S&P 500: Market Update

Hey everyone and thanks for jumping back Into the equity verse today we're going To talk about the S&P 500 if you guys Like the content make sure you subscribe To the channel give the video a thumbs Up and also check out intothe Cryptoverse premium at intothe Cryptoverse tocom let's go ahead and Jump in so I wanted to just take Inventory on on what's been going on With the S&P 500 the last several weeks I only cover it you know once every Month or so every month or two over on On YouTube so I want to talk a little About what's happened here generally Speaking as you guys know and I've said This many times with things like index Funds and Equity investing my general Strategy is just DCA at at risk levels That are low enough for me um trying to Time the market is is a very difficult Endeavor as history will prove time and Time again uh so that is my general Strategy and again the nice thing about Index funds is that you know over a long Period of time they do tend to Outperform even you know even what You'll find a lot of hedge funds trying To do so I try to stick to that Especially when risk levels are low when Risk levels are high I I sort of just Let it run but I want to talk a little Bit about what has happened here with The S&P 500 in April and some of the

Main differences with this draw down Compared to the one in in late 2023 so The one in late 2023 is actually Something that we talked about a lot Ahead of time and the reason for that is If you just look at the average of Pre-election years for the S&P 500 There's often sort of a draw down Starting around June July time frame Into October and this happens actually Quite a bit uh obviously not every Single year but you can see that 2023 Did have one 2019 had sort of one but it Wasn't quite as bad and you can sort of Keep going down the list and find many You know pre-election years where in Q3 The S&P 500 Experiences a larger draw down right so We had we ended up having a a 10% drop Now you may notice though that that drop Back over there was not was actually More severe than the one we just had and So I want to talk a little bit about That in this case back in late 2023 we Bounced off the bullmark sport band but Then we ultimately went below it but in 2024 we bounced off of it and then we Put in new highs so think one of the Things to to note in this case is what Was the long end of the yield curve Doing back then as compared to today the Reason why the long yield curve is Important is because as you know as Longing goes up obviously it puts

Downward pressure on on risk assets as We've seen happen many many times and That's essentially what happened over Here in late 2023 if we were to Overlay The long end or let's just overlay the 10-year yield you'll see see in fact That this correction that the S&P 500 Had occurred while the 10-year yield was Basically breaking out to new highs and Ultimately going all the way up to about 5% now the only reason I bring this up Is because during this draw down by the S&P 500 you'll note that it Bottomed well before this one over here Bottomed in the sense that this one here Bounced up the 20we ese whereas this one Back over in 2023 did not or it did Bounce but it was a lower high the main Difference of course is that you can see When it bounced it also corresponded to The 10year Yield at least putting in a local top Now I mean I suppose we're about to find Out if that's a if it is a local top or If we actually are about to take that Out but I do think that if you look at The long the yield curve we can really Learn a lot on on what's going on over With with risk assets because as we saw Back in late 2023 um and even in late 2022 you know When when the long of the yield curve is Shooting up kind of like it was right Here that's not a good thing for for

Risk assets and we we got another taste Of this over here in in late 2023 right The long in was shooting up and then of Course risk assets had a a larger Correction so with the s&p500 right now It's still sitting at at around 5,300 obviously it's being pulled off a A lot by a lot of the larger Mega cap Tech stocks but I know a lot of people Act like this time is different but Actually in reality if you go back many Many years there's often times where This sort of stuff happens this is not That unfamiliar if you go back and look At other sort of late late rate hiking Cycle periods where people are fleeing Sort of lower risk companies or sorry Higher risk companies for lower risk Companies this is just what happens a Lot of the wealth gets concentrated into Only a few stuff St and that's one of The reasons why buying index funds is Often better than trying to stock pick Because unless you know ahead of time Which which of the stocks that are going To drastically outperform you might end Up picking a few that don't really go Anywhere right I mean for instance you Know imagine you had just gone all in uh In the EV space a couple years ago you Know and you were to look at at at say Tesla today and and you know rivan today And and Lucid today they've obviously Not been doing anything great now that

