To The Moon

We have seen U.S. stocks experiencing some pullback since mid-August, the $S&P 500(.SPX)$ has been able to maintain its losses to less than 1.5% for 100 straight trading day with data until September 19th Market Close.

This is the first time since 2018 since S&P 500 has shown such performance.

Over a period of 100 trading days, which is close to five months, there are some significant events and the U.S. market has faced several challenges.

Rising Treasury Yields

Fed's aggressive rate hikes and recession worries to rising Treasury yields. Despite these, market remained placid and stable due to investor optimism about the economy, with significant inflow of capital and leadership provided by some of the larger technology stocks.

If we look at how 10 Years Yield have increased and S&P 500 seem to have an inverse relationship, but it does not cause too much impact to its prices.

Soaring Energy Prices

Factors like soaring energy prices have also make many traders turning bearish but they are not shorting. There are also other factors like geopolitical risks, lackluster tech stocks, relatively high U.S. stock valuations which could affect how S&P 500 would move.

WTI Oil Price vs S&P 500 Over Period 2023

If we look at how S%P 500 have moved in relation to WTI prices, we can see that it is pretty consistent, so I would think S&P 500 might not be seeing too much of an impact unless oil price soar above $90 per barrel.

WTI Oil Price vs Cboe Volatility Index (VIX)

I wanted to look at whether soaring oil price would bring about a significant increase in the VIX, apparently, we are not seeing any significant increase in VIX.

WTI Oil Price vs SPDR S&P 500 ETF Trust (SPY)

$SPDR S&P 500 ETF Trust(SPY)$ seems to move pretty much the same trend as the WTI Oil price, we might be seeing oil price continue to go up, but will SPY continue to maintain this trend?

What I foresee is big technology stocks in the SPY composite goes down, then significant impact on SPY might be populate down to the S&P 500.

Summary

From what we have observed so far on how S&P 500 is trading, it seem to be moving along a safe line, having some short-lived success.

But some economists has warned that this current calm in U.S. stocks might be a prelude to a stormy times ahead. Past historical data over the past two decades has indicates that U.S. stocks have an average of about a 2% decline in the second half of September.

I would think we need to consider these factors because of the events coming up (e.g. Fed rate hike decision, Oil output production cut, re-valuation of large technology stocks).

If inflation remain sticky, we should see bond yield going up as investors would look for safe haven, oil prices should be trending up, would not come in so soon.

If technology stocks start to lose their valuation, we might see a correction coming. I would think the best strategy is to look at defensive ETFS and stocks.

Gold and Healthcare stocks. $SPDR Gold Shares(GLD)$

Appreciate if you could share your thoughts in the comment section whether you think S&P 500 would have a short rally coming or will we see a first more than 1.5% decline?

@TigerStars @Daily_Discussion @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.