The Charts Bears Don't Want You To See
Summary
TLDRThis video script offers an in-depth analysis of the stock market and economic trends, contrasting the S&P 500's performance from December 2022 to July 2024. It examines moving averages to identify bullish, indecisive, and bearish market sentiments. Despite potential economic downturns, current charts suggest a strong uptrend, with prices above moving averages. The script also discusses various ETFs, emphasizing the importance of an open-minded approach to market analysis without making assumptions about future trends.
Takeaways
- đ The video discusses stock market and economic charts, focusing on a comparison between December 30th, 2022, and July 5th, 2024, to analyze market trends.
- đ Moving averages ranging from 20-day to 250-day are used to gauge market sentiment, with bullish, indecisive, and bearish trends being highlighted.
- đ The current S&P 500 chart as of July 5th, 2024, shows a strong uptrend with all moving averages sloping upwards and prices above them, indicating a bullish market.
- đ Concerns would arise if the present day chart resembled the downtrend seen in early 2022, but the July 5th, 2024, chart does not show such patterns.
- đ The video emphasizes the importance of not making assumptions about future market movements based on current charts, advocating for an evidence-based approach.
- đ Similar patterns of moving averages are analyzed across various ETFs like SPY, QQQ, and SCG, with the current trend being favorable compared to early 2022.
- đŒ The video notes that even if economic data deteriorates, it would likely take time for such changes to be reflected in the stock market charts, as seen in past topping processes.
- đ The NASDAQ Composite Index and other sector ETFs like SMH and IYW are analyzed, showing strong trends as of July 5th, 2024, in contrast to their performance in early 2022.
- đ The VTI ETF, representing the total stock market, shows a significant improvement from the 2022 downturn, with 83% of its trend dictated by stocks other than Microsoft, Apple, and Nvidia.
- đĄ The defensive Staples ETF (XLP) is compared to the S&P 500 ETF (SPY), with the current ratio not showing signs of defensiveness or economic concern as seen in early 2022.
- đŒ The video concludes by emphasizing the importance of an open and unbiased mindset when analyzing market charts and economic data, avoiding assumptions about future outcomes.
Q & A
What is the main focus of the video script provided?
-The main focus of the video script is to analyze stock market trends and economic charts, particularly those that might be overlooked by bears, and to compare the S&P 500 charts from December 30th, 2022, with those from July 5th, 2024.
What does the script suggest about the market sentiment as of July 5th, 2024?
-The script suggests that as of July 5th, 2024, the market sentiment appears to be bullish, with moving averages indicating a strong uptrend and prices above all moving averages.
How does the script describe the use of moving averages in analyzing market trends?
-The script describes moving averages as indicators of market sentiment, with different colors representing different time frames. A bullish market is indicated when the shortest moving average (20-day in blue) is on top, and the longest (250-day in black) is on the bottom, with all slopes up and prices above the moving averages.
What is the significance of the 20-day moving average cutting through other moving averages in the script?
-The 20-day moving average cutting through other moving averages signifies a strong bearish signal, as seen in the early stages of the bear market in January 2022. The absence of this pattern in the July 5th, 2024 charts suggests a healthier market trend.
How does the script compare the QQQ ETF performance to the broader market trends?
-The script compares the QQQ ETF performance by noting its rapid drop through the moving averages in January 2022, which was a concern. However, as of July 5th, 2024, the QQQ ETF chart does not show similar concerning patterns, indicating a more favorable trend.
What does the script imply about the importance of an open and unbiased mindset when analyzing market charts?
-The script implies that maintaining an open and unbiased mindset is crucial for proper analysis of market charts. It suggests that making assumptions about future market movements based solely on current charts can be misleading and that flexibility in outlook has served well over the past 8 months.
How does the script discuss the relationship between economic data and stock market trends?
-The script discusses the relationship by comparing economic indicators such as real personal income less transfers and nonfarm payroll employment with stock market trends. It suggests that even if economic data starts to deteriorate, it might take time for this to be reflected in the stock market trends, as seen in past patterns.
What is the script's stance on making investment decisions based on the video content?
-The script clearly states that it is for informational purposes only and should not be construed as a solicitation or offer to buy or sell any securities. It advises viewers to consult with a licensed and qualified professional before making any investment decisions.
How does the script address the potential for changes in market trends?
-The script acknowledges that market trends can change rapidly but emphasizes that as of the last update, the charts do not indicate any immediate concerning shifts. It encourages viewers to pay close attention to the charts for any signs of change.
