Weekly S&P500 ChartStorm - 12 January 2025

This week: market breadth, regime change, seasonality, positioning, developed markets, stockmarket concentration issues, margins, and valuations...

Welcome to the latest Weekly S&P500 #ChartStorm!

Learnings and conclusions from this week’s charts:

• Market breadth is undergoing a regime change (bearish).

• Election cycle seasonality is ranging and volatile in Q1.

• Retail speculators just went all-in on stocks.

• The US index is becoming more concentrated (just like RoW).

• Margin expansion has been more a feat of financial vs tech innovation.

Overall, as noted there appears to be a bearish regime change underway in the US stockmarket. This comes after an extended strong bull-run, and amidst numerous late-cycle signals showing up. This week we explore these changes and a few other key issues around market structure and fundamentals.

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1. Regime Change:  As we head towards political regime change, it seems the market is also in the process of undergoing a regime change. S&P500 200-day moving average breadth (proportion of stocks trending up) has broken down out of the robust range it occupied most of last year. Meanwhile the index itself has started to record a series of short-term lower lows and lower highs. This is what you would call a health scare (something serious and relatively sudden that prompts you to rethink things).

Source:  MarketCharts

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