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Today’s Summary
Friday, January 21st, 2022
Indices: Dow -1.30% | S&P 500 -1.89% | Nasdaq -2.72% | Russell 2000 -1.78%
Sectors: Consumer Staples was the only sector that closed higher, inching up 0.08%. Communications lagged, dropping 3.38%.
Commodities: Crude Oil futures moved lower by 0.84% $84.83 per barrel. Gold futures fell 0.35% to $1,836 per ounce.
Currencies: The US Dollar Index slipped 0.14%.
Interest Rates: The US 10-year Treasury yield dropped to 1.762%
Here are the best charts, articles, and ideas being shared on the web today!
Chart of the Day
Today’s Chart of the Day was shared by Ryan Detrick (@RyanDetrick). The S&P 500 closed below its December 2021 low yesterday, which could spell trouble for the rest of the year. Over the past 72 years, the S&P 500 has undercut its December low within the first quarter 36 prior times. The rest of the year was a coinflip, closing positive 50% of the time for a tiny average gain of just 0.3%. On the other hand, returns were far better when the S&P 500 held its December low, with the S&P 500 closing higher 94% of the time for an average gain of 18%. Last year was a walk in the park for the S&P 500 considering it gained nearly 27% with very little downside. History is suggesting the S&P 500 is in for a much more challenging year in 2022.
Quote of the Day
Most people never listen.”
– Earnest Hemingway
Top Links
The Nasdaq Loses Key Trends as Overseas Markets Step Up – SentimenTrader
Jason Goepfert examines what has historically happened after the Nasdaq drops 10% for the first time in more than 200 sessions.
Buying Support Breaks is Not the Best Strategy – All Star Charts
JC Parets points out that several assets are breaking well-defined support levels.
The Rise of the Bears – HoneyStocks
Sam McCallum highlights some noteworthy charts to keep an eye on in the near term.
The Bears are Out | 5 Charts – LPL Financial Research
In this quick video, Ryan Detrick and Scott Brown break down five noteworthy charts.
Signs Point to a Lack of Risk Appetite – Potomac Fund Management
Dan Russo points out that several ratios are signaling a lack of risk appetite among market participants.
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Top Tweets
Largest weekly decline (-5.68%) for the S&P 500 since October 2020 — sheesh! $SPX $SPY
— Matthew Timpane, CMT (@mtimpane) January 21, 2022
$SPX below its 200 DMA for the first time since 2020 pic.twitter.com/iizFPSNUPH
— Abigail Doolittle (@TheChartress) January 21, 2022
The smaller the market cap, the greater than drawdown. pic.twitter.com/HaZZ0x3OAm
— Andrew Thrasher, CMT (@AndrewThrasher) January 21, 2022
If this was the S&P 500 chart, everyone from the Fed on down would be shitting their pants over its potential message.@TheChartmeister pic.twitter.com/FJwFDwfzRc
— Jim Bianco biancoresearch.eth (@biancoresearch) January 21, 2022
#NQ_F, 4h
Now what? Do we go lower or is it time for a bounce? pic.twitter.com/k6gKoYkySn
— Yuriy Matso (@yuriymatso) January 21, 2022
The Nasdaq will need a solid rally next week to avoid logging its worst January on record. Currently down 12% on the month. https://t.co/H4p1RcpfIn pic.twitter.com/bUEtmMPe39
— Bespoke (@bespokeinvest) January 21, 2022
The Volatility Index spiked 50% this week, the 17th largest weekly % increase (note: $VIX data goes back to 1990). Here's a look a the top 20 weekly $VIX spikes and S&P 500 forward returns… pic.twitter.com/hSag2gXO9Z
— Charlie Bilello (@charliebilello) January 21, 2022
The S&P 500 has already pulled back 6.5% this year.
Remember though, the average year (since 1980) sees a 14% pullback and your average midterm year (since 1950) pulls back 17%.
After a year with very little volatility, the bottom line is 2022 was likely due for a rockier ride. pic.twitter.com/JLdEF2LCZx
— Ryan Detrick, CMT (@RyanDetrick) January 21, 2022
#bulls the lowest since August 2020 #aaiibulls #bears the highest since September 2020 pic.twitter.com/IROZZDuQ2G
— Frances Horodelski (@fhoro) January 21, 2022
Best intra-day put/call figures since Covid crash in '20. Sentiment is one of the necessary components of a tactical low, now we've got it. pic.twitter.com/miif4DtZFK
— RenMac: Renaissance Macro Research (@RenMacLLC) January 21, 2022
While equities have started year on back foot, commodities have continued their 2021 bull run (sole asset class to have broad-based gains so far this year); S&P GSCI +9% so far YTD, with 21 of 24 constituents showing positive returns
@SPDJIndices pic.twitter.com/tG0dQGPntv— Liz Ann Sonders (@LizAnnSonders) January 21, 2022
Three consecutive years of 20%+ returns for equities can make investors financially and emotionally over-invested in stocks.
Maybe it’s time to get back to the basics of asset allocation: Stocks-Bonds-Commodities-Cash https://t.co/5hzERKOXau pic.twitter.com/CkqfusiEiG— Willie Delwiche, CMT, CFA (@WillieDelwiche) January 21, 2022
we only have ourselves to blame pic.twitter.com/bCeHzm1Jr9
— Arun S. Chopra CFA CMT? (@FusionptCapital) January 21, 2022
You’re all caught up now. Thanks for reading!