That’s how many green lights are flashing in this two-factor trend model built on two of the market’s oldest rules: don’t fight the tape, and don’t fight the Fed.
Here’s the chart:
Let's break down what the chart shows:
The black line in the top panel shows the S&P 500 Index on a monthly basis.
The red line is the 12-month moving average of the S&P 500.
The black line in the lower panel shows the 3-Month Financial Commercial Paper Rate.
The red line is the 10-month moving average of that rate.
Green shading highlights a bullish regime based on trend.
Red shading highlights a bearish regime based on trend.
The Takeaway: This is a simple model that tracks price and policy — the two forces that move markets. When both align, history says the odds tilt higher.
I’ll start with the tape.
When the S&P 500 trades above its 12-month average, it signals a healthy uptrend. Buyers are in control, momentum is strong, and risk-taking tends to pay.
That’s been the case since May 2025, when the index reclaimed its trend and pushed to new highs.
It’s one of the oldest tools in the book — no guessing, just follow the trend.
Now layer in the Fed.
The 3-Month Financial Commercial Paper rate provides a market-based view of credit conditions. When it drops below its 10-month average, it signals easing — a tailwind for stocks.
That flip happened back in December 2023, well ahead of any official policy pivot.
Together, these signals tell a clear story:
The S&P 500 is trending higher. Rates are easing.
When both are green, the market tends to reward it, with average returns of 1.6% over 1 month and 3.5% over 3 months.
That’s a backdrop that tends to support higher stock prices.
It’s not a forecast.
Just a read on the data.
When the tape and the Fed are both green… history says it pays to lean in.
Grant Hawkridge | Chief Aussie Operator, All Star Charts
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