In this post I'll run down through various charts - indices, ETFs, some single stocks - to try to create some insight into the market. We're trying to establish some notion of what's doing well, what's not doing well, and what some market indicators might be telling us.

Disclaimer: I try to refrain from making outright conclusions or providing explicit trade ideas. Instead I'm walking through how different asset classes and sectors are performing, and highlighting some interesting and relevant indicators, all in an effort to give a more holistic picture of the market to help you make better informed trades. If you trade off any suggestive advice taken from this, that's your own responsibility.

Previous Edition

Indices

SYP 1y

SPY 3y

• This 1 year chart just looks more and more like a whole bunch of sideways chop.
• The 3 year gets a little more interesting. This doesn't look as bad as some other charts we'll see, but sure seems like the trend is down right now. I'm really looking at 400 as a near-term target, and really hard to be bullish while we're under 430 IMO. Just hard to make much of a case to be buying here, unless you're trying to play a bounce.

QQQ 3y

• Just looking at the 3 year chart here. Kinda like SPY the pretty lines might suggest we go down to around 300, and that might be a good level to buy at.

IWM 3y

• IWM got well under 190 this week, and that 190-192 range has been a kind of support on the lower end of this range. This is such a good chart to showcase how sideways large parts of this market have been for the last year.
• IWM had that failed breakout in November which really marked the start of this downturn. I'm personally not bullish on anything until IWM starts to bottom and participates in rallies - it didn't really participate in that March rally and I thought that was really telling at the time.

RUA 3y

• Lastly, looking at the RUA - the Russel 3000 / virtually the entire US stock market, it closed under that 2400 level, so could see lower here, but...

Overall, seems like we're close to some levels that could be major support, and we're relatively oversold, sentiment is super bearish... Idk I have to wonder if we'll just chop around down here a bit. I don't get any real conviction that we'll get that last flush we've been looking for based on these charts, but these aren't a crystal ball...

Lastly here I want to talk about the price action this week: Monday / Tuesday really felt like markets were just anxious waiting for the FOMC announcement. Wednesday that huge rally I think was all purely positioning: hedges put in place for any surprise, and when the even passed all that IV rolled off and we had a gamma-squeeze-type rally, right up to some key levels in the indices. Thursday there was a bit of talk about some fund getting liquidated, who knows, but I think it regardless it was just a reset to real prices. Did seem to have some aggressive selling Thursday, but I wouldn't give too much attention to the price action day-to-day last week.
Moving on...

Sectors

Sector Performance, 1y

• This is a pretty busy, but handy chart I look at to give me an idea of relative performance across many market sectors. It's been useful the last few years as we've had a ton of rotation between different areas of the market, and this can help me spot that and trade momentum accordingly.
• We can really see the outperformance of "energy" via the XLE here; in previous posts I pointed out the relative outperformance of defensive sectors e.g. IYH so far this year, now we're starting to see those roll over just like everything else...

XLU 1y

• I think industrials and to a lesser extent utilities are a good point of reference for how the market feels about the economy. XLU seemed to catch a bid as a defensive play even though these stocks generally underperform in a rising-rate environment. We've now seen that come back in, and it's established some kind of support around the top of it's previous range. Will be interesting to see if this breaks down further...

XLI, 5y

• Zooming out a bit on the industrials, we're now at the bottom or even slightly below the range established early in 2021 - we top out here right around the same time we topped out almost everywhere else and started to see stocks move lower (yes all this started about a year ago).
• The performance of industrials over the last year has really been indicative of what's been going on in the broad market, even if the major indices were making new highs.

Bonds, Dollar, Sentiment

DXY, all-time

• I've been highlighting the US Dollar index over the last few posts and it continues to be a major consideration for me. I think this is more important to the outlook than the move in bonds, and as long as it's making new highs I think that's a headwind for US stocks.
  The DXY is a measure of the US dollar against a basket of other currencies, though the Euro makes up the largest portion.
• The dollar going up is not great for US companies, especially those that get significant revenues from outside the US. It's also not great for all sorts of trades that can start to blow up as we make a historical move...
• I'm gonna leave this section short - not much else has changed here, though maybe the notable move in the US10Y above 3%, which maybe was a line in the sand that we broke through rather easily post-FOMC. Some real historic moves in the bond market as of late.

Consider This

Bear or Bull, I wanted to put down some points that I believe you need to keep in mind:

• Though not the first time since the GFC, the Fed is changing it's behavior by halting QE, raising rates, and starting QT (balance sheet runoff), but this time it has to commit to these actions until inflation comes down. Previous episodes saw the Fed reverse course due to market sentiment / market dynamics (Taper Tantrum, 2018). We're looking at a completely different set of circumstances here, a complete change in market dynamics.
• Global-wise, the picture is not great. Europe is facing a recession, China still can't deal with Covid and is prolonging supply chain issues in doing so, Russia is trying to reassert itself as a world power. Many emerging market countries are facing inflationary pressures and debt issues, some of these are very close to default. De-globalization is a thing.
• For the time being, the US dollar and economy is strong. I see some rumblings in the VC/tech landscape that worry me, but by and large it seems like we're doing well, and positioned to continue to do so even if the rest of the world is having major issues.

Bonus: Stocks Come Full Circle

definition: through a series of developments that lead back to the original source, position, or situation or to a complete reversal of the original position

Just as a bonus, we've now seen a lot of stocks retrace those pandemic market highs and I wanted to highlight a few because it really is just amazing the magnitude of the moves in these, both up and down:

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PYPL 5y

SHOP 5y

AMZN 5y

ROKU 5y