Weekly S&P500 ChartStorm - 24 August 2025
This week: market breadth, earnings momentum, bullish rotations, seasonality snippets, tech sector risk flags, credit spreads...
Welcome to the latest Weekly S&P500 #ChartStorm!
Learnings and conclusions from this week’s charts:
We’re seeing bullish broadening as breadth trends higher.
Also seeing improved earnings breadth and bullish rotation signs.
(but) there are ample seasonal risk flags waving heading into Sep.
Tech sector early-warning indicators are also starting to light up.
Credit spreads at 25-year lows indicate a mix of confidence & complacency.
Overall, there’s probably 3 key themes this week; the building bullish evidence (technicals, rotation, breadth), the bigger picture risk pressures building (expensive valuations, AI hype, all-in positioning), and the short-term seasonal risk flags waving. The way to reconcile this is the way you always reconcile this sort of thing: through portfolio strategy (diversification), risk management (contingencies to address downside risk), and paying attention to what price is telling you…
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1. Breadth Broadening: Here’s something interesting; after the last 2 minor sell-offs breadth has come back stronger both times, and just as the index is making higher highs and higher lows the 200-day average breadth indicator is making higher highs and higher lows — and is now sitting at the strongest level since late last year. Bullish stuff.
Source: MarketCharts
2. Earnings Momentum: On a similar note, the breadth of earnings revisions momentum is expanding (over 80% of companies are seeing positive 3-month revisions in forward EPS). In practice this is sort of a sentiment indicator, but one thing to note is the pattern of movement here (i.e. a big washout and rebound) is consistent with the early stages of cyclical bull markets.
Source: @SethCL
3. Big Things in Micro-caps: Another bullish broadening/rotation theme is the emerging strength in micro-cap stocks. It’s always interesting to see the fringe/riskier stuff doing well (n.b. also note that frontier markets and EM stocks have also been going strong recently; indicative of the broadening bullish price action sweeping global markets at the moment).
Source: @TheDonInvesting
4. Bullish Rotation? Indeed, while there are risks and pressures building in certain pockets of the market, there’s also bullish possibilities hiding in plain sight. A big potential one is the relative value trinity that I’ve been going on about (global vs US, small vs large, value vs growth). I think there is a real chance we do get a bullish resolution of this in the form of bullish rotation and catch-up by past laggards. A big part of that story is going to be global growth reacceleration theme (explained here).
Source: Chart of the Week - The Best vs Worst
5. VIX Seasonality Tracker: But just to keep things grounded, here’s an update to the VIX seasonality tracker — because even if we bull-forward through to 2026, rule one of markets is things don’t go up in a straight line. We’re almost certain to see a flare-up in volatility some time in the coming weeks…
Source:
6. Seasonally September Sucks: And September could be a candidate for that. Seasonally September is typically one of the worst months of the year, and as I’ve previously belabored valuations are elevated, positioning is fairly all-in, and September brings a busy macro calendar.
Again though, this is not necessarily a reason for pessimism or bearish abandon, but certainly a prompt to think about risk management and portfolio strategy.
Source: Citadel via @neilksethi
7. Seasonal Buyers’ Strike: This is an interesting one, and it stacks on last week’s chart (no. 4) that showed corporate buybacks seasonally slump this time of year — it also turns out retail buying sees a seasonal slump too: “retail buying activity starts to slacken in August, while September typically marks the year’s low point for retail participation.”
Source: Scott Rubner of Citadel via Daily Chartbook
8. Credit Spread Seasonality: Credit markets also have historically seen a tendency for spread widening around this time of the year. So again it’s all enough to make you at least keep a closer eye on risk in the coming weeks/months.
Source:
9. Tech Sector CDS: Speaking of credit markets, I thought this one was interesting — it seems tech sector CDS (the cost to insure against credit default) have been ticking higher in recent weeks… what do credit markets know?
Source:
10. Tech Winners & Losers: Which is interesting when you also notice the tech sector High-Low Logic Index surging, which indicates a “significant number of stocks making new highs while others are making new lows” which Dean Christians described as “underscoring how AI is creating winners and losers within the sector.”
As I commented on twitter the other day, it does appear as though there are some cracks starting to appear in the AI Hype narrative (and specifically the hype cycle).
Source: @DeanChristians
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BONUS CHART >> got to include a goody for the goodies who subscribed.
Credit Spreads: US investment grade credit spreads reached a 25-year low last week.
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