S&P 500: Year End
Risk Off Criteria 3/3, Trade Idea Updates
Week 5/End Of Month: Market Health Check + Trade Idea Updates
The risk-off environment in markets continued to develop through last week. The S&P 500 ended the week up +0.67%, and the Nasdaq +0.86%— despite the week over week advance the three risk off signals remain active heading into next week.
It is the end of the month— and as with every end of month letter this weeks note will provide update to the 3 series of trade ideas: U.S. Small Cap Equities, Outside of US Equities, and The Gold Trade.
This is also the final letter of 2024— a big thank you the first year of Lines On A Chart being a reader-supported publication. Thank you for your readership and discussion through 2024— I look forward to continuing to share thoughts and ideas every Sunday in 2025. For the next 3 days (ending Dec 31) a 25% off (forever) is available for both monthly and annual plans.
All subscribers:
Week 1: Monthly Opening Note – A comprehensive review of market health, analyzing the short-term trend, market breadth, and momentum. I also cover near-term navigation of the S&P 500, give a quick snapshot of traditional and modern small cap performance, and, when relevant, include bonds. This issue is available to all readers.
Paid Subscribers:
Weeks 2 & 3: Market Health Check – These mid-month editions focus on assessing the market’s condition, beginning with a review of the S&P 500 trend, market breadth across the NYSE and Nasdaq, and momentum indicators. Together, these factors help determine whether the market is in a risk-on or risk-off environment. Brief discussions of potential trade ideas and updates on existing positions round out these notes, which are exclusively for paid subscribers.
Week 4: Trade Ideas – This issue features a full market health assessment followed by detailed chart updates on each trade idea. The aim, like any market participant’s, is to seek outperformance. This year, trade ideas have included U.S. Small Cap Equities, Outside of US Equities, and The Gold Trade. Each idea is presented with an accumulation zone and a defined risk area. While the pace of my trading isn’t rigid, trades typically last anywhere from weeks to months. This final note of the month is also reserved for paid subscribers.
Risk Off Criteria - 3/3
At the close of trading December 27, all three risk-off criteria remained active.
The Short Term Trend— price relative to the 20-day exponential moving average
Breadth— the number of stocks making new highs vs new lows across NYSE & Nasdaq markets, middle panel “Net New Highs”
Momentum— measured using the Percentage Price Oscillator, lower panel
The S&P 500 close below its short term moving average (5994), breadth remained predominately negative, and momentum continues to declining trend. Notably the index traded above the short term trend on December 24 and 26— however failure to sustain this key level on Friday elevates the downside risk.