{"id":29109,"date":"2024-12-17T13:57:09","date_gmt":"2024-12-17T13:57:09","guid":{"rendered":"https:\/\/mycryptomania.com\/?p=29109"},"modified":"2024-12-17T13:57:09","modified_gmt":"2024-12-17T13:57:09","slug":"sp-500-breadth-oversold-as-a-seasonal-sweet-spot-begins","status":"publish","type":"post","link":"https:\/\/mycryptomania.com\/?p=29109","title":{"rendered":"S&P 500: Breadth oversold as a seasonal sweet spot begins."},"content":{"rendered":"

For today\u2019s update, I want to highlight several key charts I\u2019m watching for the capital markets and how they are impacting the near-term outlook<\/strong>.<\/p>\n

I also have a quick summary and links to recent posts that remain impactful for monitoring the markets. And after that, you can find a bonus trade idea on a chart setup<\/strong> that I\u2019m monitoring.<\/p>\n

Big Picture<\/h3>\n

Another updated look at inflation shows that pricing pressures keep moving in the wrong direction<\/strong>. The Consumer Price Index (CPI) gained 2.7% in November compared to last year, while the core figure that excludes food and energy prices rose by 3.3%. The headline figure accelerated from the prior month\u2019s 2.6% pace<\/strong>, while core inflation bottomed in August and has trended sideways the past three months<\/strong>. The Producer Price Index (PPI) jumped 3.0%, which is the largest gain since February 2023. It\u2019s also worth noting that the PPI tends to lead changes in the CPI<\/strong> as you can see below. The chart plots core PPI (blue line) and core CPI (red line), with core PPI crossing above CPI in November\u2019s figures<\/strong>.<\/p>\n

Many economists are dismissing the acceleration in CPI and PPI over the past month to rising food prices. For instance, food prices accounted for around 60% of the PPI\u2019s monthly increase with egg prices up 55% alone<\/strong>. The chart below shows an index of agricultural commodities, which are up nearly 30% year-over-year and are recently breaking out to the highest levels in over 12\u00a0years<\/strong>.<\/p>\n

Chart from Tavi Costa<\/a> on\u00a0X<\/p>\n

While many economists are pointing to one-off factors that are driving recent increases in inflation, some alternative measures of core inflation show that pricing pressures are persistent<\/strong>. The Fed\u2019s \u201csupercore\u201d measure that looks at core services excluding home rents has averaged 4.3% over the past three months<\/strong>. Another measure of core goods that excludes food and energy shows the annualized pace over multiple lookback periods is turning higher over the past couple months<\/strong> (chart\u00a0below).<\/p>\n

Chart from Nick Timiraos<\/a> on\u00a0X<\/p>\n

The average stock is lagging badly during a historical period of weak seasonality for the S&P 500<\/strong>. Mid-December tends to see a volatile stretch for the S&P 500 looking at historical trends over the past 20-years. And right on cue, there have been more declining stocks than advancers for 10 straight sessions for holdings in the S&P<\/strong>. That\u2019s the longest streak since October 2000. Across the major exchanges, there are now only about 39% of stocks trading above their 20-day moving average<\/strong> (chart below). That\u2019s a way of gauging how many stocks are trading in short-term uptrends.<\/p>\n

As the average stock is pulling back, some measures of stock market breadth are reaching oversold levels<\/strong>. The McClellan Oscillator in the chart below looks at advancing versus declining stocks on the NYSE over a trailing period. You can see the oscillator is approaching oversold levels seen during periods like the start of November and first week of August that saw broad rallies\u00a0unfold<\/strong>.<\/p>\n

After a short-term period of seasonal weakness, a strong three week stretch is coming up for the S&P 500<\/strong>. The chart below shows the S&P 500\u2019s seasonality during election years going back to 1928. If those seasonal trends hold up, then a rally into mid-January could start this coming week<\/strong>. That makes emerging signs of oversold breadth conditions quite interesting against the backdrop of historic seasonal\u00a0trends.<\/p>\n

Chart from Seth Golden<\/a> on\u00a0X<\/p>\n

Mosaic Tidbits<\/h3>\n

Here are a few of my recent posts that are still impactful and relevant to the stock market\u2019s next\u00a0move:<\/p>\n

