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Today’s Summary
Monday, May 23rd, 2022
Indices: Dow +1.98% | S&P 500 +1.86% | Nasdaq 100 +1.68% | Russell 2000 +1.10%
Sectors: All 11 sectors closed higher. Financials led, gaining +3.25%. Consumer Discretionary lagged but still rose +0.75%.
Commodities: Crude Oil futures were flat and continue to trade at $110.29 per barrel. Gold futures rose +0.31% to $1,848 per ounce.
Currencies: The US Dollar Index dropped -0.91%.
Crypto: Bitcoin dropped -3.66% to $29,143. Ethereum fell -3.30% to $1,972.
Interest Rates: The US 10-year Treasury yield rose to 2.855%.
Here are the best charts, articles, and ideas being shared on the web today!
Chart of the Day
All bear markets come to an end, but there’s no telling how deep they will run. Fortunately, you don’t need to call a bottom, as price momentum typically confirms the next durable advance. pic.twitter.com/10K54BKxSb
— Mark Ungewitter (@mark_ungewitter) May 23, 2022
Today’s Chart of the Day was shared by Mark Ungewitter (@mark_ungewitter). Bernard Baruch once famously said “Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars.” If you’re a trend follower, you’re always going to be late at the bottom and the top. After all, it’s the meaty part of the trend that you’re after. Mark shares an interesting signal that has historically marked the start of a new advance after a meaningful decline. The indicator in the lower panel shows the spread between the 20-day and 200-day exponential moving averages. The “all clear” signal comes when the spread moves from -2.5% to +2.5%. The spread is still deeply negative by -6.6%, so the coast is not clear yet. When it eventually gets back to +2.5%, you’ll definitely be a little late to the rally, but it’s probably safer than trying to catch a falling knife.
Quote of the Day
“It’s better to be late and right
than it is to be early and wrong.”
– Brian Shannon
Top Links
What Happens After A Bear Market Starts? Four Things to Know – LPL Financial Research
Ryan Detrick shares some insightful stats about bear markets.
Searching for Stabilization Amid Volatile Market – Means to a Trend
Austin Harrison lays out a few things to watch for a potential bottom in Stocks.
Are US Dollar, Euro About to Upend Financial Markets? – Kimble Charting Solutions
Chris Kimble points out that the US Dollar Index and the Euro are both flirting with critical levels.
Down 20% = Bear Market is Stupid – All Star Charts
JC Parets explains why a 20% decline in the S&P 500 is a silly way to define a bear market.
Dow’s Ominous 8-Week Losing Streak – Almanac Trader
Jeff Hirsch looks at the recent losing streaks in the major indices.
Top Tweets
Daily Mkt Mood: Risk-On
Nice rally for stocks w/ a lot of indexes up ~2%. Importantly, buyers were consistent & held through the day. On the other hand, volume was anemic.
Big dollar weakness was bullish driver & cld be the key to any real bounce.
Bulls have a chance!
— Abigail Doolittle (@TheChartress) May 23, 2022
Final heat map of the S&P 500's performance from today pic.twitter.com/O7kQm7Fp4U
— Stock Market News (@StockMKTNewz) May 23, 2022
Perhaps the single most important chart in the market.
We’re thinking it bounces here.$NDX $SPX $QQQ pic.twitter.com/1NGT3anFSk— Carter Braxton Worth (@CarterBWorth) May 23, 2022
The Russell 2000 trying to form a base near the 2018 highs. Small caps have gone virtually nowhere for the last 4 years $RUT $IWM pic.twitter.com/7HtXwBpV5e
— Austin Harrison, CFA, CMT (@meanstoatrend) May 23, 2022
and for those who want to see the reliability of the 200 WMA on $IWM it's the same as everything else, depends on whether it's a correction or a secular bear (or say Covid type crash). pic.twitter.com/zGG8f6tCR9
— Arun S. Chopra CFA CMT? (@FusionptCapital) May 23, 2022
For those looking for signs of capitulation, the put/call ratio isn't showing signs it's happened yet.
We've yet to get the equity p/c over 1, which is something it's almost always done during capitulation-type moments in the market. pic.twitter.com/MXPJR7XeHE
— Andrew Thrasher, CMT (@AndrewThrasher) May 23, 2022
Dow’s Ominous 8-Week Losing Streak
Even if Dow ended its 8-week losing streak, we're not out of the woods yet. Some declared this the first 8-week losing streak since 1923. They’re wrong, their data omits Saturday trading (ended June 1952). The last one ended Saturday, 4/30/1932. pic.twitter.com/0ahRVxSToA— StockTrader'sAlmanac (@AlmanacTrader) May 23, 2022
S&P 500 indeed escaped technical bear market after late-day rally on Friday, but one difference today vs. late-2018 (a near-bear) is that 26% of members are trading >200d moving average; back in Dec 2018, it was 11%
[Past performance is no guarantee of future results] pic.twitter.com/Q1vynTh3vO— Liz Ann Sonders (@LizAnnSonders) May 23, 2022
$SOXX vs. $SPX – Sniffing out a lower high, not something I prefer to see IF a rally is upon us.
*Market does not care about me nor my preferences. pic.twitter.com/KQ8GRfoPUF
— Larry Thompson, CPA (@HostileCharts) May 23, 2022
Relative performance of Consumer Staples has pared back a bit, but still above rising 50-days. Do you want to get bulled up on every rally when these are in uptrends? $XLP $PSCC $SPY $IVV pic.twitter.com/SD3U8iUOzz
— Drew Wells, CMT, CIMA® (@DrewTheCharts) May 23, 2022
Is it like this? $DXY pic.twitter.com/cJRNQZmCm1
— Ian Culley (@IanCulley) May 23, 2022
So I just realized that stocks have been down every week of the Johnny Depp and Amber Heard trial. Coincidence?
The good news is the trial enters the sixth and final week! pic.twitter.com/iF6xmkDQnw
— Ryan Detrick, CMT (@RyanDetrick) May 23, 2022
You’re all caught up now. Thanks for reading!