Weekly S&P500 ChartStorm - 12 February 2023

This week: correction risk drivers, analyst sentiment, optimism, peak pessimism, euphoria nadir, base building, macro headwinds, worse-off readings, long-term investing, and a weird indicator...

Welcome to the Weekly S&P500 #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 forces and factors that influence the outlook - with the aim of bringing insight and perspective.

For more background, see: ChartStorm Origin Story

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1. Correction Risk-Drivers Chart Updated:  Here’s a chart that was a frequent feature early last year — basically the idea was that the 3 in the bottom panel: EPOL (Poland: geopolitics proxy), LQD (IG Credit: rate shock (+credit)), and ARKK (new tech bubble burst) were key barometers in terms of the range of risks driving the market lower.

These 3 more or less tagged along during the rally from the October lows, but more recently have all rolled over, and effectively begun to flag downside risk once again. While we shouldn’t expect a replay of last year, the fact that the market stumbled from a key resistance level, and these risk areas are wobbling again should give food for thought on the short-term outlook…

Source:  StockCharts

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2. Analyst Price Targets:  Meanwhile, as price heads higher, analyst sentiment by this metric has reached the highest level since 2021. Clear shift and break from the trend lower that persisted through 2022…