Doesn't mean they won't eventually turn Around hopefully they do but I mean it Just goes to show why it's it's Obviously easy in hindsight to say oh Yeah it was going to be you know Nvidia That that did this amazing move whereas A couple years ago I think a lot of the Same people bullish on Nvidia would have Been saying the same thing about Tesla Whereas you know you fast forward a Couple years Tesla is is actually a lot Closer to its low than it is to its High Um so I mean it is there there's a lot Of survivorship bias right and again I'm Not saying that Tesla can't eventually Come back I actually do think it it Probably will it's just you know it's Easy to sort of say to sort of you know Throw a lot of darts at a board and if You get one right to stick with that and Then ignore all the other ones that that Don't really keep up and that's why a Lot of times just putting you know going With an index fund that gets the larger Market that generally tracks higher as Opposed to trying to pick out which Individual stock is going to outperform Because again a couple years ago I think Most people would have told you that Tesla would have been a lot higher than It is today but it's not okay whereas Nvidia I mean if you pull up the Nvidia Chart it's it's truly a sight to behold To be completely honest I mean look at

It I mean these sorts of moves just show You just show you um you know how how Stock picking you know if you pick the Right one obviously it's a great thing But if you pick the wrong one you end up Know this is the stock you didn't pick And then the stock you did pick ended up Doing something like this right so it Might actually be interesting to Overlay The Tesla valuation against Nvidia and See if there's any patterns there and One of the interesting things here is That you can see that the Tesla Nvidia Valuation is actually really low right Now Right but again you Know it's hard it's I mean it's hard When you're looking at at the market I Think a lot of a lot more people are More interested in in something like Nvidia at the current time than they are Tesla but I I wouldn't be surprised if In say four years we find this valuation Higher you know much higher than it's Today that doesn't mean that the Valuation kit go down further first in Fact you can kind of see it's already Broken down below support and obviously There's a number of different ways that This thing can move back up you could Have Tesla playing catchup or you could Have Nvidia dropping and Tesla not Dropping as much there's a lot of Different ways that something like that

Could play out I think sometimes people Have a hard time sort of envisioning all The different scenarios but one of the Ways to visualize it is to look at say Something like the Russell divided by The NASDAQ and if you look at the Russell divided by the NASDAQ you can See that the overall turn the overall Trend has been down you know essentially Since 1987 Right the overall trend has been down of Course we are near the lows but what's Interesting is when you think back to The last time that the Russell durably Outperformed the NASDAQ it was in 2022 Right which was in fact a bare market so Some of the times the reason why the Lower cap stuff Outperforms in in a bare Market is Because the larger cap stuff did so Amazingly well well that then once There's a once a pull down or once a Draw down actually occurs those sticks Those stocks get hit a lot harder the Other ones they got hit pretty hard and And therefore they don't you know they Don't go down as much and that's why you See things like you know and this kind Of goes back to what I've talked about Before Bitcoin dominance really the Story all along I suppose was Nvidia Dominance but that was what I was trying To capture Bitcoin dominance for the Cryptoverse you can apply that same sort

Of measure for other assets classes as Well and you know you could even look at The Russell divided by Nvidia in the Same way you could look at altcoins Divided by Bitcoin and see in fact that It's once again on an Nvidia rally which Is breaking the Russell down against Nvidia and it just going down to New Lows and you can look at again if you Look at the Russell divided by the NASDAQ you'll see that it looks like It's starting to break down again if you Look at these you know it was putting in Higher lows but then Nvidia just had Another explosive move to the upside and Now it's breaking the the the um the Russell down against Nvidia and this is You know this is sort of that that those Things we've talked about over the last Couple of years is how people during Higher interest rates in QT they will Flee higher risk assets that you'll find In the Russell for lower risk assets Like you know your Nvidia your Apple Your Microsoft your Google your meta Etc That doesn't mean that the Blue Chips Can't eventually go down It's just that those those are much more Likely to survive right if there is you Know if there is a Slowdown they're much More likely to survive because they Frankly just have the cash to do so Whereas a lot of the companies in the Russell you know I think I've seen some

