S&P 500 Outlook

Hey everyone and thanks for jumping back Into the equity verse today we're going To talk about the S&P 500 and we're just Going to be providing a General Market Outlook if you guys like the content Make sure you subscribe to the channel Give the video a thumbs up and also Check out into the cryptoverse premium At into the cryptoverse decom I wanted To just provide some thoughts about the S&P 500 it has been a little while and Of course we are coming into that time Of the year of pre-election years where The market does tend to cool off just a Little bit uh we talked about this in The last video and now you can see that It is starting to transpire a little bit If you're unfamiliar with what I'm Talking about if you look at say the Year-to-date Roi of the S&P 500 in Election years right if you look at the Election year average you'll often see That by about day 145 to 150 the market Sets a low okay now currently we are on Day what 114 about 114 or so um and so we're not Quite there yet but we have already seen About a 6% drop so this is very similar Seasonality that we even talked about Late last year if you guys remember back During the summer of the pre-election Year I suggested that we could get a 5 To 10% correction in the S&P 500 thanks To General seasonality right and if you

Go back and you look at what happened in 2023 you can see that we did get that You know that that correction and if you Overlay it with pre-election years on Average right you can see that the Market does tend to cool off in about Q3 Of the pre-election year so we did get That 5 to 10% correction back then now While we did talk about that I said Pretty quickly after Yellen issued Shorter duration than the market was Expecting and they essentially kicked The can down the road uh by a lot of Measures that was basically bullish uh For the stock market because it was Bearish for for bonds right I mean I I I Think if she had issued longer duration That that correction could have Theoretically continued but when she Issued short iteration it was not the Best outlook for for the bond market and So the bond market then fell right if You go look if you overlay the tenure Onto the chart You can see that the 10year topped out Right there and then the 10e came down All right so the 10year yield came down So what you'll notice is that this Correction over here corresponded to the 10e breaking to the upside we're also we Just saw a 6% correction right here and You'll notice that it's corresponding to The 10-year yield moving back up to the Upside so as the long into the old curve

Goes up it puts pressure on risk assets Now so far all we've really seen Is a fairly modest correction right now You may notice back over here in July The very first pullback was about a 6% Pullback to that bull market support Band very similar pullback right here Right about a 6% pullback to the 20we SMA following that though the S&P then Rallied back up about 5% now from where We found this local low the S&P is Already up about 2.2% so it already has rally up off that Low sum a 5% rally would actually take It all the way back up to around 5200 But what you'll notice is that it Essentially sort of zigzagged its way Down for about three months right I mean This this really started in July and it Ended in late October Right started I Guess mid July so you had August September and then it bottomed out in in Late October it was about a 3mon Correction or so that ultimately saw the S&P drop about 11% so it actually Dropped a little bit more than I think What I suggested I said about a 5 to 10% Drop back then it actually dropped about 11% um and so then of course you know Yellen issuing short iteration we saw The S&P climb on all the way back up and Now it is once again SED to finded a Little bit of weakness but remember There's often times some seasonal

Weakness around that April sort of that March April ail May time frame in the S&P 500 um again here is showing this Year with the average of Prior election Years and on average you know we sort of Set a low sometime way out over here and If you compare this year to other years Might not be that interesting to compare It to 2020 because that was the the Pandemic year but if you look at other Years like 2016 you can see that it Followed a similar script right kind of Moving up and then sort of settling back Down into May and June uh 2012 is almost A carbon copy of what we're seeing right Now where it sort of moves up gets a Pullback and then get sort of a bounce Into the last couple of weeks of April It then it then went on to roll over Sort of into that May and June time Frame the 2012 script here actually Looks very similar to what we saw in Q3 Of last year right you said a low a Lower low and then one final low right Now look at the year-to date Roi the S&P 500 in 2012 in that in this sort of this Phase of the election year you said Hello and then you get that bounce in in The late April and then you have a low a Lower low and then one final lower low Before then picking back up for the rest Of the year and so that is something That I I think we should be aware of is Is this sort of repeating this same

