Today's number is... 16

We’re now in the homestretch of 2024, and the 16th of December is when seasonality becomes a tailwind for stocks for the remainder of the month.

Here’s the chart:

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

Let's break down what the chart shows:

This blue line represents the average return for December since 1950 for the S&P 500.

The Takeaway: It's perfectly normal for stocks to remain relatively flat during the first half of December. For the first half of December 2024, we only saw a gain of 0.31%.

The recent weak breadth, combined with a rotation into underperforming stocks, is at the top of my list of reasons for the market's current sideways movement.

But today, the 16th of December, we see a switch in the seasonality environment!

For most of 2024, stocks have outperformed seasonal trends, as this year is shaping up to be one of the best election years ever!  So, will this pattern play out this December? Or not? 

The strong performance in the...

Today's number is... 8

We have now experienced 8 consecutive days with more S&P 500 stocks declining than advancing. 

But, this time it is different…

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

The black line in the middle represents the consecutive days the S&P 500 had more decliners than advancers.

The red line at the bottom represents the percentage of S&P 500 stocks at 1-month lows.

The Takeaway: Yes, breadth appears weak at first glance, as the data indicates that more stocks have been declining than advancing over the past 8 trading days.

Looking back at history, we can see that this period of poor breadth has occurred three other times over the past two decades.

All three times were amid bear markets and record-high spikes in one-month new lows.

Currently, we are just 0.6% below all-time highs...

Today's number is... 1

We have now experienced seven consecutive days with more S&P 500 stocks declining than advancing. Are we finally going to see an expansion in the new lows list?

The short answer is yes… 

We are beginning to see the 1-month new lows list expanding.

But should we be concerned?

Here's the data:

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

The Takeaway: The key point is that you cannot have a bear market of any kind without the prices of stocks falling. 

However, the recent spike in the one-month new lows does not raise any significant red flags at this time, as it is no different from similar pullbacks over the past 2 years and not what a significant market top environment would look like.

Until I observe a more serious deterioration in market internals with the list of new lows expanding into longer timeframes, I have no reason to believe we are entering a bear market.

However, a short-term pullback at this point wouldn’t be surprising at all.

On average, each year tends to have 3 to...

Today's number is... 6

We have now experienced 6 consecutive days with more S&P 500 stocks declining than advancing. This matches the previous streak of negative breadth observed over the past seven years.

Should we be concerned about this?

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 line in the top panel shows the price of the S&P 500 index.
• The black line at the bottom represents the consecutive days the S&P 500 had more decliners than advancers.

The Takeaway: When we dig into the data, we can see that during the past 6 trading days, several large stocks increased in size while many smaller stocks decreased. This shift in market participation doesn't mean the market is now going to fall.

It suggests a rotation back into stocks that have recently underperformed, particularly large-cap growth companies.

The top 10 stocks by market cap have an average return of 4.9% since last Monday...

Today's number is... 500

The S&P 500 is reaching all-time highs, yet more stocks are declining than advancing on most days.

That's what we saw last week! 

But does it matter? 

Below is a table showing instances of the S&P 500 reaching all-time highs, with more stocks declining than advancing, along with the weekly forward returns:

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

The Takeaway: On Friday afternoon, there was a lot of discussion on X, with many bears highlighting that poor breadth readings while the S&P 500 index is at all-time highs are a bearish signal for the markets. 

I usually pay little attention to what perma bears are saying; instead, I prefer to dig into the data and decide whether the information is valuable or not.

Since 1950, there have been 25 instances where the  S&P 500 is reaching all-time highs, yet more stocks are declining than advancing on most days.

On average, a year later, the median return is 14.9%, with...

Today's number is... 7

We only have 7 trading days left of this current breadth thrust regime.

That's Monday week!  

The breadth thrust regime I am talking about is when 55% or more of the S&P 500 stocks are at 20-day highs, and once this is triggered, the regime lasts one year!

Here’s the chart:

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

Let's break down what the chart shows:

• The gray shading highlights the breadth thrust regime.
• 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 blue line in the top panel is the S&P 500 index price.

The Takeaway: A breadth thrust regime points to healthy leadership conditions and indicates that the stock market may more easily move up and to the right.

