively simple: e.g. just use some variatio
Detecting Opportunities in Commodities
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