Pattern where you kind of come down you Get a bounce back up you know that could Go as high as maybe 5200 and then you go Below the bullmark sport band and then Ultimately try to find whatever your low Is going to be so if if it were to reach The same extent of this correction it Would actually put it all the way down At around you know 4700 something like that again there's No guarantee that it goes that low but I Did want to at least highlight a couple Of things one of which is this trend Line that you could sort of draw out and Say that you know the S&P has been Holding as support with the exception of This fake out right here below the trend Line which also corresponded to sort of Capitulating pretty far below the bull Market support band um now what's really Interesting about this is you can Overlay uh you can overlay sort of Hyg minus the vix onto this chart and One of the things you'll notice here Actually what I'm going to do is I'm Going to do it the other way around I'm Going to I'm going to pull Up that metric right so we're going to Pull up hyg minus the vix and you'll see On the hyg minus the vix you can see Sort of a series of higher lows that are Forming right you see those higher lows That have been forming now overlay the S&P 500 onto that chart right so we're

Going to um let me switch this over so Let me actually s switch this to a log Um now I want this one to be a log this One can just be a regular scale and what I'm going to do is is we're going to um Sort of look at at this trend okay so We're going to say all right well if you Connect with the Dots here right this Low corresponded to that low on the S&P 500 right and then this low corresponded To the next low on the S&P 500 remember The S&P was also on sort of a similar Trend line where this was a fake out Below the trend line but that fake out Also tagged this part where hyg minus The vix tagged that trend line you can See that hyg minus the vix just tagged That trend line again but while it did It it has tagged that trend line The S&P has still not gone back to that Trend line and for the S&P to go back to That trend line it would correspond you Know to a 4700 4800 S&P um for it to go Back to that trend line so again I mean This is just basic General seasonality It has nothing to do with underlying Macroeconomic conditions or anything Like that it doesn't mean that it Doesn't evolve into something else but Historically we do see some type of Correction in the S&P 500 around this Time right I mean you can see it in 2012 um here's 2008 well 2008 again was a recession

Here uh you can look at at 2004 and you'll see like how how the how The S&P kind of drops gets a little bit Of a a late April rally and then sort of Drops into may may uh May June time Frame so I would keep an eye on that Especially with the hyg minus the vix Sort of back down to its trend line for The fourth time At some point these trend lines can Break and if you're not familiar with This metric right if we sort of Zoom This thing out you can see what this Looks like kind of going back further And actually there's kind of a nice sort Of trend line here at the top that it it Does tend to follow which is kind of Interesting um to take a look at but Every so often you will find it um sort Of these you you'll see it kind of Moving up and then it'll it'll get a big Drop down to the bottom of this range Okay so that is something I I I think Think that is is worthwhile to watch out For and when it does drop to the bottom Of these ranges it tends to correspond To pretty eventful moves in the S&P 500 Right so if you were to look at at sort Of this low when it dropped to the Bottom of the range back in October 2022 It corresponded to that low if you were To look at it over here there was a big Drop below it that was obviously the Pandemic you can also see a big drop

Here by hyg minus the vix where it Bottomed out December 2018 very similar Thing over here in February 2018 after a Pretty big drop same thing in August 2015 after a pretty big drop and and so On and so forth right 2011 um you know 2010 so when this thing You know as that thing rolls over and Hits the bottom of this range here that Often does Mark Bottoms in the S&P 500 Um so again there's no guarantee that We're heading that way now uh perhaps we Just hold the trend line again right It's possible that we just simply hold The trend line one once again and we and We just continue to climb the wall of Worry as we go into into the summer Months and honestly there's always a Good chance that could happen um it's Really difficult predicting when the Market could deviate from General Seasonality the the two main things that I could foresee causing deviations well There's three things right there's one There's geopolitical events which I mean You know no one's going to be timing That um so I don't even try you know I Don't even really try to time that stuff Because it just seems imposs possible uh Number two inflation reaccelerating Which I could see becoming an issue but I don't really think it's going to Become an issue this year um I know a Lot of people are calling for it to

Really re accelerate and go back up much Higher in a second wave I think it's Possible we get a second wave but if we Do I would guess it wouldn't happen Until maybe next year um you know after A a Fed pivot right I I think you know As long as you're on this side of the FED pivot I would still think that it It's just a matter of time before Inflation just continues to slowly go Down I could be wrong about that if the Neutral rate is above the current fed Funds rate I don't think the neutral Rate is above the current fed funds rate I think the FED funds rate is above the Neutral rate and we're just sort of Watching the whole process play out um So I don't really think that inflation Will re Accelerate uh you know back up to seven Or 8% this year it could be become a Risk in future years if the FED pivots Too soon before they get inflation say Durably back back down to 2% so the only Other thing that really leaves is the Labor market um so as long as the labor Market remains strong and by by that I Mean you know as long as it's really Printing below 4% unemployment rate then The market loves to keep on climbing the Wall of worry um if you see a print Above that then perhaps you get you sort Of revisit the bottom of this range on On the hyg minus the vix but again we're

