Weekly S&P 500 #ChartStorm - 1 April 2018

Those that follow my personal account on Twitter will be familiar with my weekly S&P 500 #ChartStorm in which I pick out 10 charts on the S&P 500 to tweet. Typically I'll pick a couple of themes and hammer them home with the charts, but sometimes it's just a selection of charts that will add to your perspective and help inform your own view - whether its bearish, bullish, or something else!

The purpose of this note is to add some extra context beyond the 140 characters of Twitter. It's worth noting that the aim of the #ChartStorm isn't necessarily to arrive at a certain view but to highlight charts and themes worth paying attention to.

So here's the another S&P 500 #ChartStorm write-up!

1. Recovery Process: Well with the first chart, if you're in the camp that says this is a bear market then you might as well move on to the next chart. What it shows is basically that the recovery process out of a decent correction the likes of which we are currently going through can take some time. Over the period shown in the chart the recovery process can take anywhere between 97-417 days... or an average of 200 days (vs 60 odd days at the moment). So as I noted previously, there could be a bit more water to go under the bridge on this one.

Bottom line: Over the past decade it's taken an average 200 days to recover from a correction.

2. Bitcoin and the Stockmarket: Curious pattern here pointed out by Bloomberg Crypto. Seems to show some interlinkages or parallels between the markets as Bitcoin and the S&P500 peaked around the same time, and made the initial bottom around the same time also. It's certainly food for thought, especially for those who are in the camp that say this is like dot-com because rather than the dot-com mania playing out in the stockmarket it has played out in the crypto markets. And in fairness there was certainly some hectic mania over there.

Bottom line: Bitcoin and the S&P500 peaked and bottomed around the same time.

3. Institutional Investor Confidence: I thought this chart was really interesting, it shows the State Street institutional investor confidence index - which is derived off data from their global custodian business (has about $30 trillion under administration), and basically appears to show institutional investors "buying the dip". They don't have a perfect record, but it is an interesting piece of information to add to the mix that the big guys are buying and certainly not showing any signs on panic on this measure.

Bottom line: It seems institutional investors are buying the dip.

4. Stockmarket Valuations: Quite an appropriate chart to follow up with is a look at the forward PE ratio. This chart from JP Morgan shows a fairly sizable reset in the PE ratio (thanks to the fall in stock prices and the surge in forward earnings due to tax cuts among other things). Intriguingly the chart also shows cash holdings, which when you think about the "war chest" factor says maybe things could get interesting if these companies decided to deploy some of that cash. Also, you can see that they have calculated the PE excluding cash (important in a low rate environment) which reveals an even cheaper PE ratio.

Bottom line: Forward PE ratios have seen a notable reset.

5. Inverse ETFs: This chart shows basically demand for inverse ETFs (standardized against the rest of the market). This indicator has spiked to levels last seen during the 2016 correction (actually during the later stages o