The St. Louis Fed Financial Stress Index has risen above the zero line, increasing to 0.09.
Here’s the chart:
Let's break down what the chart shows:
The blue line represents the price of the S&P 500 index.
The green/redline represents the St. Louis Fed Financial Stress Index. When the line is green, it indicates that financial market stress is lower than normal. Conversely, when the line is red, it indicates that financial market stress is higher than normal.
The St. Louis Fed Financial Stress Index measures financial stress in markets and is published by the Federal Reserve Bank of St. Louis. This index is constructed from 18 weekly data series: seven interest rate series, six yield spreads, and five other indicators. Each of these components provides insights into different aspects of financial stress.
The Takeaway: Here is another data point for the bears…
The St. Louis Fed Financial Stress Index has reached its highest level of market stress...
Yesterday's daily move of +9.5% for the S&P 500 was its third-best day going all the way back to the 1950s.
Here’s the chart:
Let's break down what the chart shows:
The blue line in the top panel is the S&P 500 index price.
The green & red lines in the bottom panel is the daily percentage change.
The table showcases the forward returns for the top 20 best days for the S&P 500.
The Takeaway: If you have been following my daily notes this week, you would have seen on Monday that I noted that a massive back-to-back price drop could indicate that we had reached a market bottom. On...
More than 50% of the stocks in the S&P 500 are currently in oversold conditions.
Here’s the chart:
Let's break down what the chart shows:
The blue line in the top panel is the S&P 500 index price.
The black line in the bottom panel is the percentage of S&P 500 stocks oversold (Daily RSI14 less than 30)
The gray lines indicate when the percentage of S&P 500 stocks oversold crosses above 50.
The Takeaway: The recent environment has not encouraged risk-seeking behavior. We have now entered a phase where many risk assets have broken lower from topping formations and are now retesting prior cycle highs.
When we take a look under the hood, we find that over 50% of the stocks in the S&P 500 are now oversold (Daily RSI falling below 30). This level of oversold conditions has not been seen since the market crash of 2020.
So, I dug into the data to see what typically happens to the market when the majority of S&P 500 stocks become...
