Key insights
- Despite the S&P 500 reaching new highs, underlying market breadth is weak, with declining volume and overbought conditions. A few sectors are driving gains while others lag. Heavy tech earnings, a Trump-Xi summit, and CPI data in the next three weeks could be catalysts for a correction. Insider selling is elevated, suggesting caution.
Just my daily thoughts.
What looks good on the surface:
- S&P 500 at record highs, up +10.8% in one month * Price above all major moving averages (20/50/200day) * Credit markets calm: high yield spreads at 286 bps, nowhere near stress levels * NYSE advance/decline line confirmed new highs
What's actually happening underneath:
- Only 55% of S&P 500 stocks are above their 200day MA. in a healthy rally this should be 70-80%+ * Only 50% are above their 50-day MA. barely half the index is participating * Volume is collapsing on up days: 93.6M (Apr 8) -> 30M (Apr 28). that's 39% of the 20day average * RSI at 70.67 (overbought), stochastic pegged overbought for 13 straight days * A handful of sectors are carrying everything: Tech (74%), Financials (88%), Consumer Discretionary (80%). Meanwhile Energy (14%), Utilities (13%), Consumer Staples (26%) are getting left behind * Insiders are selling at well above historical averages (buy/sell ratio at 0.24 vs 0.34 median)
Why the next 3 weeks matter (Apr 29 - May 15):
- Apr 29: FOMC decision + GOOGL, MSFT, META, AMZN earnings all on the same day * Apr 30: AAPL earnings + Q1 GDP report * May 12: April CPI (risk of hot print from oil at $101/bbl) * May 14-15: Trump-Xi summit in Beijing * May 15: Monthly options expiration (gamma unpin)