S&P 500

Authored by Daniel Drew via Dark-Bid.com,

As the market meanders its way through a post-earnings, pre-Fed no man's land, I couldn't help but wonder if this was a unique aimlessness or a seasonal pattern.

The market is partly driven by quarterly earnings cycles, and one has to wonder, "Does the earnings hype always live up to expectations?" Not only do individual stocks move up and down around earnings announcements, but the entire market exhibits certain behavior as well.

When an asset takes out horizontal resistance to the upside, it is nice to see the old resistance tested as new support, before pushing higher.

The S&P 500 traded sideways for nearly 18-months, before breaking out to the upside and then testing old resistance as new support at (1) below. Once this support held, the S&P took off to the upside in short order.

CLICK ON CHART IMAGE TO ENLARGE

The market is looking increasingly ugly.

Stocks are a lot like a body of water. Anyone can see where the surface level is… but what’s occurring underneath is much more difficult to observe.

Well, today the “surface” stock level looks great: the S&P 500 is a mere 1.9% off its all-time record high. The world has gone stock crazy with retail investors POURING money into the markets like it’s 1999 all over again.

Unfortunately for them, some truly nasty stuff is going on underneath the surface of the market.

Via ConvergEx's Nicholas Colas,

Just when you thought the 8 year bull market for US stocks had shown us everything, something new comes along. 

 

With practically every valuation measure indicating stocks are "fully" valued, "over" valued, or "in a freaking bubble," the last respite of the desperate asset-gatherer has been "well, relative to bonds, stocks are still cheap." That is no longer the case...

The yield advantage of owning 10Y Treasuries over the S&P 500 is now over 60bps (10Y yield at 2.57% and S&P divi at 1.97%)...