Today's number is... 50%

Market breadth had been weak... However, it has significantly improved over the last week, with 50% of S&P 500 stocks reaching a 20-day new high.

However, this recent surge in 20-day new highs wasn't quite enough to trigger my favorite breadth thrust regime.

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's break down what it shows:

• The black candlesticks in the top panel is the S&P 500 index price.
• The black line in the bottom panel shows the percentage of S&P 500 stocks at 20-day highs.
• The red line in the bottom panel is the trigger for a breadth thrust.
• The gray shading highlights when in a breadth thrust regime.

The...

Today's number is... 12.5

The 1-week rate of change in Investors Intelligence bears has spiked to 12.5%.

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's break down what it shows:

• The blue line in the top panel represents the price of the S&P 500 index.
• The green bars in the bottom panel show the 1-week change in Investors Intelligence (II) of more bears.
• The red bars in the bottom panel show the 1-week change in Investors Intelligence (II) of less bears.

The Takeaway: Last week, I noted that more bears were beginning to enter the market. We have now experienced a further surge in bear activity, with...

Today's number is... 3

After 3 years, the Consumer Discretionary versus Consumer Staples ratio has exceeded its previous cycle highs from 2021.

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's break down what it shows:

• The black line in the top panel is the S&P 500 Consumer Discretionary price.
• The blue line in the middle panel shows the relative ratio of S&P 500 Consumer Discretionary versus S&P 500 Consumer Staples.
• The black line in the bottom panel is the S&P 500 Consumer Staples price.

The Takeaway: As you have probably noticed, I have been focusing on bearish data points over the past few weeks, but it's always important to highlight some key bullish data points, particularly the breakout of this relative ratio from a 3-year base. 

This chart is one of my favorite ways to measure risk appetite. It compares discretionary stocks, which include products and services consumers buy with their discretionary...

Today's number is... 1

Yesterday, the bulls demonstrated that they are still present, with the S&P 500, 400, and 600 reaching their highest 1-month highs since November.

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's break down what it shows:

• The blue line in the top panel is the S&P 500 index price.
• The black line in the second panel shows the percentage of S&P 500 stocks making 1-month highs.
• The gray line in the third panel shows the percentage of S&P 400 stocks making 1-month highs.
• The red line in the bottom panel shows the percentage of S&P 600 stocks making 1-month highs.

The Takeaway: Yesterday, all major indices increased by over 1.5%. This was an impressive day for the Bulls on the back of eased inflation fears.

With this broad participation, we saw 1-month new highs move higher and have now reached their highest levels...

Today's number is... 16

My Fear or Strength Model has been in bearish mode for the last 16 trading days.

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's break down what it shows:

• The black line in the top panel is the S&P 500 index price.
  • The green shading highlights the model is in bullish mode.
  • The red shading highlights the model is in bearish mode.
• The black line in the middle panel is the 10-day average of the NYSE+NASDAQ net new high advance decline line - The “strength” component of the model. The gray shading represents the AD line is rising.
• The black line in the bottom panel is the Volatility index - the “fear” component of the model. The gray shading represents the VIX reading above 28.5.

The Takeaway: My Fear or Strength Model is a tactical framework that has two triggers: 

1. Buy stocks when...

Today's number is... 28.5

Market sentiment is shifting as the average bears reached 28.5 last week, the highest reading since November 2023.

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's break down what it shows:

• The blue line in the top panel represents the price of the S&P 500 index.
• The green line in the middle panel shows the average bulls from the Investors Intelligence (II) and the American Association of Individual Investors (AAII).
• The red line in the bottom panel shows the average bears from the II and the AAII.

The Takeaway: We're beginning to notice more bears entering the market, as the average sentiment among bears has reached its highest level since November 2023. At the same time, optimism appears to be fading, with the average sentiment among bulls hitting the lower end of a year-long range.

Typically, we say that nothing influences sentiment like price movement. However, that's not entirely the case in the current...

Today's number is... 19

My RORO Risk Range Summary, which includes 19 Risk-On versus Risk-Off ratios, has shifted to slightly favor risk-off assets.

