The Daily Number Articles

Today's number is... 100%

Our US Dollar Long Term Percent Bullish breadth reading just reached 100%.

Here’s the chart:

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Let's break down what it shows:

The blue line in the top panel shows the price of the US Dollar index.

The black line in the bottom panel represents US Dollar Long Term Percent Bullish breadth reading, which includes 15 key currency pairs.

To calculate the US Dollar Long Term Percent Bullish, we use two criteria:

1. The closing price of the currency pair must be above its 200-day moving average.
2. The direction of the 200-day moving average must be rising.

After assessing these criteria for all 15 currencies, we combine the results to obtain a percentage figure.

The Takeaway: The US dollar has been ripping higher over the past quarter, and when we look beneath the surface, we see healthy breadth readings and confirmation of strength as our US Dollar Long Term Percent Bullish breadth reading just reached 100...

Today's number is... 4

The S&P 500 index is holding up well as it is only 1.89% below its all-time high; however, when we take a closer look at the individual stocks, we can see that they have begun to dip below 4 key timeframe highs that we have identified as important.

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's first break down what the chart shows:

The blue line in the top panel shows the price of the S&P 500 index.

In the bottom panel:

In black is the % of S&P 500 stocks that are above their 2018 highest high

In blue is the % of S&P 500 stocks that are above their 2021 highest high

In gray is the % of S&P 500 stocks that are above their December 2023 highest high

In red is the % of S&P 500 stocks that are above their 2024 Q1 highest high

The Takeaway: This chart is a great way to visualize the current market environment and track what's happening beneath the surface.

What...

Today's number is... Q1

After two weeks of enjoying the Australian summer at the beach house, I've returned to my desk! I hope everyone had a lovely Christmas and celebrated the start of the new year with family and friends!

Let's start the year off with some cycle data… 

Stocks historically do not perform well in the first quarter of a post-election year.

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's first break down what the chart shows:

This blue line represents the average return in post-election years since 1950 for the S&P 500.

The Takeaway: The stock market rewarded bulls over the past 12 months, as 2024 was one of the best election years ever!  

However, I began to notice a...

Today's number is... 2

We only have two out of nine indicators flashing green on my bull market behavior checklist.

Here is the table:

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About the Table: If you’re following me on X, you probably know that I like to know what type of environment we are in before allocating capital. 

This checklist is a mix of breadth, price & macro’ish indicators, which is designed to show turns toward risks or opportunities.

I use a mix of US and global market data and throw in a sprinkle of macro data. I do this...

Today's number is... 97%

Forewarning: This note will take two minutes to read as a lot has happened since yesterday's move lower:

- The Dow Jones Industrial Average recorded its 10th consecutive down day.

- The S&P 500 has experienced 13 straight days with more decliners than advancers.

- The S&P 500 saw a spike in 1-month new lows to 60%, the highest level since March 2023.

- The percentage of S&P 500 stocks in oversold conditions increased to 29.5%, reaching its highest level since October 2023.

- The percentage of stocks above their 50-day moving average dropped to 18.3%, the lowest level since November 2023.

However, one data point that caught my attention was that over 97% of stocks in the S&P 1500 declined in price yesterday!

Here is the table:

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The Takeaway: Yesterday morning, I pointed out that the...

Today's number is... 37.3 > 34.3

More S&P 500 stocks are in downtrends than uptrends.

37.3% are in downtrends… and 34.3% are in uptrends.

Has the environment switched? Maybe.

Here is the chart:

(right-click and open image in new tab to zoom in)

Let's first break down what the chart shows:

The blue line in the top panel shows the price of the S&P 500 index.

In green is the % of S&P 500 stocks above both their 200-day and their 50-day moving averages, indicating a longer-term uptrend.

In yellow is the % of S&P 500 stocks above their 200-day but below their 50-day moving averages. This indicates a longer-term uptrend but a short-term mess.

In red is the % of S&P 500 stocks below their 200-day and below their 50-day moving averages, indicating a longer-term downtrend.

The Takeaway: This chart is a great way to visualize the current market environment and track trends beneath the surface.

Currently, over one-third of...

Today's number is... 3

The Hindenburg Omen has triggered for the 3rd time over the past 110 trading days.

The Hindenburg Omen is designed to identify potential turning points in the stock market, raising concerns about a possible downturn.

Is this something we should be concerned about? Or not?