What is the significance of the defensive Staples XLP ETF ratio in the script's analysis?
-The script uses the defensive Staples XLP ETF ratio to illustrate market shifts towards a more defensive stance before a downturn. It compares the ratio's performance in January 2022 to July 5th, 2024, noting that the latter does not show the same concerning patterns as the former, suggesting less immediate market concern.
How does the script use the total Stock Market ETF (VTI) to discuss market diversity?
-The script uses the VTI ETF to highlight that the majority of its holdings are outside the tech sector, indicating that the bullish trend observed is not solely driven by tech stocks like Nvidia, Microsoft, and Apple. This suggests a broader market strength beyond a few leading stocks.
Outlines
đ Stock Market Trends and Economic Indicators
This paragraph discusses the stock market trends over a two-year period, comparing charts from December 2022 to July 2024. It emphasizes the bullish sentiment reflected by the upward slopes of moving averages on the S&P 500 daily chart. The speaker advises viewers to pay attention to the moving averages and their implications for market sentiment, comparing current trends to past market conditions. The paragraph also touches on the potential impact of economic data on market trends and the importance of not making assumptions based on current charts.
đ Analyzing ETF and Sector Performance
The second paragraph delves into the performance of various ETFs and sectors, including the S&P 500, QQQ, and growth stock ETF SCG, comparing their moving average trends from early 2022 to July 2024. It highlights the importance of observing the 20-day moving average and its relationship with other moving averages as an indicator of market direction. The paragraph also discusses the broader market trends as represented by the Vanguard Total Stock Market ETF (VTI), noting that a significant portion of its trend is influenced by stocks outside the tech sector.
đŒ Economic Indicators and Market Outlook
The final paragraph focuses on economic indicators, specifically real personal income less transfers and nonfarm payroll employment, as key measures for assessing economic health and potential recessions. It contrasts historical data during recessions with current data, which has recently reached a new all-time high, suggesting a lack of immediate economic downturn. The speaker emphasizes the importance of maintaining an open and unbiased mindset when interpreting market charts and economic data, avoiding assumptions about future market movements.
Mindmap
Keywords
đĄStock Market
đĄEconomic Charts
đĄMoving Averages
đĄBullish
đĄBearish
đĄTrend
đĄS&P 500
đĄNASDAQ Composite Index
đĄETF (Exchange-Traded Fund)
đĄRecession
đĄInvestment Decisions
Highlights
The video analyzes stock market and economic charts to assess current market trends and potential future movements.
Charts of the S&P 500 from December 2022 and July 2024 show a strong uptrend with prices above all moving averages.
A comparison of moving averages for different time periods illustrates what bullish, indecisive, and bearish market sentiment looks like.
The video emphasizes the importance of using a 'way of the evidence' approach, avoiding assumptions about future market movements based on current charts.
Charts of the SPY, QQQ, and other ETFs show how market sentiment can change rapidly, with moving averages providing key indicators of these shifts.
The video discusses how economic data, such as real personal income and nonfarm payroll employment, can be used to assess the health of the economy and predict recessions.
Current economic data does not show the concerning patterns typically associated with recessions, suggesting the economy remains strong.
The video contrasts the current market conditions with those during previous market downturns, highlighting key differences in moving average patterns.
The importance of maintaining a flexible, unbiased mindset when analyzing market charts is emphasized to avoid being caught off guard by unexpected movements.
Charts of defensive ETFs like XLP show how market sentiment can shift towards defensive assets during times of economic uncertainty.
The video analyzes the performance of individual stocks like Nvidia and Microsoft within the broader market context, noting their influence on ETFs.
A comparison of the total stock market ETF VTI with the S&P 500 highlights the diversity of holdings and sector weightings within VTI.
The video notes that while tech stocks like Nvidia have a significant influence on VTI, the majority of the ETF's trend is driven by other stocks.
The importance of monitoring economic indicators and market sentiment to make informed investment decisions is underscored throughout the video.
The video concludes by reminding viewers that market conditions can change rapidly and emphasizes the need for ongoing analysis and adaptability.
A disclaimer is provided, stating that the video is for informational purposes only and should not be considered investment advice.