Some people put out tweets showing that Like you know like 40% of them or Something are are not even you know like Are losing money it might even be more Than that but it just goes to show why a Few stocks can really carry the index And I think you can even look up like Equal weighted Um uh I mean here's the NASDAQ 100 equal Weighted in this case you can see that The NASDAQ hasn't even taken out the Highs from March when you weight it Equally whereas if you weigh It based on you know not equally right If you're more so basic on on market cap You can see that it's it's completely Taken out that high from March and and I Think a lot of people look at that and They they sort of say well well it's Only doing it because of these few Stocks well that's the exact reason why Index funds often outperform hedge F you Know just getting a low expense ratio Index Fund often outperforms hedge funds Because unless the hedge funds know Ahead of time which stocks are going to Outperform and pull an Nvidia then they End up picking you know all the ones That are going to underperform or if They do pick the one that outperforms They they're know they're not fully Allocated into it they still have stuff Into other things that are Underperforming and so at the end of the

Day the S&P 500 ends up outperforming Most people that are trying to you know Sort of pick which stocks are going to Out outperform um and again I I know It's easy now to to look and say well Nvidia is always going to do this but I I I think if you were to challenge Yourself a lot of people in in 2022 were Saying the same thing about Tesla and it Hasn't done nearly what people's Expectations were and again I I say that As a long-term Tesla bull you know um Actually do think they will be Successful long term um it seems like It's coming up to a crescendo here so The first thing that the test the Bulls Need to do is they need to break through The bullmark sport band which is Currently kind of around the current the Current price the the 20we estim is 179 The 21 week em is 184 so the Testa bues Need to break through that first and Then of course I mean I imagine if they Can break through that the next obvious Resistance will be somewhere over here In the sort of the low 200s but this is Essentially what happens right you know You people pick individual stocks and Then two years later you can see all Right well yeah if you put all your Money in in one over the other it would Have it would have done much better I Want to talk a little bit about Seasonality too oh before we get to that

The the reason I was mentioned I was Mentioning some the uh the 10year Yield so this correction that the S&P 500 had in late 2023 as we saw it was When the when the 10year yield was Breaking out to new highs right you can See right here this is essentially you Know I mean I'm sometimes I'm just lazy And I don't want to actually draw the uh The lines but if you look right here you Go sort of Across from that high you can see that It was you know the correction started Just before the 10year yield started to Break out to new highs I'm only Mentioning that because I I would keep An eye on the 10year yield there's no Guarantee that it's going to break out To new Highs but it is starting to curl Back up okay and it and it looks like It's potentially bouncing off the bull Market support band here Um so you know barring any unforeseen Events in the short Term it looks like it's trying to to to Move back up and I don't really think You can blame the long of the yeld curve For going up I mean think about it you Know you have the FED going through you Know all this tightening High interest Rates in QT but then you have all this Fiscal spending and so at the end of the Day you know who's going to buy all this All this government debt um I do think

That with the long end going back up it Could be sort of investors saying you Know hey enough is enough you know if Nvidia is going to keep screaming to the Upside if we're going to have all this Sort of irresponsible fiscal spending Then the long end has to go up right the Long end has to go up And I mean right now it's at around 4. .5% still I mean still nowhere near These highs back over here at 5% but I Would just watch it because if we start To get close to sort of these levels up Here then it it might be somewhat Similar to what happened when we got Close to these levels right there right But we're still a little ways off from That but I do think it's worthwhile to Watch the 10-year yield because I I've Said before you know it's it's certainly Possible that the long end goes back up 2 to 5% and in fact if you look at Something like TLT which is essentially the inverse Right you can see that a lot of times When it bottoms out not always but a lot Of times when it bottoms out it it Double bottoms right um sometimes Sometimes it even puts in a slightly Lower low and so most recently this is The Low and so if it were to double bottom Then that would imply that the long Yield curve goes back up if it takes out