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's break down what the chart shows:

The blue line shows the price of the S&P 500 index.

The gray bars represent the Hindenburg Omen signals.

The criteria for the Hindenburg Omen:

1: The S&P 500 must be above its 50 day moving average. 

2: New NYSE 52-week highs & new 52-week lows must both be greater than 2.8% of all advancing and declining issues.

3: The NYSE McClellan Oscillator is negative.

The Takeaway: I will begin by stating that the Hindenburg Omen should not be viewed in isolation but more as one small piece of the larger stock market puzzle. However, it is important to note that this signal...

Today's number is... 16

We’re now in the homestretch of 2024, and the 16th of December is when seasonality becomes a tailwind for stocks for the remainder of the month.

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's break down what the chart shows:

This blue line represents the average return for December since 1950 for the S&P 500.

The Takeaway: It's perfectly normal for stocks to remain relatively flat during the first half of December. For the first half of December 2024, we only saw a gain of 0.31%.

The recent weak breadth, combined with a rotation into underperforming stocks, is at the top of my list of reasons for the market's current sideways movement.

But today, the 16th of December, we see a switch in the seasonality environment!

For most of 2024, stocks have outperformed seasonal trends, as this year is shaping up to be one of the best election years ever!  So, will this pattern play out this December? Or not? 

The strong performance in the...

Today's number is... 8

We have now experienced 8 consecutive days with more S&P 500 stocks declining than advancing. 

But, this time it is different…

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's break down what the chart shows:

The blue line in the top panel shows the price of the S&P 500 index.

The black line in the middle represents the consecutive days the S&P 500 had more decliners than advancers.

The red line at the bottom represents the percentage of S&P 500 stocks at 1-month lows.

The Takeaway: Yes, breadth appears weak at first glance, as the data indicates that more stocks have been declining than advancing over the past 8 trading days.

Looking back at history, we can see that this period of poor breadth has occurred three other times over the past two decades.

All three times were amid bear markets and record-high spikes in one-month new lows.

Currently, we are just 0.6% below all-time highs...

Today's number is... 1

We have now experienced seven consecutive days with more S&P 500 stocks declining than advancing. Are we finally going to see an expansion in the new lows list?

The short answer is yes… 

We are beginning to see the 1-month new lows list expanding.

But should we be concerned?

Here's the data:

(right-click and open image in new tab to zoom in)

The Takeaway: The key point is that you cannot have a bear market of any kind without the prices of stocks falling. 

However, the recent spike in the one-month new lows does not raise any significant red flags at this time, as it is no different from similar pullbacks over the past 2 years and not what a significant market top environment would look like.

Until I observe a more serious deterioration in market internals with the list of new lows expanding into longer timeframes, I have no reason to believe we are entering a bear market.

However, a short-term pullback at this point wouldn’t be surprising at all.

On average, each year tends to have 3 to...

Today's number is... 6

We have now experienced 6 consecutive days with more S&P 500 stocks declining than advancing. This matches the previous streak of negative breadth observed over the past seven years.

Should we be concerned about this?

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's break down what the chart shows:

• The blue line in the top panel shows the price of the S&P 500 index.
• The black line at the bottom represents the consecutive days the S&P 500 had more decliners than advancers.

The Takeaway: When we dig into the data, we can see that during the past 6 trading days, several large stocks increased in size while many smaller stocks decreased. This shift in market participation doesn't mean the market is now going to fall.

It suggests a rotation back into stocks that have recently underperformed, particularly large-cap growth companies.

The top 10 stocks by market cap have an average return of 4.9% since last Monday...

Today's number is... 500

The S&P 500 is reaching all-time highs, yet more stocks are declining than advancing on most days.

That's what we saw last week! 

But does it matter? 

Below is a table showing instances of the S&P 500 reaching all-time highs, with more stocks declining than advancing, along with the weekly forward returns:

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The Takeaway: On Friday afternoon, there was a lot of discussion on X, with many bears highlighting that poor breadth readings while the S&P 500 index is at all-time highs are a bearish signal for the markets. 

I usually pay little attention to what perma bears are saying; instead, I prefer to dig into the data and decide whether the information is valuable or not.

Since 1950, there have been 25 instances where the  S&P 500 is reaching all-time highs, yet more stocks are declining than advancing on most days.

On average, a year later, the median return is 14.9%, with...