Transcripts
in this holiday weekend video we'll
focus on the stock market and economic
charts the Bears don't want you to see
we'll be moving quickly so feel free to
use the pause button on your video
player left side of your screen is a
daily chart of the S&P 500 it's dated
December 30th
2022 let's quickly set the stage with
this chart and then we'll look at the
exact same chart dated Friday July 5th
2024 it's a two-year chart 2021 on the
left side of your screen moving averages
range from the 20-day moving average in
blue all the way out to the 250-day
moving average in Black this is what it
looks like when the net aggregate
opinion of all Market participants
regarding all subjects on all time
frames is bullish this is what it looks
like in here when it's indecisive and
this is what it looks like when it's
bearish and we know from past videos
this is what a strong Trend looks like
this is our indecisive tight cluster in
here in
2022 and this is what a downtrend looks
like thus in the present day concerns
would increase if the present day chart
looks similar to January February and
March of
2022 if we fast forward to July 5th how
does the exact same chart look
today very very similar to the
commentary in recent weeks and recent
months present day chart looks like like
a strong uptrend with blue the fastest
moving average on top black the slowest
moving average on the bottom the slopes
of all the moving averages are up and
prices above all of the moving averages
even if the economy started to roll over
and economic data started to deteriorate
significantly in the coming weeks and
months it would most likely take time
similar to this period or topping
process in here on the left side of your
screen since we're using a way of the
evidence approach let's do the same
thing with numerous charts including spy
same moving averages here's the peaking
process this is the look we want to
avoid in the present day the right side
of your screen over here is July 5th
2024 similar situation you can see very
early in January 2022 in the early
stages of the bare Market the 20-day
moving average in blue dropped like a
stone and cut through the rest of the
moving averages do we have something
similar on July 5th on the right side of
your screen we do not the 20-day moving
average in blue still has a strong
conviction look similar situation with
the triple Q's when the market started
to become concerned about fed policy
interest rates in inflation QQQ dropped
through the moving averages rapidly all
of this occurring in the month of
January in
2022 we saw something similar in the
present day we would be concerned unless
you're guessing or assuming you know
what's going to happen based on the
chart in front of us we still have a
very favorable look from a trend
perspective scg the growth stock ETF you
can see late in
2021 prices above all the moving
averages in a matter of weeks it drops
below all of the moving averages and
notice once the 20-day moving average in
blue
drops below the 250-day moving average
in Black here it never recovers that
level on this rally attempt here in 2022
that eventually
fails right side of your screen same scg
same moving averages we have a strong
conviction look under our approach this
chart is telling us to continue to be
patient with our long and profitable
positions NASDAQ composite index left
side of your screen
notice how much white space is between
the moving averages here early in
2021 look how much tighter prices
relative to the moving averages in Q4 of
2021 as the Market's rolling over the
NASDAQ makes its final Peak here well
before the calendar turns to 2022 and
once again this look in here is the type
of look that we want to
avoid if you're reviewing things
objectively on the on the right side of
your screen we don't have anything in
the present day chart dated July 5th
that looks like q1 of
2022 things can change rapidly but they
haven't changed yet and if we look at
this chart or any other chart and we
assume or say they're about to change we
could have said the same thing every
single day over the past 8
months SMH the semiconductor ETF drops
Like a Stone in January of
2022 do we have something similar and
concerning on July
5th we do not focus on the right side of
your
screen same exact chart same moving
averages we're looking at Nvidia on July
5th it's still hugging its 20-day moving
average up here and it remains well
above an upward sloping 50-day moving
average in red and well above an upward
sloping 250-day moving average in Black
contrast that with where price was in
here in January of 2022 and February of
2022 this really doesn't look anything
like this over
here another tech sector ETF
iyw the chart changes rapidly in early
2022 and by the time the ETF Bottoms in
November of 2022 price is well below a
downward sloping 250-day moving average
in Black same chart on July 5th
continues to have that strong Trend
look how about the broader vti ETF the
Vanguard Total Stock Market ETF it too
in a matter of trading sessions went
from the top of the moving average stack
to the bottom of the moving average
stack in January of 202 2 and before
things started to get really really
dicey in this window here look how tight
the moving average cluster is after that
really bad things happened how does the
exact same chart look on July 5th better
worse or about the same the answer is
significantly better relative to January
of 2022 also
noteworthy the broad total Stock Market
ETF top 10 holding here left side of
your screen sector weightings here now
let's move to the notes in the upper
right hand corner 70% of the exposure in
vti is outside of the tech sector and
