S&P 500: Moody
A pathway to all time highs
There is always a headline.
This year has been nothing short of a masterclass in market-moving narratives. From global tariff tensions to disruptive AI reshaping corporate valuations—and now, increasingly, white-collar job markets—every week seems to deliver a new reason for volatility.
Friday added another log to the fire: Moody’s downgraded the U.S. credit rating. A scene from The Big Short worth revisiting. Mark Baum (played by Steve Carell) confronts the ratings agency rep:
"Georgia, can you name one time in the past year where you checked the tape and didn't give the banks the AAA percentage they wanted?" - Mark Baum
Well…. by that I guess they’ve checked the tape.
My analysis maintains a bullish outlook, considering a constructive pathway towards all time highs as the primary scenario. Bearish positioning to be restricted until all three risk-off criteria signal a second alarm for the year.
Programming Note: Reader Updates
Just a reminder: Lines After Dark—the midweek market update—remains free through May. Starting in June, it will move behind the paywall for supporting subscribers.
Also in June, the subscription price will increase from $22 to $28/month. Current subscribers keep their existing rate. If you’ve been considering upgrading, now is the time to lock in the lower price.
Risk Off Criteria: 0/3 Active
Each week, I assess the market using three core signals that define the broader environment as either risk-on or risk-off. When all three are triggered simultaneously, it sets off the "alarm." The last alarm triggered February 21, 2025 where the market declined 19.5% over the next month and a half.
Short-Term Trend — Price relative to the 20-day exponential moving average (S&P 500)
Breadth — Net new highs vs. new lows across NYSE and Nasdaq
Momentum — Percentage Price Oscillator (PPO) on the S&P 500