Weekly S&P 500 ChartStorm - 17 April 2022

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  • Stocks sputter as rotation out of growth continues.
  • Utilities, agriculture stocks catch a relative bid as more new lows are hit in the broader market.
  • Economic rollover potential persists as negative earnings guidance emerges.

Bull and Bear Symbol with Stock Market Concept.

undefined undefined/iStock via Getty Images

1. Correction-Drivers Update

  • EPOL [Poland ETF] (geopolitics proxy): at a stalemate for now
  • LQD [IG Credit ETF] (credit/rates): new lows as bond yields spike further
  • ARKK [New Tech Fund] (tech burst): drifting further lower

Market itself just resting at support (and below both the 50 & 200dma).



2. Amazon vs Commodities… Cycle has shifted: unfriendly regime for tech.

Amazon vs commodities cycle shift


3. The rise and rise of tech... Permanently higher plateau?

Tech relative


4. Retail Investor Sentiment: Decent correction in sentiment as measured by this indicator, but it's still quite far from the bottom end of the range.

TD Ameritrade Investor Movement Index

TD Ameritrade Investor Movement Index

Source: TD Ameritrade Investor Movement Index

5. The hidden bear market... The headline index itself has not been much to get excited about either way, but under the surface there is a tell-tale sign of weakness and basically for all intents and purposes a hidden bear market.

new highs new lows weekly


6. Utilities: Turns out Utilities... have utility in a down market.

(and extra informative that they are outperforming while bond yields are surging)

Utilities relative to SPX


7. Agribusiness on the move: Agribusiness ETF breaking out vs the S&P500 after an extended period of chewing its cud, so to say.

Agriculture ETF MOO breaking out


8. Supply/Cost Problems: The supposedly transitory problems of supply chain disruption/shortages/covid/rising costs are still to this day very clearly a major problem for business, based on what companies are saying during their earnings calls.

SPX earnings companies citing negative impact

FactSet via @PriapusIQ

Source: FactSet

9. Economic Forecaster: The famous and clever Economist, Dr S&P500, is forecasting a slump in the ISM manufacturing PMI.

ISM PMI and SPX yoy % change


10. Asset Valuations: Commodities the least dirty shirt?

US asset classes: valuation vs history

Topdown Charts, Refinitiv Datastream

Source: @topdowncharts from The 12 Charts to Watch in 2022 [Q2 Update]

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

Cyclicals vs Defensives: US cyclicals vs defensives have pushed deeper into new lows. Similarly, the gradual decline for EAFE has accelerated, and EM appear to have put in a lower high. All-up, around the world, cyclicals vs defensives have gone from a source of strength to a source of weakness.

EM DM USA cyclicals vs defensives

Topdown Charts, Refinitiv Datastream, MSCI

And when you zoom out at the global level it looks very clear: this is not a bullish chart. At best maybe markets go sideways, but this is not a situation where the macro/value backdrop is at best (expensive valuations, high inflation, stumbling growth, tightening monetary policy).

global cyclicals vs defensives

Topdown Charts, Refinitiv Datastream

We've just been through a period of historical excess, and as the tides come in, so do they go out. Sorry if this is too bearish for you, but I just look at the charts and say what I see. When the facts change, my opinion will change.

This article was written by

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Topdown Charts is an independent research firm covering global asset allocation and economics - bringing a chart-driven, top-down approach to investors.  -->> Check out our new entry-level service: https://topdowncharts.substack.com/--We take a top-down, global multi-asset perspective to deliver:Actionable investment ideasRisk management inputMeaningful macro insightsCharts to use in your own work--Our clients include Pension companies, RIAs, Hedge Funds, family offices, insurance firms, and wealth managers and Investment Consultants.--Sign up for exclusive insights:  https://topdowncharts.substack.com/===================================================

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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