yet this is the look of the chart on
July 5th Nvidia only
5% of vti's Holdings if we add Microsoft
Apple and Nvidia less than 177% of the
makeup of vti meaning mean 83% of this
trend here is dictated by stocks other
than Microsoft Apple and Invidia and the
look of this chart here really doesn't
look anything like q1 of
2022 we're not making any assumptions
about what Monday looks like what next
week looks like or the next 3 weeks or
even the next 3 months this is the chart
in front of
us left side of your screen defensive
Staples xlp in the ETF World relative to
spy the S&P 500 ETF 5 or six weeks
before the S&P 500 peaked this ratio
started to take on a defensive look in
the first few trading sessions of
January xlp ided by spy a defensive
ratio was already above all of the
moving averages and the slope of the
250-day moving average in Black in here
was flattening out and the fastest
moving average the 20-day moving average
between late November here and 2021 and
early January here shot through all of
the other moving averages in a
concerning manner how does the exact
same chart look on July 5th better worse
or about the same relative to this look
here in January of 2022 we could see
this in the very early stages of the
bare Market the answer to that question
is significantly better if the look of
the chart started to morph into
something more like this concerns would
increase and if it does it just tells
you to pay closer attention it is very
very easy with a look like this to
remain patient the look of this
defensive ratio on July 5th is not
screaming major concerns in fact you can
make an argument it's projecting
economic
confidence Common Sense tells us these
bullet points here for the most part
encapsulate the order of operations as
the market shifts from growth to
contraction and eventually into a
recession the National Bureau of
economic research they're the ones that
officially declare economic recessions
straight from the horse's mouth in
recent decades bottom of your screen the
two measures we have put the most weight
on are real personal income less
transfers and nonfarm payroll employment
relative to those measures are the
charts concerning relative to these
bullet points and what do we mean by
that looking at the first data set real
personal income excluding current
transfer receipts we live in a world
with NeverEnding calls for recession
there's always somebody pounding the
recession table and today is no
different just like the charts of the
S&P 500 this is the look we want to
embrace over here the Shaded area show
you the look that you want to
avoid shaded area indicates when the US
economy was in a
recession clear weakness here weakness
here data plunges in the 1990 1991
recession
noticeably weak in the 2001 recession
the data moves sideways and then falls
off a cliff during the financial crisis
thus in the present day do we have
something that looks more like this
region in here or something that looks
more like this concerning region in
here this chart was pulled off of Fred
during the trading session on Friday
July 5th data set recently made a new
all-time high
just like the chart of the S&P 500 this
is the data set in front of
us major data set number two that nver
uses to determine whether or not the US
economy is in a recession see weakness
before the 1945 recession weakness in
this window here easy to spot weakness
in the
1950s not difficult to see the change in
Trend in the data here late 1960s early
1970s double dip recession in the
1980s non-farm payrolls rolled over in
the 1990 1991 recession they started to
descend rapidly in the 2001 recession
and rapidly in the financial crisis
recession if we look at the same data
set on July 5th does it look more like
the left side of the screen or more like
this concerning rollover period here in
1990 the data May shift very very soon
but the chart in front of us says it
hasn't shifted yet we really don't even
have to update the models this week last
week looking good looking good this week
the S&P 500 was up 106 points we're in
Striking Distance of some Targets on the
secular volatility research project
possible we could hit those in the next
one to three
weeks still on track relative to this
topic here and there's nothing on the
chart of the total Stock Market
ETF that contradicts any of this nor any
of
this waking up every day with an open
mind about a wide range of outcomes from
widely bullish to wildly bearish has
served us well over the past 8 months
and we all know if we're going to
properly use a chart like this it's
extremely important that we head into
next week and every week with that
flexible unbiased and open
mind the material in this video has no
regard to the specific investment
objectives financial situation or
particular needs of any
viewer this video is presented solely
for informational purposes and is not to
be construed as a solicitation or an
offer to buy or sell any Securities or
any related financial instruments nor
should any of its content be taken as
investment advice
any opinions expressed in this video are
subject to change without notice and
Shaco Capital Management LLC or CCM is
not under any obligation to update or
keep current the information contained
herein CCM and its respective officers
and Associates or clients may have an
interest in the Securities or
derivatives of any entities referred to
in this material CCM accepts no
liability whatsoever for any loss or
damage of any kind arising out of the
use of all or any part of this material
we recommend that you consult with a
licensed and qualified professional
before making any investment decision
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