Recession, earnings, the Fed, ongoing war, housing concerns, debt ceiling, over-valuation…. The gloom can crush you. Don’t listen to it. Look at the data:
- S&P 500 price is above the 50-day moving average and above the 200-day moving average
- S&P 500 50-day moving average above the 200-day moving average (golden cross) which has historically led to higher future returns
- Monthly momentum indicators turning higher (Coppock, MACD)
- Every day this year new 52-week highs > new 52-week lows
- 75% of stocks above its respective 200-day moving average
- 10 out of 11 S&P 500 sectors above its respective 200-day moving average (only outlier is very defensive Utilities sector)
- Global breadth surging
- Cyclicals > Defensives
- Small Cap Stocks > Large Cap Stocks
- High yield and investment grade spreads tighter
- Cash levels still at all-time highs
I could go on and on pointing out bullish data, which completely flies in the face of the narrative.
And now we are seeing ‘escape velocity’ according to Jeff DeGraaf at Renaissance Macro. This is occurring during a week when the Fed raised interest rates and hinted at a few more, the mega-cap earnings Thursday night were lackluster to say the least, and there was a monster jobs report that would have sent the market into a tailspin 4 months ago. The market is shrugging the news off, climbing that wall of worry. The probability of a new bull market is high.
Sean Dillon, CMT, CFTe
SVP, Investment Strategies
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