I rely heavily on the breadth thrust regime. It’s not an all-clear signal or a guarantee that the market...

Today's number is... 0

Typically, sentiment matters most at extremes, and I like to use it as a contrarian indicator. The way I learnt it was to beware of the crowd when the crowd is too one‐sided.

Currently, we are not at extreme levels. However, what caught my attention this week is that the Bull-Bear spread from the American Association of Individual Investors (AAII) has fallen below 0, while the S&P 500 has reached all-time highs.

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 represents the price of the S&P 500 index.
• The red lines represent when the S&P 500 is at all-time highs while the AAII Bull-Bear spread is below 0.

The Takeaway: This is the first time in 30 weeks that the AAII Bull-Bear spread has dropped below 0. This indicates that there are more bears than bulls, and what stands out to me is that this has occurred while the S&P 500 is reaching new all-time highs. This event is rare. In the past 34...

Today's number is... 20%

What happens after a 20% or more up year in the S&P 500?

With only 19 trading days remaining in the year, the S&P 500 has increased by 26.8%. So, it seems that 2024 could finish with a gain of 20% or more.

Here is a table with all of the 20% or more up years, along with the following year's returns:

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

The Takeaway: Since 1950, there have been 19 instances where the S&P 500 finished the year with gains of 20% or more.

Of that, the stock market experienced positive returns in 15 out of the 19 years following a 20% or more gain, which is 78.9% of the time. Conversely, it was down in 4 out of those 19 years, representing 21.1% of the time. 

On average, the return following a year with a 20% or more increase was 9.6%. In years that were up years, the average gain was 15.4%. In contrast, during down years, the average loss was recorded at -11.9%.

From the data, it’s more likely that we will see strength...

Today's number is... 12

We have entered December, the 12th month of the year, which happens to be my favorite month! It's summer here in Australia, meaning the days are warm and long. This gives me plenty of time to play golf in the afternoon… and let's not forget that Santa comes to town!

More importantly, stocks tend to perform well in December.

Here’s the chart:

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

Let's break down what this chart shows:

• This blue line represents the average return for December since 1950 for the S&P 500.

The Takeaway: Yesterday, I shared a note about...

Today's number is... 535

“It’s a bull market, you know.” - @OptionsSean

This bull market has been ongoing for 535 trading days to date.

Here is a bar chart displaying all S&P 500 bull markets since 1950:

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

Let's break down what this chart shows:

• The blue bars represent the percentage change of each bull market. 
• The red dots represent the total number of trading days for each bull market. 
• The blue horizontal dashed line indicates the average percentage...

Today's number is... 387

As we approach the final month of 2024, we have seen an impressive number of stocks perform well, with 387 stocks showing positive returns year-to-date so far.

Here’s the chart:

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

Let's break down what the chart shows:

The dark blue bars represent the year-to-date returns of each S&P 500 stock.

The light blue bar indicates the average year-to-date return of S&P 500 stocks.

The yellow bar represents the S&P 500 year-to-date return.

The Takeaway: Bears have been claiming that market breadth has been narrow throughout 2024. That is simply incorrect! Market breadth has been and continues to be strong in 2024. The data supports this.

A total of 387 stocks have posted positive returns this year, with 184 of those stocks outperforming the S&P 500. In contrast, only 118 stocks have posted negative returns during the same period. 

The S&P 500 has gained 26% year-to-date,...

Today's number is... 22.8%

Yesterday, the S&P 500 reached another all-time high. 

So far in 2024, the index has spent 22.8% of its trading days at record highs.

This is the kind of data we expect to see in a bull market!

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 of time the S&P 500 has spent at all-time highs each year.

The Takeaway: Looking back at history, when the stock market hits all-time highs, it often goes on to reach even more all-time highs.

With the S&P 500 achieving yet another all-time high, it’s clear that 2024 is shaping up to be an impressive year, bringing the total number of highs to 52.

As of now, the index has achieved all-time highs 22.8% of the time, making it the sixth highest year on record, with one month still remaining. - The best years on record were 1954 and 1995, each achieving a high of 30.6%.

Additionally...