Weekly S&P500 ChartStorm - 26 June 2022

The Weekly S&P500 ChartStorm is a selection of 10 charts that I handpicked from around the web and from Twitter posts. The purpose of this wire is to add extra colour and commentary around the charts.

The charts focus on the S&P500 (US equities); and the various forces and factors that influence the outlook - with the aim of bringing insight and perspective...

Asset return quilt (YTD):

Well, we're almost at the half-way point for 2022 (and what a year it has been (so far!)), basically: cash & commodities good, everything else bad. Raises the question if H2 will be more of the same or something entirely different… 

S&P SitRep:

Gap closed, but a key test for the current rally lies plain to see overhead...

Meanwhile, we’ve seen some improvement in the correction/risk driver proxies (geopolitics, bond yields, tech burst) -- but not very convincing at this stage

First Half Reflections

What happens when the market is down big in the first half of the year? ...something ¯\_(ツ)_/¯ (no real pattern, except perhaps you could say it's easier to rebound big in % change if you're down big to begin with!)

also n.b. updated YTD as of Friday close = -18.45%

Bad breadth...

...sometimes good buy, sometimes goodbye.

Oversold?

Market is oversold on this metric.

All else equal (and it rarely is), this raises the odds of a rally — but also n.b. that the condition of the market being oversold (i.e. bearish momentum) is a natural characteristic of a bear-market/down-trend...

On the Future(s):

Do the futures tell the future? Asset manager equity futures positioning has dropped to a new record low (again though, this condition helps pick a bottom in an uptrend, but in a downtrend/bear market this is actually where positioning would habituate)

Retail Set Sail:

Some signs of capitulation…

What Capitulation?

But then again, on this metric (cumulative equity fund flows) there doesn’t appear to be much or any capitulation at all… in fact that memeish “DCA“ rallying cry comes to mind.

Rate-Hike-Ructions: 

Rate hikes coming in thick and fast. (chart shows cumulative global interest rate cuts minus hikes vs stockmarket)

I’ve said it before, and I’ll say it again: rate cuts helped on the way up -- so it’s only logical that rate hikes hurt on the way down...

Fiscal Drag Too:

You could say that Yellen is helping her old mates at the Fed fight inflation via demand destruction with a bunch of fiscal tightening too!

Economy being squeezed every which way: look out below for earnings...

Thanks for reading!

Callum Thomas, founder and head of research at Topdown Charts.

Any feedback, questions and views are welcome in the comment section below.

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