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Weekly S&P500 ChartStorm - 17 April 2022
This week: risk-driver review, check on tech, retail investor sentiment, the hidden bear market, utility of utilities, agribusiness on the moove, muddy macro, asset valuations...
The 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!
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1. Correction-Drivers Update:
-EPOL [Poland ETF] (geopolitics proxy): at a stalemate for now
-LQD [IG Credit ETF] (credit/rates): new lows as bond yields spike further
-ARKK [New Tech Fund] (tech burst): drifting further lower
Market itself just resting at support (and below both the 50 & 200dma).
2. Amazon vs Commodities… Cycle has shifted: unfriendly regime for tech.
3. The rise and rise of tech... Permanently higher plateau?
4. Retail Investor Sentiment: Decent correction in sentiment as measured by this indicator, but it’s still quite far from the bottom end of the range.
5. The hidden bear market... The headline index itself has not been much to get excited about either way, but under the surface there is a tell-tale sign of weakness and basically for all intents and purposes a hidden bear market.
6. Utilities: Turns out Utilities... have utility in a down market.
(and extra informative that they are outperforming while bond yields are surging)
7. Agribusiness on the moove: Agribusiness ETF breaking out vs the S&P500 after an extended period of chewing its cud, so to say.
8. Supply/Cost Problems: The supposably transitory problems of supply chain disruption/shortages/covid/rising costs is still to this day very clearly a major problem for business, based on what companies are saying during their earnings calls.
9. Economic Forecaster: The famous and clever Economist, Dr S&P500, is forecasting a slump in the ISM manufacturing PMI.
10. Asset Valuations: Commodities the least dirty shirt?
BONUS CHART >> got to include a goody for the goodies who subscribed.
Cyclicals vs Defensives: US cyclicals vs defensives have pushed deeper into new lows. Similarly, the gradual decline for EAFE has accelerated, and EM appear to have put in a lower high. All-up, around the world, cyclicals vs defensives have gone from a source of strength to a source of weakness.
And when you zoom out at the global level it looks very clear: this is not a bullish chart. At best maybe markets go sideways, but this is not a situation where the macro/value backdrop is at best (expensive valuations, high inflation, stumbling growth, tightening monetary policy).
We’ve just been through a period of historical excess, and as the tides come in, so do they go out. Sorry if this is too bearish for you, but I just look at the charts and say what I see. When they facts change, my opinion will change.
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