Dec 7, 2022
Banking stocks had been outperforming the broader market throughout most of the fall, but that reversed in a big way in November and even more so this month. The largest stock in the S&P 500 Banking Industry, JPMorgan Chase (JPM), however has been a notable outperformer. As shown below, relative to other S&P 500 banks, JPM has seen its relative strength rip higher.
Although it has reverted lower more recently after trading well above its 50-DMA, the stock has experienced a notable moving average crossover as its 50-DMA has risen above the 200-DMA. That is the first time the 50-day has been higher than the 200-day since the start of the year. From a technical perspective, these types of patterns are considered positive, especially when both are rising (golden cross).
In spite of that bullish reputation, the actual performance following past moving average crossovers where the 50-DMA trades above the 200-DMA is not particularly noteworthy nor should it generate a massive amount of optimism. As shown below, on an average basis, JPM has fallen one week and one month after past occurrences that have happened without another instance in the prior three months. That compares to gains of 0.25% and 1.05%, respectively, for all other periods. Looking further out, average performance has only been notably better than normal three months later albeit that is paired with less consistency to the upside. In other words, moving average crossovers to the upside are not necessarily the positive technical pattern many chart watchers consider them to be. As always, past performance is no guarantee of future results. Click here to learn more about Bespoke’s premium stock market research service.
Dec 7, 2022
The S&P 500 (SPY) has struggled to pick a direction so far this morning but at least as of this writing, it is on pace to finish lower yet again. From a technical perspective, the index is at a cross roads having formed a wedge in the past couple of months. During the recent rally, SPY did manage to move back above its 200-DMA, but it couldn’t quite get above the past year’s downtrend line. After the streak of declines in the past week, it has returned to the bottom of the rough uptrend line that has been in place off the October lows.
Again price action has been choppy so far today, and while further declines could result in a break down, it would also mark an impressive, but not exactly unheard of, streak of declines. As shown below, it would be the fifth daily decline in a row. From a historical perspective, that is not particularly rare with 65 other streaks of 5 days or more since SPY began trading. As recently as October and September, there were two streaks that even extended to 6 days long.
What is more rare is for these streaks to start at the beginning of a new month. In fact, this month’s 3.5% drop to start December is on pace to be the 20th worst start of a month for the S&P 500 ETF (SPY) since inception, and there have only been two other times in which all of the first five trading days of a month have seen declines: February 2002 and June 2011. As shown below, those streaks of declines actually came in what were the middle of periods of consolidation while the following few months went on to experience further downside. As for the actual size of the declines, both of those previous instances saw larger drops (roughly around 4.5%) than the 3.5% decline currently.
Dec 6, 2022
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we begin tonight with a look at the S&P 500’s continued decline, honing in on the drop in Energy stocks (page 1). We then review the charts and term structures of crude oil (page 2) and gasoline and heating oil (page 3 and 4). Turning to economic data, we dive into the latest trade balance figures (page 5). We finish with an update of the latest supply chain data from the New York Fed and Logistics Managers’ Index (pages 6 – 8).
See today’s full post-market Closer and everything else Bespoke publishes by starting a 14-day trial to Bespoke Institutional today!
