Health of the Market  (10/12/2024)

The charts will be updated by   every Saturday. When no change to text, [NC] will be used. Click for favorite investment websites. This site is part of Charlottesville's The Center at Belvedere Investors' Forum. Note: If the latest date does not show here or on charts, try reloading the page or clearing cached images.

Health (Home) Market Status Longer Term Market Cycles System Observations Income



[NC]  The indicators for the equity market show a up market within a bull cycle in a bull trend, and in a bull market (see definitions on Longer Term page). The plot of the advancing stocks less the declining stocks on the NYSE is now heading up..  The Power Zone is coming shortly. October is generally poor in the first half. This year seems different with Fed moving rates down and the election. .  Click here to check it out. 

The S&P 500 finished the week ending October 11 with another record-breaking rally, up 0.97% from last Friday. The index just notched a new all-time closing high and is now up 22.61% year-to-date.

The S&P 500 index closed up 1.11% for the week, after being up 0.22% the previous week. The Nasdaq index closed up 1.13% for the week, after being up 0.10% the previous week.  The small caps closed up 0.96% for the week, after being down 0.54% the previous week.

81.1% of S&P 500 stocks were above their 200-day exponential moving averages, up from 80.0% the week before.  76.6% of these stocks were above their 50-day EMAs, up from 74.4% the week before.  54.4% of Nasdaq stocks were above their 50-day EMAs, up from 53.5% the week before (see chart). 

[NC]  A Bull Cycle started the week ending 11/10/2023 after a short bear cycle that started 10/20/2023. The previous bull cycle started 3/17/2023. A Bull Trend was signaled 11/17. A VIX Buy Alert occurred on 8/16/2024, shown on the Market Status page.  Charts for the fourth year of the presidential cycle are shown on the Cycles page.  The first half of October is typically poor. It does usually end up..  Check out this analysis to see the what happens monthly in greater detail.

[NC]  The Power Zone, the favorable time of the year, ended on April 11. The Power Zone typically starts sometime in October and ends sometime in May. See the Market Cycles page for more. The 10-year Treasury yield is below the 2-year AND the 3-month yield, which is an inverted yield curve. This generally precedes a recession by several quarters.  See more on the Income page.

[NC]  This website follows the markets and does not presume to factor in economic conditions. Buyer beware!

[NC]  Market timing is discussed on the Observations page -- does it work?  Consider dollar-cost-averaging over a month or so to gain access to the market -- if you have missed the buy-low point (which most people do). Check out this article on how the market moves during the month.  For traders, buy on the 27th and sell on the 6th.  Or buy on the 10th and sell on the 18th. 

[NC]  A three-month performance chart of the Nasdaq QQQ exchange-traded fund is below. QQQ delivers a mash-up of tech, growth and large-cap exposure that excludes financial stocks. The fund and index are rebalanced quarterly and reconstituted annually.


[NC]  The CNN Fear & Greed Index gives an interesting perspective on the internals of the market. The trend of the components of this index are important to gauge the trends of the market.

[NC]  A measure to determine if the price is too high relative to the underlying earnings is the Schiller price to earning ratio. This is the current price divided by the 10-year average of "real" (inflation-adjusted) earnings. This ratio corresponds quite well to the peaks of price as shown by charts on this site.

[NC]  John Murphy of StockCharts.com asks "Why do we look at charts?" - They provide the most up-do-date information on the state of the stock market. They may also be telling us something about the fundamental reports we won't be getting until much later. Charts track forward-looking markets, while fundamental data is backward looking. It's always safer to look out of the front window of your car while driving to see where you're going. Not the back window that shows you where you've already been."

[NC]  A chart from 1870 that shows the major market swings can be seen here.


Stock Market Action

[NC]  The large-capitalization S&P 500 index is shown with its gray Bollinger Bands below. The bands are two standard deviations above & below a 20-day simple moving average. When the price goes above or near the edge of the upper Bollinger Band a downswing in price is likely as the market is overbought. Similarly, when the price goes below the lower band, the market is oversold, and an upswing is likely. The 14-day RSI is a measure of the price momentum. Below 50 indicates negative momentum.  A divergence with price is an indication that the price trend is likely to change.

[NC]  The huge advance since the October 2023 low had several big boosts from Fed announcements. The large-cap market went up to a new S&P 500 all-time high on 7/16 (and again 9/19}. Then it broke below the 50-day MA with a negative RSI momentum. Now, after a vigorous rebound to the noted resistance and a drop again below its 50-day MA, it has broken above the previous resistance of the July high.

[NC]  The S&P 500 index is a capitalization-weighted index, meaning the larger cap stocks are given the most weight in the index.  Market cap is calculated by multiplying the number of stock shares a company has outstanding by its current stock price. The stocks in the index include companies in eleven sectors to offer a picture of the health of the U.S. stock market.  However, the six largest companies make up 27% of the value of the index.  These are Microsoft, Apple, Amazon, Nvidia, Alphabet (Google) and Meta (Facebook).  To get a clearer picture of what all the 500 stocks are doing, an equal-weight index can be used.

