Market Overview: S&P 500 Trends and Indicators
So far this year, we’ve seen gains of over 28%, while the S&P 500 has risen approximately 20%. The middle section of the chart illustrates the SPX/TLT ratio, while the top section displays the RSI for this ratio. Historically, short-term peaks in the SPX occur when the RSI for this ratio approaches or exceeds 70; currently, the RSI stands at 68.60.
In the chart, we’ve indicated moments when the RSI reached near 70 or higher with blue dotted lines. When combining this indicator with the one on the next page, it suggests limited upside potential for the market, with a possible pullback on the horizon.
The bottom part of the next chart shows the 10-day average of the equity put/call ratio, while the next higher window depicts the 5-day average. Both timeframes have recently dipped into bearish territory. The red circles highlight instances on the SPX chart when both timeframes were in this zone. Historically, such conditions indicate constrained upside potential for the SPX, often preceding a pullback. Although the larger trends remain bullish and new highs may still be achievable later this year, the upcoming month or so could be volatile.
Next, we examine the GDX, with the upper window showing its performance and the lower window tracking the 50-day average of the up-down volume percentage for GDX. The uptrend in GDX is confirmed when this 50-day average stays above “0” (currently at +9.22). This volume indicator is a signal that can persist for several months. While some consolidation is expected during the current bull market, it may last a couple of months, but higher highs and lows are anticipated.
In the chart, we’ve shaded green areas where this indicator exceeds “0.” Both the weekly and monthly charts for GDX remain bullish, and signals of this nature can last from 1.5 years to up to four years.
SPX Monitoring Updates:
Sold long on 9/13/24 at 5626.02 for a gain of 2.23%.
Initially went long on 9/5/24 at 5503.41.
Sold SPX on 8/19/24 at 5608.25 for an 8.14% gain, having previously gone long on 8/5/24 at 5186.33.
Year-to-Date Performance:
From 1/1/23 to 12/31/23, the SPX gained 28.12%, while the SPX itself rose by 23.38%.
Monitoring purposes for GOLD:
Long GDX since 10/9/20 at 40.78.