Weekly S&P 500 #ChartStorm - 3 Jun 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. S&P500 vs 10-Month Moving Average: First up for the first of the month is a chart of the monthly closing price for the S&P500. Notably it's still trading above its 10-month moving average, which is a key momentum indicator and a very basic rule of thumb timing tool for avoiding major prolonged bear markets and avoiding missing out on prolonged major bull markets (and as with all momentum indicators: with due whipsawing and frustration in a ranging market). Interesting perspective to keep in mind amidst all the daily angst and volatility of late.

Bottom line: The S&P500 closed May above its 10-month moving average.

S&P500 monthly chart and 10-month moving average

2. S&P500 Seasonality by Month - Boring June: Moving on to monthly seasonality, the table below shows the average monthly return and a few other metrics for the time period 1964-2017. And well, June historically has been a boring month. The average return for June was 0%, and it had the worst best return (lowest best return at 5% - low bar to beat I guess you could say...), and the lowest standard deviation of returns. With all the volatility YTD, maybe investors could use a boring and mundane month!

Bottom line: June monthly historical return stats are relatively mundane and mediocre.

monthly seasonal statistics for the S&P500

3. Stuck in the Macro Middle: Keeping the "M" alliteration going, the S&P500 remains stuck in the macro middle, with small cap stocks saying "UP" and emerging market equities saying "DOWN". As I noted last week, this is primarily a US dollar issue (and a monetary policy issue - but more on that later). Small cap stocks tend to benefit from a stronger dollar and emerging markets tend to come under pressure from a stronger dollar. So it's going to remain a game of push and shove should this macro theme persist, and it's worth keeping in mind that in aggregate S&P500 companies get about a third of their income outside of the US. Keep monitoring the macro!

Bottom line: The S&P500 is currently caught between macro crosswinds.

S&P500 vs small caps and emerging market equities

4. Fear and Greed Index: Also caught in the middle is sentiment, with the CNN Money Fear & Greed Index likewise stuck in the middle of the range. Neither fearful, nor greedy. Again I would say this is a product of conflicting signals and macro crosswinds, and as usual - when the market breaks either way it will probably take sentiment right along with it.

Bottom line: The Fear & Greed Index is also stuck in the middle.

stockmarket fear and greed index

5. The Euphoriameter: Keeping with sentiment, I updated the Euphoriameter indicator to incorporate closing May monthly figures. It is now down almost half a standard deviation since the peak in January. Probably most people would argue that this is not enough of a reset to make a compelling contrarian case, but it is a reset nonetheless, and if the earnings/macro backdrop does continue to hold up then it could make for an