Weekly S&P500 ChartStorm - Top 10 Charts of 2022

Here's the most popular charts from the Weekly S&P500 ChartStorms of 2022

Welcome to the final Weekly S&P500 #ChartStorm of 2022!

To wave goodbye to the year, I have collated the most popular charts of the year based on a combined ranking of retweets and likes on Twitter. The format is a little different — I have embedded the original tweet so you can see the date, original tweet text, and of course the chart (you can even visit the tweet and see what people were commenting at the time — which in itself can be revealing sometimes!).

Along with that I’ve added some comments as points of reflection in terms of the content, insight at the time, and any remaining relevance going forward. So it should be interesting both in terms of what type of content resonated with people through the year as well as shedding some insight on the big-picture market cycle.

Hope you enjoy!

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1. Market Cycles: This one was interesting because it mapped the market action that was unfolding to the simple textbook stylized market cycle where bonds go down first, then stocks, then commodities. As of the time of writing they’re all basically still going down, but the next step in the perfect world of the textbook market cycle ““should““ be for bonds to turn up...

Callum Thomas @Callum_Thomas

6. It's the old textbook market cycle in progress: first bonds peak, then stocks peak, then commodities peak... At it's simplest, price just reflects the progression of the business cycle (and inflation/monetary policy) h/t @granthawkridge $AGG $SPY $DBC

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2. When The Trend is Not Your Friend: I think the most interesting aspect of this one is even just the thought exercise alone of “what happens if stocks don’t just go up long-term?“ — indeed, aside from the 2000-03 bear market, and 08/09 financial crisis, there have been numerous lost decades, as I pointed out the other day — confounding some of the conventional wisdom and sales spin. It also gives us a useful if simple heuristic for risk management.

Callum Thomas @Callum_Thomas

1. The bear truth... From a long term trend perspective, a prospective crossing over of these longer term moving averages would demarcate this from a shakeout/correction to a proper shift in trend -- a concept which would be outright alien to many. h/t @howardlindzon $SPX $SPY

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3. Valuations:  So, we can definitely debate the merits of the price-to-sales ratio, but on just about every valuation indicator stocks reached extremely expensive levels — leaving zero margin for error. The unwinding of overstretched valuations was one of the reasons this year was so painful for passive buy and holders.

Callum Thomas @Callum_Thomas

7. Good news bargain hunters, the S&P500 price/sales ratio is now *only* 20% above dot com bubble levels! h/t @OJRenick $SPX $SPY

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4. Largest Drawdowns: This one was interesting in terms of putting things in perspective, but also a cautionary in that 2020 was an extreme outlier. The worst bear markets were not sudden crashes, but rather ongoing processes of grinding demoralizing pain and frustration.

Callum Thomas @Callum_Thomas

3. Just a friendly reminder that bear markets happen across space and time... h/t @MacroAlf $SPX $SPY

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5. Earnings Watch-Out(look): The first wave of the bear market in stocks was geopolitics, inflation shocks, and Fed tightening, the second wave likely is driven more by economic recession risks and earnings downside. This chart provided advance warning in that respect.

Callum Thomas @Callum_Thomas

5. The problem with lower P/E ratios is that while the P has moved, the E is on thin ice -- and the cracks are starting to show... h/t @MikaelSarwe $MACRO $SPX $SPY

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6. Under The Surface:  There was (and still is?) much debate as to whether 2022 is/was a bear market. But this chart made it obvious that below the surface of the headline market indexes, a bear market was clearly underway.

Callum Thomas @Callum_Thomas

8. Let there be no ambiguity. This is a bear market. Under the surface the picture is clear. We are only now starting to see the index roll over. h/t @jasongoepfert $NDX $QQQ

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7. Stocks vs Bonds: One of the unusual things about this year was how both stocks and bonds suffered. Indeed, despite the down move in stocks, this version of the stock/bond ratio reached new (extreme/bubbly) highs. It begs the question as to whether 2023 or beyond might see bonds turn the tides on this chart.

Callum Thomas @Callum_Thomas

9. Stocks vs Bonds ratio... Wild. h/t @AtlasPulse $SPX $SPY $BONDS

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8. Asset Deflation:  Continuing that comment, if there was any term to sum up the year in markets it would be “Wealth Destruction“. Stocks down, bonds down, crypto down, house prices starting to drop… and that’s in nominal terms (much worse in inflation-adjusted terms).

Callum Thomas @Callum_Thomas

9. Asset Deflation. This kind of wealth destruction is rare and likely ripples long beyond the horizon that most are focused on. h/t @PhilipJagd

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9. Margin Call:  Interesting chart in its own right, and intriguing how it seemed to flash the same warning signs as the last two major downturns, but of course any time you make reference to 00/01 and 08/09 people are going to pay attention!

Callum Thomas @Callum_Thomas

7. File under: "things that look exactly like 00/01 & 08/09" @topdowncharts $SPX $SPY

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10. Monetary Tides Going Out:  When the monetary tides were coming in (or more like a monetary (+fiscal) tsunami!) just about every asset and market went up and we saw throngs and multitudes of bull market geniuses pounding their chests. Not so much enthusiasm now that the monetary tides are going out. In hindsight, it was never going to end well for markets.

But not to leave you on a grim note: these things go in cycles: know the cycle, love the cycle, embrace the cycle, and the cycle will be your friend and not your enemy.

Callum Thomas @Callum_Thomas

8. Record QE to Record QT. You didn't think you could escape unscathed from this monetary maelstrom did you? h/t @AyeshaTariq $MACRO

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BONUS CHART >> got to include a goody for the goodies who subscribed.

End of Year Special Report:  this week’s bonus chart is… 47 charts!!

That’s right, as a holiday treat I’m making my 2022 End of Year Special Report from Topdown Charts available as a one-off free download for followers and supporters.

The report includes 47 of my best, worst, and favorite charts of 2022 and the must-see macro/market charts to have on your radar in 2023.

Specifically, the contents:

• Charts That Worked

• Charts That Didn't Work

• My Favorite Charts

• Charts to Watch in 2023

• Honorable Mentions

• People's Choice Charts

I hope you enjoy this selection of charts which I have meticulously handpicked from reviewing all of my Topdown Charts “Weekly Macro Themes” reports of the past year. And what a year it was!

Happy Holidays!

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Best regards,

Callum Thomas

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