Catalysts are lining up to boost small-caps<\/strong>. The rate-cutting cycle, relative valuations, and a momentum thrust are driving a historical breakout in the Russell 2000 Index of small-cap stocks<\/a>.Animal spirits are igniting speculative areas of the capital markets. High-yield bonds are another segment delivering a positive signal on the outlook<\/strong>, including junk bond spreads and relative performance of the lowest rated categories<\/a>.The S&P 500 is setup for a strong finish to 2024<\/a>. A favorable seasonal period, recent surge in the number of stocks making net new 52-week highs, and loose financial conditions are supportive near-term for the stock\u00a0market<\/strong>.If inflation keeps accelerating, then a major change in stock market leadership could be coming<\/a> in 2025. Energy and consumer discretionary sectors are highly correlated to rising inflation, while commodities could be set for a mean-reverting move\u00a0higher<\/strong>.<\/p>\n

Heard in the\u00a0Hub<\/h3>\n

The Traders Hub features live trade alerts, frequent market update videos, and other educational content for\u00a0members<\/strong>.<\/p>\n

Here\u2019s a quick recap of recent alerts, market updates, and educational posts:<\/p>\n

Riding Bitcoin\u2019s breakout to a 37% gain in just 25\u00a0days.<\/strong>My favorite crypto-linked trade idea heading into year-end.<\/strong>How high quality growth fundamentals helped us capture a 73%\u00a0gain.<\/strong>Boosting longer-term gains with trailing moving averages, including one growth holding now up\u00a0247%.<\/strong><\/p>\n

You can follow everything we\u2019re trading and tracking by starting a 7-day free trial <\/strong>here<\/strong><\/a>. By starting a trial, you will unlock all content and reports created exclusively for\u00a0members<\/strong>.<\/p>\n

Chart Idea<\/h3>\n

IREN Ltd\u00a0(IREN)<\/strong><\/p>\n

If cryptocurrencies keep rallying into year-end, then keep a close eye on IREN. The company\u2019s data center facilities are optimized for Bitcoin mining and artificial intelligence applications. The stock tested the $16 area back in July then pulled back. The stock is making a smaller pullback after testing that level again at the start of December, which is resetting the MACD at the zero line. I\u2019m watching for a breakout over $16, and will send a complete trading plan to Hub\u00a0members.<\/p>\n

I hope you\u2019ve enjoyed The Market Mosaic, and please share this report with your family, friends, coworkers\u2026or anyone that would benefit from an objective look at the stock\u00a0market.<\/p>\n

Become a member of the Traders Hub<\/strong> to unlock access\u00a0to:<\/p>\n

\u2705Model Portfolio<\/strong><\/p>\n

\u2705Members Only\u00a0Chat<\/strong><\/p>\n

\u2705Trade Ideas & Live\u00a0Alerts<\/strong><\/p>\n

\u2705Mosaic Vision Market Updates +\u00a0More<\/strong><\/p>\n

Our model portfolio is built using a \u201ccore and explore\u201d approach, including a Stock Trading Portfolio and ETF Investment Portfolio.<\/p>\n

You can start a 7-day free trial to the Hub by clicking <\/strong>here<\/strong><\/a>. By starting a trial, you will unlock all content and reports reserved exclusively for\u00a0members.<\/p>\n

Disclaimer: these are not recommendations and just my thoughts and opinions\u2026do your own due diligence! I may hold a position in the securities mentioned in this\u00a0report.<\/em><\/p>\n

S&P 500: Breadth oversold as a seasonal sweet spot begins.<\/a> was originally published in Coinmonks<\/a> on Medium, where people are continuing the conversation by highlighting and responding to this story.<\/p>","protected":false},"excerpt":{"rendered":"

For today\u2019s update, I want to highlight several key charts I\u2019m watching for the capital markets and how they are impacting the near-term outlook. I also have a quick summary and links to recent posts that remain impactful for monitoring the markets. And after that, you can find a bonus trade idea on a chart […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-29109","post","type-post","status-publish","format-standard","hentry","category-interesting"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/29109"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=29109"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/29109\/revisions"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=29109"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=29109"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=29109"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}