The S&P 500 Sets a New Kind of Record

Usually when we wrap up a trading week for the S&P 500 (Index: SPX), we focus on the big picture for the index.

For instance, did the index set any new highs? The answer to that question is yes, twice in the past week, as the S&P 500 reached 4,187.62 on Monday, 26 April 2021 and then reached higher to 4,211.47 on Thursday, 29 April 2021, before dropping back to close the week of trading at 4,181.21. On the alternative futures spaghetti forecast chart, we see the trajectory of the index is running at the lower edge of the redzone forecast range we have technically been projecting since 11 January 2021, but which we locked in on 22 February 2021.

But it is within the component stocks that make up the index that something more remarkable happened in the month of April 2021. Here’s ZeroHedge with that story:

… while the 5%-ish gain for the month in S&P is notable, during 18 sessions this month through trading on Thursday, 95% or more of the index’s members traded above their 200-day moving average.

That’s the most days ever observed in a single calendar month and double the previous high of nine days in September 2009.

Being ZeroHedge, they find the cloud in that seemingly silver lining in the form of a note by Miller Tabak analyst Matt Maley:

“The fact that 95% of the S&P 500 is now above its 200-day moving average is NOT a bullish sign,” Matt Maley, chief market strategist for Miller Tabak + Co., wrote in an April 26 note.

“Yes, a high number of stocks above their 200 DMA’s is usually positive, BUT it is NOT bullish when the number becomes extreme (like it is now…at 95%). In other words, this data point is much like sentiment. When it is strong, it is positive…but when it becomes extreme, it becomes a contrarian indicator!”

If you’ve been paying attention to the S&P 500 chaos series, you know we’re coming up on when the current trend will end.

But what will be the triggering event that changes the index’ trajectory? For that, we pay attention to the market moving headlines in the news. Here’s what we flagged as notable in the final week of April 2020.

Monday, 26 April 2021

• Signs and portents for the U.S. economy:

• U.S. auto dealers are winners as chip shortage lifts vehicle profits
• U.S. business spending on equipment ends first quarter on strong note
• Missed opportunity: hedges to crimp U.S. shale oil producers’ first quarter profit

Fed minions want maximum employment but may not deliver; appetite to buy up Treasuries on secondary market undiminished:

• Analysis: Fed’s ‘maximum employment’ push may fall short in post-pandemic economy
• U.S. bank appetite for Treasuries unfazed after Fed ends regulatory relief

ECB minions determined to inflate Euro:

• ECB’s Panetta: we must maintain stimulus until inflation hits 2%

S&P 500, Nasdaq close at record highs ahead of tech earnings wave

• As small-cap stocks lag, Wall Street worries about broad slowdown

Tuesday, 27 April 2021

• Signs and portents for the U.S. economy:

• U.S. consumer confidence hits 14-month high; house prices soar
• Oil Rises Despite OPEC+ Sticking to Raising Output Amid India COVID Surge

Fed minions have questions to answer:

• Investor questions for the Fed: what about inflation, bond buying and rates?
• How the Fed may ace, or flub, its inflation call

Bigger inflation developing all over:

• China’s industrial profits nearly double as demand for raw materials rises

Positive recovery signs in Germany:

• Germany lifts GDP growth forecasts, sees consumer-led rebound

BOJ minions disappointed cannot inflate Yen:

• BOJ signals prolonged easing, offers gloomy price outlook

Wall Street ends mixed as earnings wave nears

Wednesday, 28 April 2021

• Signs and portents for the U.S. economy:

• U.S. auto sales to more than double in April: J.D. Power, LMC Automotive

• Auto parts maker Dana flags rising costs, chip shortage hit

Biden to push trillions in investment, plead for police reform in Congress speech

U.S. goods trade deficit vaults to record high in March

Fed minions expected to keep on keeping on, but then Fed Chair Powell says the word “froth”:

• Fed likely to stay the course despite U.S. economy’s growing momentum
• FOMC stands pat on rates and bond buying, vaccines help outlook
• Yields drop as Fed’s Powell says it’s too early to talk about tapering

• Stocks Slammed As Powell Drops The ‘F’ Word
• Fed’s Powell: China’s approach to digital currency would not work here

Positive recovery signs in Japan:

• Japan’s retail sales rise at fastest pace in five months

Wall Street ends lower after Fed holds steady on rates

• Analysis: U.S. companies are worried about inflation, equity investors less so

Thursday, 29 April 2021

• Signs and portents for the U.S. economy:

• Fiscal stimulus powers U.S. economic growth in first quarter
• Oil climbs to fresh 6-week high on bullish demand

Fed minions pushing on a string?

• Next up for Fed’s Powell and the taper test: ‘string’ theory

Bigger inflation developing all over:

• Euro area bonds ‘next shoe to drop’ as vaccinations accelerate

Positive recovery signs in Eurozone:

• Euro zone sentiment surges in April ending COVID recession

S&P 500 near record high on Facebook boost, Nasdaq eases

Friday, 30 April 2021

• Daily signs and portents for the U.S. economy:

• U.S. labor costs accelerate in the first quarter
• Stimulus checks boost U.S. consumer spending; inflation warming up
• 2020 Was a Record Year for U.S. Crude Exports

Some Fed minions starting to think about taking the punch bowl away sooner rather than later:

• Fed’s Kaplan warns on ‘imbalances,’ wants to talk taper

Double dip Eurozone recession confirmed:

• Euro zone dips into second recession in first quarter, but recovery ahead
• German output shrinks in Q1 as lockdown dampens consumption

Shortage of supplies, rising inflation affecting global production:

• China’s factory activity growth slows on supply bottlenecks, soft demand
• China factory activity accelerates in April but cost pressures mount – Caixin PMI

Wall Street ends lower, weighed down by Apple

Want to find out what positives and negatives were in the past week’s markets and economics news? Click through to find Barry Ritholtz’ succinct summary!