The prior low then it would imply the Long the yield curve maybe goes to where The short end of the yield curve is Today so that's what I would consider to Be sort of like the the worst case Scenario uh for the long end and I guess It the worst case depending on what side Of the trade you're on but I would say If the 10-year were to go to 5 and a half% is Is not necessarily my base case but that Would sort of be the worst case scenario I think and that would probably get uh You know the attention but I think in The short term watch here its reaction Off the bull market support band because It does seem to be bouncing right here Um and and if if again if there's no if We're going to get the jobs report next Week okay so if the labor market isn't Absolutely falling apart which it has Held up pretty well so far All Things Considered if it's still holding up okay Then the 10e might continue to go up if It's not and you get a really bad print Then doesn't really matter right then You could see this come back down right Because then the you know the labor Market's slowing down and the the fed's Probably is going to end up pivoting and Then the market starts to care more About you know the labor market than it Does inflation I think for now the Market still cares more about you know

Inflation and and all that stuff because As long as inflation is is running hot I Mean it's still going to As Long As Basically the way to think about it I Think is as long as companies can keep Raising prices is that's going to Continue to sort of improve their their Earnings as long as the consumer is not Throwing in a towel I think a lot of People are complaining a lot of people Have obviously complained about it um About about prices and stuff but they're Still spending that's the thing right They're still actually spending and so That's what I would watch for I mean I I Think the the the the jobs report next Week should provide some directionality To the 10year yield um if it's if it's a A hot jobs report you're probably going To see the tenure go up a lot if it's if It comes in a lot colder and it's a bad Number then you might actually see the Tenure roll over and again I don't know I mean I don't really know what way it's Going to go I'm just sort of Highlighting that if it starts to get Back up near the highs then you could See sort of a repeat of what we saw back Over here one thing to remember though As I've said before markets need a Reason to go down not a reason to go up I mean with all the passive investing Markets generally Trend higher they Really need a reason to go down and so

If you get things like the long of the Yeld curve going Up that can lead to sort of Corrections Like like that all right um but in the Short term I mean the S&P has continued To do pretty well here uh there was if You look at like the daily time frame You know I was looking at at sort of This candle right here and trying to Figure out all right what's happened Every other time we've had sort of a Candle like that where it it basically You know at the open it starts up it Sort of um gaps higher and then by the End of the day it closes a lot lower There's some examples of it right here's An example right here um there there was Another example right here as well you Where you kind of have maybe that's not That's actually not a perfect example Because it actually just opened that was Just where it opened um but there there Definitely are some examples of of Candles like that that you can find if You if you sort of go back far enough um So I would I would keep an eye on that Because we have seen we have seen that That pattern before in the short term of Course Nvidia has been doing a lot of The heavy lifting I want to talk a Little about seasonality because Seasonality is something that as I've Said it it it plays out I don't know Maybe like 60 to 70% of the time and

Then the other percentage is does Something completely different well if You look at year-to dat Ro of the S&P 500 in 2024 it's actually doing quite Well it's already the S&P is already up About 11% on the year if you actually Look at at pre-election year averages or Sorry not pre-election I don't want to Look at pre-election years I want to Look at election year averages normally It's right around this time when the S&P 500 on average is putting in its low for The year so isn't that interesting so Normally when the S&P 500 is struggling In election years it's putting in this Low around this time frame around the End of May this Time it's a basically yearly highs right And not that far away from alltime highs This goes to show how how difficult the Seasonality stuff is and why you should Not invas your entire investing Decisions around seasonality if you look At at at say just comparing it to some Other election years obviously you have 2020 which is not really that great to Compare to because we had a pandemic you Can look at 2016 and and see that in 2016 the market Sort of faded into May and this time it Hasn't done that you you can look at 2012 see that it it really had faded Around this time um and and was putting

In some lows by the end of May early June clearly this time is were way up Here you can look at you know there's There's obviously 2008 but that was Ultimately a a recession you can look at 2004 again you know putting in some lows Of the year we did go lower later but Still these were at that point in the Year it was the lowest the lowest the S&P had been whereas right now it's the Opposite and we could go back further But I mean 2000 was also a recession um 1996 looks like we're actually following 1996 the closest right now out of all The ones we've looked at so if it were To continue to follow 1996 then it would mean sort of just Going sideways uh for another month or Two and then dropping into into the Latter you know into Q3 or Something so I would I would just keep An eye on the seasonality stuff because It is kind of playing out differently uh In terms of this year than what we've Normally seen it also might be Interesting to take a look at some of The individual stocks like apple if you Look at Apple that one was actually Really underperforming this year um but Now it's it's actually had a pretty nice Move to the upside it's still not where It normally is at this point in election Years but it has recovered a lot of Those sort of early losses so Apple's of