Not there at the current time I would Keep an eye on this trend line though And see if the S&P sort of revisits that Same trend line what's interesting is You know we talk a lot about about we Mostly talk about crypto on this channel Um but it is interesting how a lot of These things are are are very much Correlated to one another right if you Look at the S&P 500 you will find a Trend line where it has tagged it you Know a number of times right three times On the third attempt we had a fake out Below it now if you were to look at say Eth right uh Ethusd you will find a very similar Trend line right you'll find a very Similar trend line Where it's been putting in higher lows And on the third tag of the trend line It was a fake out below it so some of The times I I I think a lot of people Sort of get caught up in the narratives Of the different outside classes but in Reality they're they're actually pretty Much doing the same thing right it's Just that crypto is a more volatile Version of the S&P 500 right so like if If if the S&P is going up then often Times you will see not always but often Times you will see crypto outperform but If the S&P is going down often times You'll see the S&P um or you'll see Crypto

Underperform what's really fascinating Right now though is the fact that the S&P has already bounced off of its Bullmark sport band right it went to its Bullmark sport band the last time it was At its bullmark sport band was in late October you know a after the long of the Yeld curve went all the way up to around 5% or so the NASDAQ already went below Its 20we moving average and it's Actually still below it today even Though the Market's up 1 and a Half% but despite that Bitcoin is still Fairly well above its bullmark scorpion Despite the fact that both the S&P 500 And the NASDAQ have already paid it a Visit and so that's kind of interesting So if you do see um you know if you do See the S&P sort of fall back in to its 20we estimate in May kind of after Potentially setting a lower high late April early May if it falls back into it Once again kind of like it did right Over here right it got a bounce off of It and then fell back down to it if you See something like that play out then it Could correspond to sort of Bitcoin uh Finally going back and testing its 20we SMA um but again there's no guarantee That it even sets a lower low in May or June I'm just sort of showing that General seasonality outside of Macroeconomic stuff and outside of Geopolitical stuff General season ality

By the S&P 500 does show that look there Is often times some weakness sort of Going into that may time frame and and Sometimes it even goes out until until June so I would keep that kind of on the Back of you know sort of keep that on The radar a little bit uh the idea of of Something like that potentially Happening as we get out into May so if The S&P sort of resolves into a lower High in late April early May and starts To roll over again then you're going to Be faced with this trend line once again Which again could correspond to around That 4700 to 4,800 level I mean it's not Even that much lower than the current Prices right um it would only be about 6% lower which is basically the same Amount that this first drop was right Over here we dropped 6% we got a rally And then we dropped another 6% and then We got a rally and then we dropped Another 6% right so we basically have Three 6% drops basically back to back to Back one month after another um so I Think the ultimate question will be Though and then we'll have to sort of Revisit this assuming that it plays out We'll have to revisit it in May or June Is that if we do come back to the trend Line does it hold as support or not Right does it actually hold as support And again remember the market needs a Reason to go down not up so often times

Like just like it was back over here we Got a big bounce off of it that doesn't Mean you will always get a big bounce Off of it I mean after you tag the trend Line enough times right event eventually It will break um it's just a matter of You know how many times does it take to To ultimately break it and by the time You do break it you might not go back to You know where it previously was um but I would watch that level out into May And June and see if that trend line gets Tested and if it does get tested whether We hold it or not will probably depend On on how the labor market is doing by Then um I know last year we saw a big Drump in the labor market data kind of Going in the summer I think the June Print saw the unemployment rate it was The unemployment rate for May but it Dro It jumped from 37 or it dropped from uh 34 to like 37 or something like that in A single month um and so that would be You know if that were to come into play Then then maybe it it it falls below it But I would I would keep an eye on that Trend line if we if we fade back into it In in sort of that may time frame if you Look at a date range on you know sort of From here to here that was about 22 Weeks and then from there to here it was About 31 Weeks and then since leaving this area It's already been about 25 weeks right

