Dissecting "Extreme" Market Data
What does it all mean?
Investors,
I believe that the stock market is at an inflection point right now. While the S&P 500 is off to a strong start in 2023, generating a YTD return of +7.65%, the market is reaching extreme levels of positioning, fund flows, breadth, and volatility (or the lack thereof). We will review each of these aspects and their potential implications in this edition of Cubic Analytics, but I wanted to start by sharing an updated view of the proprietary study that I shared at the end of February 2023 for the S&P 500.
When I originally shared this analysis, the bullish crossover of the linear regression curves (🟡 > 🔵) was just occurring, a relatively rare signal that was flashing for the 4th time in the past 10 years. This is a very slow-moving indicator, intended to be used over a long timeframe; however, it’s getting off to a strong start so far. Over the past 10 years, the average 1-year return for the S&P 500 is +18.1% and the index is higher 100% of the time.
And guess what? The same signal has also flashed for the Nasdaq-100 and the indicator continues to display strong bullish momentum!
While this is a relatively small sample size, broadly occurring during a period of active QE, investors should be pleased at the fact that the signal is still valid in the current environment. This is merely one indicator and statistical studies don’t operate in a vacuum absent of macroeconomic data or monetary policy.
Within this report, I’ll be sharing another important milestone for the S&P 500 which improves bullish outcomes. I’ll also share interesting on-chain data for Bitcoin, which speaks to the fundamentals of the Bitcoin network in the current environment. This will be a data-heavy report, but I’ll be sure to cut through the noise and provide meaningful takeaways for everything that we review!
To premium members, invitations for this week’s exclusive group call (Tuesday at 6pm ET) were sent out earlier this morning, so you should have that on your calendar once you accept the invite!
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