Course one of those blue chip companies That um you know should survive you know Whatever High rates the FED wants to Throw out St us for however long they're Going to do it but you can see that it's It's just basically recovered all those Losses and now it's back up to Essentially break even um you know where It was at the at the beginning of the Year So I also wanted to talk a little bit About monthly average Roi um and look at the S&P 500 so if you Look at the S&P 500 the 90-day Roi Based on data going all the way back to 1927 the worst time to buy on average For the S&P has been July and August the Worst time the best time with with a 90day Roi in time in mind 90day Roi so Three months later the best time has Been October buying in October and then 90 Days later so once you get into January On average you're up you know 2 to 3% on Average buying in July and August you're You're you're not negative but you're You're still essentially at at break Even that's one of the reasons why People say like sell a man go away it's Not you know again it's not always that The market goes down it's just that There's a lot of times in the Summer Where you know there's not a lot of Volume and people sort of tune out for

The summer and and not a whole lot Happens if you if you were to go back And that doesn't mean that it has to be Like that this time obviously every Every year is different but if you look At last year right if you look at at at June initially the market went up quite A bit um sort of making anyone sort of Laugh at the idea that the summer would Be boring but then you got into to July And August and and and really by by by September um when summer was ending you Can see that the market essentially Hadn't gone anywhere I mean it went up But then it just came right back down And then the more durable returns came In Q4 and you see that right buying in October and as we just showed monthly Returns October historically has been The best time to buy with a 90day Roi in mind so I would just sort of keep Those those pieces of information um I Mean it's it's there it's not like it Has to it's not like it has to follow Suit but it's just something to to Consider with with all this um with all These markets and of course I mean you Know seasonality is thrown out the Window and when sort of unforeseen Circumstances Cur and clearly we still Have an inverted Yi curve um we've had That for a long Time actually I believe we're we're Coming up

On two years now um if you look at At Treasure yeld spreads believe we're We I think we're at two years Now so with the 2-year now OB for for The 3 month in the 10 year it it Inverted back back in in October of 2022 Or so so that's not been two years but If you look at the 2ye I think it Inverted in July of 2022 didn't it sort Of had a wick below it in April but then We actually durably got below it in July So yeah we're almost coming up on two Years now so this is one of those things Too where there's two ways for it to to Un invert one is through a bull Steepener which is where the short end Of the old curve goes Down that would be because the fed's Starting to cut which they've said They're not really planning on doing Right now and I mean again these Probabilities tend to be tend to be off When you or the market expectations tend To be quite off when you look back a Year later but right now the market is Expecting the First Rate cut in in November Um so if if the FED were to start Cutting rates then the short end of the Old curve would go down so looking at Something like um like the 3 month right If you look at the thre month it's still At it's just hanging out at at at at 5.4% and why shouldn't it I mean if if

The FED funds rate is five you know 5 And a half% the short end isn't going to Go anywhere especially considering that The market is saying that the fed's not Going to cut in the next three months Right so the short end of the yield Curve is staying put so if the short end Doesn't Move then the only way for us to have it Un inversion is for a bare steepener and A bare steeper ER is where the long end Of the Y curve goes up um that's Actually what we had in late 2023 but it Didn't actually lead to the uninversity Of data before they're going to cut and I don't I mean you know I don't really Think you can blame them I mean Inflation is still you know if you were To go look at at the inflation rate Year-over-year you know it still hasn't Really durably gone down and this is the Exact level that it got stuck at in 1972 Around 3% and then the FED got too you know They got to lose too quickly and then we Had another round of inflation so I Don't really think you can blame the FED Uh for not wanting to cut yet but Obviously their their European Counterparts are already suggesting that They will be cutting in June unless There's a really bad inflation print Between now and then so potentially a a Rate cut coming in June uh for the