So 31 weeks would actually put you the First week of June you know for Potentially Retesting um that trend line if it were To take the same amount of time as it Took over here and if it took say only You know 28 weeks then it would put it In about miday which would be somewhere Between sort of this this to here and Then this first one to the second test So I would continue to watch the S&P 500 Overlay hyg minus the vix also I think To give some type of insight into what's Going on there remember every time that It is tagged that trend line on that Metric so too has the S&P 500 tagged This trend line as well um it just you Know sometimes it it it bounces around For a a couple of months before actually Finding that trend line so I would keep An eye on that um as we get out into the Sort of the May and June time frame What I find kind of interesting is that You know some of these individual stocks Are are behaving very different than What they normally do for instance Apple In 2024 is actually basically you know It's basically just gone down this year You know it's it's it's actually almost About 15% down uh for the year which if You compare that to 2020 I mean by this Point in 2020 Apple was actually doing Better which is kind of crazy to think About um 2016 it was around this level

But not for another you know several Days you not out for another several Days or so and if you were to look at Say 2012 you can see just how well Alpo Was doing back then uh 2008 obviously Was a recession year 2004 2000 was another recession Year and then 1996 right so I I just kind of find it Interesting because some of the names Are are are doing okay but then some of These like juggernauts like apple are Really struggling right but if you were To go look at say meta if you look at Meta I imagine it doesn't look nearly as Bad right meta's been doing better this Year um you can see it's actually up Quite a bit you know meta's up what like 36% year to Date compare that to 2016 and 2020 it's above those two years But Apple I mean apple is certainly Struggling and then you could look at Other stocks uh like Nvidia which has Been sort of the uh the one that's been Leading this whole charge for the last Year and a half or so it's up about 60% um which is well above where it was In 2020 and in 2016 uh you can go look At 2012 as well and 2008 and 2004 and 2000 and basically the year That Nvidia is tracking the closest Right now I guess is the year 2ou uh 2000 where basically this is where it

Was at this point in the Year but back then Nvidia wasn't you Know the Behemoth that it is today right It was a much smaller company back then In fact Cisco was sort of what you might Want to compare it to but again even Those were very different companies and I don't really think it's the it's not Like it's the the best comparison it is A comparison but it's not necessarily Like the fairest or the best comparison Person but I mean you can see just how Some of the individual names are are Struggling like apple whereas other ones Are are actually doing quite well and so That on average the S&P um does tend to Outperform a lot of people that sort of Stock pick because it's it can be very Difficult picking sort of the few that Are are outperforming if you guys Remember uh about a year ago we had the Magnificent 7 right but a lot of those Names have really fallen off um recently Right you've seen apple fall off uh You've seen uh I mean Tesla fell off a While back um I mean it's been Struggling a lot recently it's currently Up to I guess post Market it's up to 153 uh so it's back up a little bit here But you can see that Tesla year to date Is actually down quite a bit so some of Those names um have sort of fallen off From the Magnificent 7 while seems like Fewer and fewer names are actually

Leading the charge you know like it used To be all seven of them but then as as Time has gone on some of those names Have have started to really underperform Um some of the other ones right so I Mean meta is still doing pretty well Nvidia is still relatively elevated Google I think Google Was I mean Google's yeah that one's Still doing it's been doing pretty well As well was obviously tracking it at one Point uh Google's still doing uh pretty Okay too but you can see like apple is Has really fallen off here uh and and Tesla has really fallen off here and Then I guess Microsoft was maybe the Other one we could we could sort of just Check in on here it's it actually got a Pretty big drop last week but it's right Back down to that bull market support Ban which is ultimately where it found Support in late 2023 so I would see you Know if that just is going to hold Support here over the next month or two As we get out into that general Seasonality of um you know of May where The market does kind of go into a lull And then it sort of builds out from There assuming there's no macroeconomic Forces at play that would cause it to Take a detour from General seasonality But anyways I I I guess that'll wrap it Up I just wanted to provide a very brief Update on the S&P 500 and of course as

Always I mean there's no there's no Guarantee that you even go down to that Trend line right now perhaps we just Hold the bullmark sport band and and Continue to climb back up I mean there Are examples of that right like right Here in October 2021 sometimes you just Sort of get a pullback to the 20we Ese And then you just continue to climb on Up you've seen that a number of times um Where you sort of tag the 20we moving Average and and then just kind of Continue to climb and maybe you keep Retesting it but the general direction Remains up so I would also keep that in Mind as a as a potential outcome too I Think the biggest insight as to whether This correction is going to occur could Be based on what is the long end of the Yeld curve continuing to do right you Know is the long end going up and if it Is you know how high is it going to go Up or if it's going down why is it going Down right is it going down for the Right reasons or is it going down for The wrong reason Seasons uh so it Obviously depends on quite a lot of Stuff any we'll go and wrap it up there Thank you guys for tuning in make sure You subscribe and I'll see you guys next Time bye