Six Charts that Matter
1. S&P 500® Index
The S&P 500® Index remains above its 100-day moving average at 1309; a sustained sell-off below 1309 presents more ominous evidence for the near-term direction of the Index.
2. U.S. Dollar
Is the U.S. dollar's recovery driving the softening in the S&P 500? Maybe. If so, further appreciation above 76.00 would be problematic.
3. U.S. 10-Year Treasury
Regulatory measures are aggressively attempting to reduce speculative froth in the commodities space. Outflows from commodities are finding homes in more defensive asset classes. Clearly, the 10-year U.S. Treasury is one home. The 10-year is approaching its 200-day moving average at 3.07%; it has not traded below the 200-day average since early December.
4. Health Care XLV
5. Technology XLK
Moderating global growth and a more defensive market, performance of the health care and technology sectors since March accurately depicts this change in sentiment. Their performance emphasizes the need to be diversified now more than any other time since May 2010. I am encouraged that money allocated to highly sensitive growth sectors, such as technology, is not being hoarded. Appreciation in the health care, consumer staples and utilities sectors suggest it is just "hiding out."
6. Corporate Earnings
Earnings from S&P 500 Index corporations remain incredibly robust. The chart below measures quarterly earnings, which continue to improve quarter to quarter, and the most fundamentally sound element of the markets' significant appreciation since 2009.