In This Article:
Yahoo Finance markets and data editor Jared Blikre — who also hosts the Stocks In Translation podcast — breaks down the latest market (^GSPC, ^IXIC, ^DJI) signals, offering both bearish and bullish insights on the S&P 500's potential direction.
He explains how market technicals, sentiment indicators, and historical trends could shape the outlook in the coming months.
Twice a week, Stocks In Translation cuts through the market mayhem, noisy numbers and hyperbole to give you the information you need to make the right trade for your portfolio. You can find more episodes here, or watch on your favorite streaming service.
To watch more expert insights and analysis on the latest market action, check out more Catalysts here.
The S&P 500's longest winning streak in 20 years, it stalled out earlier this week, raising the question from investors. Was this just one of those flashy short covering rallies, or the start of a race to fresh all-time highs? I'm Jared Blickre, host of Stocks in Translation. Well, today I have two bearish signals and two bullish signals. And we're going to go through this, but first I got to get to a definition. Market technicals. Market technicals analyze stocks and markets using price action, chart patterns, and technical indicators. And first up is the 200-day moving average. And we're going to look at the Kahuna, the S&P 500. And there's that 200-day moving average in blue, and you can see we've been camped out underneath it for about six days until we got get over that. And it wouldn't take much. I still land in the bearish camp. So we're kind of on the razor's edge here, and we got to move along because now I want to get to sentiment. And the definition of market sentiment is the collective attitude of investors toward financial markets, driven by optimism, which is bullishness, and pessimism, which is bearishness. And for that, we have a number of examples. We have surveys and polls, like consumer consumer confidence, and consumer sentiment. We have fund flows. Where is the money flowing as opposed to what are just the prices? We have market internals and breadth. For example, how many stocks in the S&P 500 are advancing or declining at a certain time? Social media speaks for itself. Derivatives and options. We're going to circle back to that in a second. But then we have insider activity. What is the C-suite doing? Are the CEOs buying their own stocks? And then new ETFs. Takes a long time for these products to come into market, and sometimes it's a contrary signal, very much like magazine covers. And we're going to come back to those too. But I want to stick with derivatives and options for just a minute here, and I'm going to take a look at the VIX. And yes, the VIX is a sentiment indicator here. And here we see it is still in the low 20s. And what I want to point out is that this is a six-month chart, first of all. Earlier, last December, we did have a little bit of a hiccup in the markets. It was a Fed announcement that came out a little bit hawkish, but it was the elevator up and an elevator down. It was very quick. But what we're seeing this time, and I'm going to put some candlesticks, you might have to squint, it's of a different character. It took a while to get up there, and it's taking a long time to get back down. This tells me a Steve Steve Snasknik likes to say, the VIX is not a fear gauge. It is a kind of a barometer of institutional hedging demand, and we're seeing a lot of uncertainty in the institutional space. So there's a
the bearish arguments. But now we want to move on to the bullish ones. And here is history. I like history. Seasonality is one of those. This is not seasonality, by the way, but what happened in April was really interesting. We saw the S&P 500, it was down 10%, and then it was up 10% in one month. This has happened 35 times since 1960, and over the next few months, even to the quarter, it does get a little bit dicey at times. We could actually see a return to those lows that we saw. But what's very bullish for me in the longer term is that one year out, 83% of the time, we were up with median returns of 14%. And I think that would be welcomed from investors this year. Now, here's my second bullish argument, and this might be a little bit contrarian. Here's a Barron's cover from over the weekend, where did the bulls go? So this is a clearly bearish take, but a magazine cover, kind of like a new ETF launch, it takes a while to produce and it's kind of stored up pent up pent up sentiment as to where the market might be not going. And so we see this play out in different ways. I would also draw attention to the fact that they're trying to make sense of Palantir's lofty price. That was just days before the price crashed 10%, which was the biggest drop in the year. So you put it all together, where where having some mixed signals right now, but we are on that razor's edge, and we can flip pretty quickly into bullish or firmly bearish territory. So tune into Stocks and Translation for more jargon-busting deep dives, new episodes on Tuesdays and Thursdays on Yahoo Finance's website or wherever you find your podcast.
