Why the S&P 500 Is in "Neutral"

What to watch on the $42 trillion index… Published By Money & Markets, LLC. April 15, 2024 Published By Money & Markets, LLC. April 15, 2024 [Turn Your Images On] [Turn Your Images On] From The Desk of [Matt Clark, CMSA®]( Chief Research Analyst, [Money & Markets Daily]( Why the S&P 500 Is in "Neutral" Money & Markets Daily, Last year was great for investors. The S&P 500 posted a 24% gain from start to finish — including a 15% bump over the last two months of the year. And 2024 started strong with the index jumping 11% to a new all-time high in late March. Investors were banking on the idea that the Federal Reserve would start trimming interest rates in the coming months. Then, last week happened. One of the Fed’s key gauges of inflation — the Consumer Price Index (CPI) — came in hot at 3.5%, sending stocks lower. The S&P 500 dropped 1% on Wednesday. After recovering slightly on Thursday, the index sank lower to close the week. And I’m not sure we’re past the hangover from a great 2023. Here’s why… S&P 500 Futures Point to Down Shift Following the bad CPI news, S&P 500 futures posted an unsettling mark. For the third time in eight sessions, futures contracts tied to the index hit what’s called an “outside day.” This happens when the price of an equity reaches higher highs and lower lows than the day before. A negative “outside day” is when the stock opens higher, trades at a new high, then pulls back to trade at a lower low and closes below the previous low. Here’s what the S&P 500 futures looked like by Thursday afternoon: S&P 500 Futures Shows 3 “Outside Days” [Turn Your Images On] You can see the three “outside days” on April 1, April 4 and April 10. This is where futures traded above the previous day’s high, fell back and closed lower than the previous day’s low. A few "outside days" don’t indicate a downward trend on the horizon for the S&P 500. It could indicate a short-term blip, considering the strong uptrend the index has been in since 2023. But something else stands out as a reason to consider a broader pullback may be coming. --------------------------------------------------------------- [Turn Your Images On]( [$25 Stock to Fuel the AI Market Boom of 2024]( One secretive company’s new technology is poised to disrupt the AI market – a market that is projected to grow from roughly $500 billion to $200 trillion. That’s a surge of 39,900% over the next six years. Today, you can invest in this one-of-a-kind company for just $25 a share. [Click here for all the details.]( --------------------------------------------------------------- S&P 500 Rates “Neutral” The whole Money & Markets team shared some additional research on the broader index on Friday (if you missed that, [click here to check it out]( using Adam’s Green Zone Power Ratings system to examine every stock in the index. Here’s what I found when I performed an X-ray on the entire index. On average, all stocks in the S&P 500 rate 49 out of 100, or “Neutral.” If this were an ETF, our recommendation would be to watch — not buy or sell. Drilling deeper into factor ratings, we can see where the S&P 500 shines… and where it falls short: - Momentum — 49. - Size — 9. - Volatility — 59. - Value — 40. - Quality — 70. - Growth — 62. Of all the stocks on the index, a little more than 50 rate “Strong Bullish” on our system. However, more than 70 rate “Avoid” and more than 120 are “Neutral.” S&P 500 Rates “Neutral” [Turn Your Images On] This means that treated like any other exchange-traded fund, the S&P 500 is not a fund to buy right now. There are more stocks on the index rated “Avoid” than “Strong Bullish” and even more considered “Neutral.” This doesn’t suggest a massive downtrend in store for the index, but it should give you pause. While the broader index itself may be something to avoid, there are, of course, some gems in it. That’s where the power of [the Green Zone Power Ratings system]( becomes so valuable. Rather than looking to buy an entire index of stocks — an index that contains more “fat” than “meat” at this point — our system helps you drill down and find the best of the best to help bolster your portfolio. Until next time… Safe trading, [Matt Clark, CMSA®]( Chief Research Analyst, [Money & Markets Daily]( --------------------------------------------------------------- [Turn Your Images On] Small Business Owners Add to Inflation Worries The [NFIB Small Business Optimism Index]( fell to its lowest level since 2012 in March. Business owners sharply lowered their sales expectations, and inflation ranks as the leading concern in the survey. A net 36% of respondents expect the economy to worsen in the next six months. Inflation concerns may be a self-fulfilling prophecy. In March, the net percentage of small business owners raising prices jumped from 21% to 28% — the highest share since October 2023. Another 33% expect to raise prices soon. Higher prices are the simplest definition of inflation. This data is concerning, but it also raises the possibility that the Federal Reserve will cut rates this year. If the economy weakens as expected in the next months, a rate cut is inevitable. — Mike Carr, Chief Market Technician, Money & Markets  [Turn Your Images On] [(Click here to view larger image.)]( --------------------------------------------------------------- Check Out More From Money & Markets Daily: - [IS THE S&P 500 LYING TO YOU?]( - [THE GLOBAL AI ARMS RACE IS ON]( - [AI-POWERED ESPIONAGE?]( --------------------------------------------------------------- [Turn Your Images On]( Privacy Policy The Money & Markets, P.O. Box 8378, Delray Beach, FL 33482. 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It may contain errors and you should not base investment decisions solely on what you read here. It's your money and your responsibility. Nothing herein should be considered personalized investment advice. Although our employees may answer general customer service questions, they are not licensed to address your particular investment situation. Our track record is based on hypothetical results and may not reflect the same results as actual trades. Likewise, past performance is no guarantee of future returns. Certain investments carry large potential rewards but also large potential risk. Don't trade in these markets with money you can't afford to lose. Money & Markets permits editors of a publication to recommend a security to subscribers that they own themselves. However, in no circumstance may an editor sell a security before our subscribers have a fair opportunity to exit. Any exit after a buy recommendation is made and prior to issuing a sell notification is forbidden. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. (c) 2024 Money & Markets, LLC. All Rights Reserved. Protected by copyright laws of the United States and treaties. This Newsletter may only be used pursuant to the subscription agreement. Any reproduction, copying, or redistribution, (electronic or otherwise) in whole or in part, is strictly prohibited without the express written permission of Money & Markets. P.O. Box 8378, Delray Beach, FL 33482. (TEL: 800-684-8471) Remove your email from this list: [Click here to Unsubscribe](