Weekly S&P500 ChartStorm - 2 February 2025

This week: monthly chart, January impact, growing optimism, small caps vs large caps outlook, darkening markets, CFA trends, corporate life expectancy, rotation...

Welcome to the latest Weekly S&P500 #ChartStorm!

Learnings and conclusions from this week’s charts:

• The S&P 500 closed up +2.7% in January.

• The equal-weighted index did +3.4% (sign of things to come?).

• Companies are sounding more optimistic in earnings calls.

• Investor confidence is down, economic confidence is up.

• The scene is set for rotation (especially small vs large).

Overall, despite some volatility, January marked a solid start to the year, and the maintenance of momentum is a good sign (historically speaking — as the charts show). The intriguing uptick in economic optimism actually provides more of a prompt to ponder rotation and ranging rather than more of the same of the past few years. Change is in the air…

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1. Happy New Month:  The S&P500 closed January up +2.7% on the month, extending its bull run and 15-month streak above the 10-month moving average. Interestingly the equal-weighted S&P500 outperformed the cap-weighted; up +3.4% — a harbinger for some much overdue rotation?

Source: 

Topdown Charts

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2. Good January, Good Year?  Stockmarket returns tend to be better when January is an up month. I’m guessing this is a trend/momentum thing — in other words, if stocks went up in January then there’s probably a good chance the market is already in an uptrend, and uptrends tend to …trend. I think Newtown said it best: “a body in motion at a constant velocity will remain in motion in a straight line unless acted upon by an outside force.”