The S&P 500 has gone 639 consecutive trading days without a -3% decline.
Here’s the chart:
Let's break down what the chart shows:
The blue line in the top panel is the S&P 500 index price.
The black lines in the bottom panel indicates the number of consecutive days since the S&P 500 experienced a daily move of -3% or less.
The Takeaway: As I write this daily note, the S&P 500 futures are down over 3% after Trump imposed tariffs on most countries around the globe last night.
The last time the S&P 500 experienced a drop this significant was 639 trading days ago, which was during the cost-of-living crisis in 2022.
Since the beginning of the 1990s, there have been 104 days with a change of -3% or less, with most of these down days happening while the market was in a sizeable drawdown.
When examining the S&P 500's forward returns, we find that on days with a decline of -3%, there is only a 55% chance the market will be positive two weeks later.
Here is a four-panel chart showing the recent strength of gold and its outperformance versus the other main asset classes.
Here’s the chart:
Let's break down what the chart shows:
The yellow line is the Gold ETF index price.
The blue line is Gold relative to Bonds.
The gray line is Gold relative to Stocks.
The black line is Gold relative to Commodities.
The Takeaway: If you didn't know already, we’re in the midst of a massive gold rush.
Gold has been an outstanding place for your money since breaking out of its multi-year base in early 2024.
The new absolute and relative highs we’re seeing are signals of strength, not weakness.
When the lines go from the lower left to the upper right, we call those uptrends.
Right now, gold is at fresh all-time highs on an absolute basis, and it’s showing remarkable strength with 4-year highs relative to US stocks. Additionally, gold is achieving new all-time highs relative to bonds, and it’s also making 4...
My Risk-On/Risk-Off ratio has reached a 22-month low, dropping below a key level that acted as resistance in 2021/22, which transformed into support from 2023 to the present.
Here’s the chart:
Let's break down what the chart shows:
The black line is my Risk-On/Risk-Off ratio.
The Risk-On components consist of Copper (HG1), High Yield Bonds (JNK), Aussie Dollar (AUDUSD), Semiconductors (SOXX/SPY) & High Beta (SPHB/SPY).
The Risk-Off components consist of Gold (GC1), US Treasury Bonds (TLT), Yen (JPYUSD), Utilities (XLU/SPY) & Staples (XLP/SPY).
If this ratio rises, the numerator (risk-on) is outperforming the denominator (risk-off); if it is falling, the denominator (risk-off) is outperforming the numerator (risk-on).
The Takeaway: The message right now continues to be… we are in a Risk-Off environment.
This looks to be a pivotal moment for the US stock market. With this key level now broken, it reinforces the weak market conditions I’ve been...
