Weekly S&P500 ChartStorm - 18 Feb 2024

This week: seasonality, sentiment, positioning, technicals, efficiency, energy, valuations, global stocks, alternative assets, US vs global tech stocks...

Welcome to the latest Weekly S&P500 #ChartStorm!

Learnings and conclusions from this week’s charts:

• 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 minds…

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1. Seasonal Snip:  Been a good run YTD for stocks so far, but beware the second half of February — the market has historically tended to drift lower over the coming couple of weeks.

Source:  @RyanDetrick

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2. Election Season:  Intriguingly, the seasonality is worse this time of year during Presidential election years. Also, the general seasonal trend is poor vs all years during election years. So a couple of interesting pieces of background information on market tendencies.

Source: 

Daily Chartbook

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3. Surging Sentiment:  Meanwhile, investors are as bullish as it gets — Consensus Inc bullish sentiment is at a 20-year high for stocks. A point to ponder is when you have an extreme in sentiment it represents many minds that could change.

Source:  Will Inflation Surprises Upset The Apple Cart?

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4. Asset Manager Positioning:  Similarly, asset managers have upped their bullish positioning in equity futures (which is all the more meaningful given this shows net positioning (net long), and standardized against open interest). No doubt some are playing catch-up after being left behind by the raging tech bull.

Source: 

Daily Chartbook

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5. Meanwhile, This:  Chart shows in the red dots instances of 90% downside volume in close proximity to a record high. Not necessarily something to panic about, but again, as with some of the charts from last week — time to heighten the risk management senses (know your process, know your plan (…do you even have one??)).

Source:  @mark_ungewitter via @TheChartReport

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6. Tailwinds Turning:  Following up from last week,