S&P 500

Three weeks ago, when looking at the incoming Q4 results, we were stunned by an unprecedented divergence: that of GAAP and non-GAAP earnings. We showed this difference as follows:

... and noted that while on a non-GAAP basis, the S&P's trailing P/E is a relatively rich 16.5x (over 17x as of today), it was the GAAP P/E that was troubling, because at just 91.5 in actual S&P EPS, this implies that the GAAP P/E of the overall market is now a near-record 22x.

We showed the delta between GAAP and non-GAAP as follows:

What could go wrong?

Today was all about the 200-day moving average for the S&P 500...2019.40 was all that mattered...

With one central bank meeting down, but two to go, VIX and VSTOXX (Europe's VIX equivalent) have plunged to 2016 lows discounting any 'events' upsetting the complacency anytime soon. However, as Goldman's options strategists note, the medium-term skew (3M to 1Y) are at or near record highs as traders prepare for turbulence amid 'Brexit', US elections, and of course the inevitable 'Fold or No Fold' Fed decisions later in the year.

2019.40 - that is the line in the sand for today - and for now, the S&P 500 cash index is trading back below this key technical support level...

The miracle bounce to the 200-day moving-average...

And today, for now, we have lost that level...

The battle begins.

Last week, when Bloomberg was celebrating the 7 year anniversary of the third longest, most central bank-supported, and thus "most hated" bull market in history, it said that  "investors are awash in angst, showing little faith the run can continue. They worry about contracting corporate earnings, slowing Chinese growth and uncertainty over interest rates. And they’re walking the talk by pulling cash from stocks at almost the fastest rate on record. It’s not unwarranted - the S&P 500 has gained just 0.5 percent in the last 18 months."