[NC]  The chart below shows an equal-weight performance version of the S&P 500 (RSP) in red together with the capitalization-weighted version (SPY) in black. The relative strength plot at the bottom goes up when the SPY, driven by the mega stocks, is doing better than the RSP. Normally the market does better when the relative strength of the broad maket indicated by RSP is doing better that the SPY shown by the green trend lines.



[NC]  Small-cap stocks, represented by the iShares Russell 2000 Small Cap ETF (IWM), are not typically traded by computerized programs. They are traded by individuals and as such offer us a look at what individual investors are thinking instead of the big trading firms. Small caps hitting a new low tells us investors are selling, continuously selling. Not a good thing for the stock market looking forward.  From FibTimer.com.

[NC]  The small-cap stocks do better with lower interest rates -- see the Income page. After shooting up on high volume due to the Fed comments on a likely interest rate cut, they eliminated those gains. The poor employment report on Thursday 8/1, caused a market melt-down as a "mild" recession seems more likey. This index bounced off the 200-day MA and then recovered. Now, after dropping like a lead balloon and a fast move up to the resistance level shown, it is dropped again. Friday was a big reversal day up 2.03%.


[NC]  The technology-heavy Nasdaq composite index has pulled back since mid July as a rotation to more general stocks occurred. Then a major drop took the index down to the 200-day MA and bounced. Then it recoverd rapidly to the resistance level shown. Now, after another drop, it broke through the resistance.


[NC]  Sector investing via exchange traded funds (ETFs) is popular. The traders rotate between sectors. To see how some popular sector ETFs are doing, click here for the Candle Glance of two-month charts. The charts include the StockCharts Technical Ranking (SCTR). The sector ETFs used in the Candle Glance are these.

[NC]  Here is a map of popular ETFs arranged in significant groups.  This link gives gain or loss in a week with a small chart when you hover over the group.

[NC]  The international bond market is provided by the WSJ. See the Income tab for a chart of U.S. Treasury yields. 2020 ended with the 10-year treasury note at 0.93% and the 2-year note yield was 0.13%.

[NC]  The stock markets in other countries can diversify a portfolio. To participate in these markets, the U.S. dollar can be hedged out. Click to check out the country hedged ETFs and the un-hedged ETFs.

[NC]  Note that BSE SENSEX is an India index, CAC 40 is France, FTSE 100 is a UK index, Nikkei 225 is Japan, Hang Seng is Hong Kong, DAXK is Germany, and Shanghai is, of course, Shanghai.




Dollar Influence


[NC]  The dollar ($USD) and the 10-year Treasury rate ($TNX /10) are shown in a 6-year chart with weekly closing prices. The earlier dollar rise peaked in March 2020. The quick 10.8% drop ended with a double bottom in the spring of 2021. The huge 25.7% rally since then corrected with a 12.3% drop and then a correction and consolidation of that drop.

[NC]  A falling dollar has a positive influence on the U.S. market, especially large cap multinationals, as prices for our customers overseas are less expensive. However, a weaker dollar makes product imports (some in the supply chains) get more expensive. This has a negative effect on revenue for technology companies.

[NC]  The 10-year Treasury rate rose to a peak on 10/5/2018 and 11/8/2018 closing at 3.23% both times. It hit a low in March and August 2020 around 0.5%. Now it is on a long-term rise.

[NC]  Ed Yardeni in the 2/9/19 Barron's stated that, based on his 40 years of experience, he has never found that supply-versus-demand analysis helped much in forecasting bond yields.  It's always been about actual inflation, expected inflation, and how the Fed was likely to respond to both.

[NC]  Also shown is the CRB Commodities Index, which is a measure of inflation. This index is an unweighted geometric average of prices across 17 commodities including energy, grains, industrials, livestock, precious metals, and agriculturals. 

[NC]  The price of gold had risen dramatically until the 2-year pull-back. The gold and silver miners ETFs (GDX and SIL) had gone up even more. Now the uncertainty in the market and potentially lower interest rated is pushing the price of gold higher again.






Long-Term Overview

[NC]  The Federal Reserve controls the Federal Funds Rate, which is the interest rate at which banks lend reserve balances to other depository institutions overnight on an uncollateralized basis. It also tends to effect longer-term rates. On 3/15/2020 an emergency rate cut set the benchmark interest rate between 0% and 0.25%. Then the Fed is raising the rate as shown in the chart.

[NC]  The chart gives an overview of the situation. The market had done well since the termination of the QE3 Fed bond buying, until the last half of 2015. The 10-year Treasury rates moved down as the Fed raised the over-night Federal Funds Rate in December 2015. There were a total of nine 1/4 point rate increases, the last one in December of 2018. The Fed cut the rate at its July 2019 meeting, and more cuts followed as shown below. In May 2022 the Fed started to raise the rate to slow the economy to fight inflation.The rate increases have now halted and there is speculation as to when they might start falling.  A chart of various Treasury yields since 1962 are shown on the Income tab.

Click here to go back to the top.

The source of the charts is located on the upper right of the chart. This page is for amusement only, and should not be taken as advice to buy or sell anything.