ECB fed has still said that they're not Going to be cutting for several more Months one interesting thing though with Relate you know as it relates to sort of The ECB and the FED is what does that Mean for you know um what does that mean For things like the dollar right if you Mean if you look at the dollar it Actually looks early similar to the 10year yield so if you go back and look At the 10-year yield remember what it's Doing is it's basically it's just s Slowly bouncing up here and and well I Guess I should I should look at it in This sort of recent Trend Right Here Right but it's been slowly putting in Higher lows potentially bouncing off the Bll market support band now that chart This chart right here the 10year yield Doesn't it look really similar to the Dollar so if you pull up the dollar and You overlay on this chart the dollar is Basically following the 10e You see it pretty clearly and if you Just you know if you just pull up the Dollar by Itself and you put its bull market Support ban on here you can see that It's been putting in higher lows just Like the 10e yield has been Doing So there's sort of two outcomes I mean Obviously one is I mean markets don't Generally go sideways for very long

Right so if the dollar goes down According to this it would be because The 10e goes down but if the 10 goes up Then perhaps we should expect the dollar To go up and you can see that just like The 10-year yield is starting to bounce Off of its bull market support Band the dollar has not yet bounced but It's sitting at its bull market support Band and if you were to look at say like You know the dollar against um against The Euro you can kind of see a very similar Trend like it's been putting in higher Lows essentially since July of 2023 but it's also below the bullmark Support pan so will it hold as support Here or not it's probably a lot of That's going to depend on what the long Of the yeld curve does and again I've Just outlined reasons for why the long Of theel curve could go up the we if it If it goes down it's probably because You get a bad labor market print right Because again I mean until until the Labor market softens up the the risk Assets generally Trend higher and and That's one of the reasons why the the Long and the Y curve just keeps going Higher is because I think you know the The bond market keeps essentially Thinking that you know enough is enough And and that something's going to break And then nothing breaks risk assets keep

Going higher and then there's still you Know the long yield curve has to go up Because it's basically just like look The econom is still chugging along what Other choice do you have um you could Also look at at the dollar against um Against the Yen if you look at that you Can see that you know it had a pretty Explosive breakout back over here it's Funny because if you guys remember back In 20 2022 it was going absolutely Parabolic the US dollar was going Parabolic against the end and then There's a huge selloff and then we got Back up here again and then another Selloff but it just kept on being higher Lows until eventually it broke out it Then finally broke out to the upside Right and then finally broke out to the Upside had a pullback to exactly where It broke out from right here and then Now it's starting to go back up again so That's also something that I think is is Worth keeping an eye on as well because Again I mean it's it's based on a lot of Different things it's not just based on The Euro um it's based on a lot of Different currencies I'm talking about The the dollar so it's worthwhile to Sort of follow all the different ones That can impact it but I suppose you Know that's more or less what I I wanted To talk about with the S&P 500 I mean Again it's at 5300 the I think the main

Thing I was I was looking at is you have The S&P and the NASDAQ I mean the Nasdaq's doing the best then you have The S&P which is not I mean it's slowing Down a little bit but it's still at Highs then you have the Dow Jones kind Of all the way back at its bull market Sport B itself and so it's certainly the Move recently has not been a uniform Move right it's definitely been better In certain sectors uh than other sectors But perhaps perhaps watching the Dow Would be would be useful right here and Again the Dow is not always a leading Indicator for the NASDAQ um it sometimes Can be but if you just simply look like Right here you can see that the Dow was Coming down um and and as it came back Down the NASDAQ still went up for a Little bit before coming down a little Bit but it took the Dow going below its Bull Marcus sportband really to or at Least getting close to it before the NASDAQ even paid attention um but Anyways I think we'll wrap it up there I Just wanted to sort of provide some Commentary on the S&P 500 and the Overall markets um and you know the Dollar and the long yeld curve and so on And so forth and of course there's There's big Bitcoin which is you know Hanging out at around 68k or so and Obviously we've talked a lot about that And U we'll talk more about that but I I

Want to just focus on on the S&P 500 Today and and we'll see if if the Seasonality stuff continues to sort of Play out differently than it normally Does or if it if sort of reverses um and And gets back on track but anyways we'll Go ahead and wrap it up there thank you Guys for tuning in uh subscribe if You're not subscribed and I'll see you Guys next time bye