Here is the chart:

(right-click and open image in new tab to zoom in)

Let's first break down what the chart shows:

This RORO Risk Range Summary compares the current trading ratios of 19 risk pairs to their 52-week range, represented by black diamonds, and their range position from one month ago, shown as gray triangles. The right side indicates Risk-On, while the left side indicates Risk-Off.

The Takeaway: When evaluating Risk-On versus Risk-Off ratios, I find the weight of the evidence approach to be very useful. 

In my RORO Risk Range Summary, the risk pair comparisons indicate a slight tilt toward Risk-Off assets over the past month. For 11 out of 19 pairs, the ratios are closer to their Risk-Off component, suggesting a weakening risk appetite.

Furthermore, 12 out of the 19...

Today's number is... 0.64%

The First Five Days indicator for 2025 showed a positive return of 0.64%. 

Here’s the table:

Here’s a bonus table highlighting all the positive years:

The Takeaway: Since 1950, this indicator has been positive 48 times. When it is positive, it has an average yearly gain of 15.6%, which is above the average yearly return of the S&P 500. Of the 48 years with a positive First Five Days, 83% have concluded the year on a positive note.

Not bad if you ask me.

But next on the list from Stock Trader's Almanac is the January Barometer (January Percentage Change), which is considered the most important of the January Trifecta (Santa Claus Rally, First Five Days & January Barometer) and I can confirm that if the January Barometer is positive, it returns on average a massive 18.1% yearly gain. Of...

Today's number is... 1.60%

The S&P 500 under the hood is bifurcated!

The average stock in the S&P 500 is only 1.60% above its 200-day moving average.

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's break down what the chart shows:

The blue bars represent the percentage from the 200-day moving average of each S&P 500 stock.

The yellow bar indicates the average S&P 500 stock percentage from the 200-day moving average.

The red bar represents the S&P 500 index percentage from its 200-day moving average.

The Takeaway: The 200-day moving average is a great indicator for determining the stock's longer-term trend.

Simply put, an uptrend is when the price is above the 200-day moving average, while a downtrend is when it is below.

Currently, 266 stocks, or 53%, are trading above their 200-day average, while 234 stocks, or 47%, have dropped below it.

Market leadership is becoming increasingly narrower. 

The data supports...

Today's number is... 100%

Our US Dollar Long Term Percent Bullish breadth reading just reached 100%.

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's break down what it shows:

The blue line in the top panel shows the price of the US Dollar index.

The black line in the bottom panel represents US Dollar Long Term Percent Bullish breadth reading, which includes 15 key currency pairs.

To calculate the US Dollar Long Term Percent Bullish, we use two criteria:

1. The closing price of the currency pair must be above its 200-day moving average.
2. The direction of the 200-day moving average must be rising.

After assessing these criteria for all 15 currencies, we combine the results to obtain a percentage figure.

The Takeaway: The US dollar has been ripping higher over the past quarter, and when we look beneath the surface, we see healthy breadth readings and confirmation of strength as our US Dollar Long Term Percent Bullish breadth reading just reached 100...

Today's number is... 4

The S&P 500 index is holding up well as it is only 1.89% below its all-time high; however, when we take a closer look at the individual stocks, we can see that they have begun to dip below 4 key timeframe highs that we have identified as important.

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's first break down what the chart shows:

The blue line in the top panel shows the price of the S&P 500 index.

In the bottom panel:

In black is the % of S&P 500 stocks that are above their 2018 highest high

In blue is the % of S&P 500 stocks that are above their 2021 highest high

In gray is the % of S&P 500 stocks that are above their December 2023 highest high

In red is the % of S&P 500 stocks that are above their 2024 Q1 highest high

The Takeaway: This chart is a great way to visualize the current market environment and track what's happening beneath the surface.

What...

Today's number is... Q1

After two weeks of enjoying the Australian summer at the beach house, I've returned to my desk! I hope everyone had a lovely Christmas and celebrated the start of the new year with family and friends!

Let's start the year off with some cycle data… 

Stocks historically do not perform well in the first quarter of a post-election year.

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's first break down what the chart shows:

This blue line represents the average return in post-election years since 1950 for the S&P 500.

The Takeaway: The stock market rewarded bulls over the past 12 months, as 2024 was one of the best election years ever!  

However, I began to notice a...