Today's number is... 2

We only have two out of nine indicators flashing green on my bull market behavior checklist.

Here is the table:

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Today's number is... 97%

Forewarning: This note will take two minutes to read as a lot has happened since yesterday's move lower:

- The Dow Jones Industrial Average recorded its 10th consecutive down day.

- The S&P 500 has experienced 13 straight days with more decliners than advancers.

- The S&P 500 saw a spike in 1-month new lows to 60%, the highest level since March 2023.

- The percentage of S&P 500 stocks in oversold conditions increased to 29.5%, reaching its highest level since October 2023.

- The percentage of stocks above their 50-day moving average dropped to 18.3%, the lowest level since November 2023.

However, one data point that caught my attention was that over 97% of stocks in the S&P 1500 declined in price yesterday!

Here is the table:

Today's number is... 37.3 > 34.3

More S&P 500 stocks are in downtrends than uptrends.

37.3% are in downtrends… and 34.3% are in uptrends.

Has the environment switched? Maybe.

Here is the chart:

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Let's first break down what the chart shows:

Today's number is... 3

The Hindenburg Omen has triggered for the 3rd time over the past 110 trading days.

The Hindenburg Omen is designed to identify potential turning points in the stock market, raising concerns about a possible downturn.

Is this something we should be concerned about? Or not?

Here’s the chart:

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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:

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Let's break down what the chart shows:

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.

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:

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:

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:

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:

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:

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: