Today's number is... 808

Small-caps are currently experiencing their third-longest period without reaching all-time highs. So far, it has lasted 808 trading days, and they are still in a 6.7% drawdown.

Here’s the chart:

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Let's break down what the chart shows:

• The dark blue line in the top is the S&P 500 index price.
• The gray line in the top panel is the all-time high level.
• The red line in the middle shows the all-time high drawdown in small caps.
• The light blue line in the bottom shows the consecutive trading days since we last saw an all-time high in small caps.

The Takeaway: Is 2025 the year we see all-time highs in small caps? Maybe.

But right now, Small-caps are currently trading below their previous cycle highs from 2021 and have been for the past 808 trading days.

Small-cap stocks are often under-owned and underappreciated, leading to low overall expectations for...

Today's number is... 351

On Monday, the S&P 500 closed down by 1.46%. However, if you look deeper, you will actually see that 351 (69%) S&P 500 stocks advanced while only 152 declined for the day.

Here's the data:

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Let's break down what the table shows:

The first row represents the advancing stocks of the S&P 500, while the second row shows the declining stocks. Each column corresponds to a trading day, starting with the current day on the left and moving to the right through the past ten days.

The Takeaway: The breadth of the S&P 500 has improved over the past two weeks. In 9 of the last 11 trading days, more stocks have advanced than declined. Even on days when the index showed weakness, breadth continued to improve. 

But let's take a closer look at yesterday's scenario: When the S&P 500 index drops by over 1% and more than half of the stocks (over 50%) advance.

I found that this scenario hasn't happened too often. In fact, this has only happened twice in...

Today's number is... 22

My Developed Markets Advance-Decline line, which consists of 22 developed markets, just closed at an all-time high.

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's break down what it shows:

The black line represents the Developed Markets Advance-Decline line, which includes the following countries' ETFs: Canada, USA, Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Israel, Italy, Netherlands, Norway, Spain, Sweden, Switzerland, UK, Australia, Hong Kong, Japan, New Zealand, and Singapore.

The Takeaway: I like using this AD Line as it is a valuable indicator for assessing overall market strength. It measures the number of developed markets participating or not, providing us with insights into the health of the market move. So, when more markets are advancing than declining, the AD Line rises; in contrast, it falls when there are more declining markets than advancing ones.

Currently, this AD line is at its highest level ever, which means that the strong...

Today's number is... 0.0%

After a brief pullback in the larger trend, the bulls have regained control and pushed the S&P 500 higher. The S&P 500 now has a 0.0% drawdown, which means that it's at an all-time high. So, the bull market continues!

Here is a bar chart displaying all S&P 500 bull markets since 1950:

(right-click and open image in new tab to zoom in)

Let's break down what this chart shows:

• The blue bars represent the percentage change of each bull market.
• The red dots represent the total number of trading days for each bull market.
• The blue horizontal dashed line indicates the average percentage change across all bull markets, while the red horizontal dashed line indicates the average number of trading days in bull markets.
• For the data nerds, I have added the data table for each bull and bear market. 

The Takeaway: I define a bull market as a rally that rises by 20% or...

Today's number is... 17.5

Bank of America's US High Yield Option-Adjusted Spread is currently at its lowest level in 17.5 years.

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's break down what it shows:

• The black line is the BofA’s US High Yield Option-Adjusted Spread.
• The red line is the 40-week moving average of the High Yield Spread.
• The blue line is the S&P 500 index price.
• The gray shading highlights when the high yield spread 40-week average is trending lower.

The Takeaway: Let me explain this data more clearly…

A widening in high-yield spreads (the black line moving higher) typically indicates a risk-off environment. This suggests that investors are becoming more risk-averse and that the economy may be facing challenges. Conversely, a tightening in high-yield spreads (the black line moving lower) indicates the opposite.

If there had been meaningful stress in the stock...

Today's number is... 50%

Market breadth had been weak... However, it has significantly improved over the last week, with 50% of S&P 500 stocks reaching a 20-day new high.

However, this recent surge in 20-day new highs wasn't quite enough to trigger my favorite breadth thrust regime.

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's break down what it shows:

• The black candlesticks in the top panel is the S&P 500 index price.
• The black line in the bottom panel shows the percentage of S&P 500 stocks at 20-day highs.
• The red line in the bottom panel is the trigger for a breadth thrust.
• The gray shading highlights when in a breadth thrust regime.

The...

Today's number is... 12.5

The 1-week rate of change in Investors Intelligence bears has spiked to 12.5%.

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's break down what it shows:

• The blue line in the top panel represents the price of the S&P 500 index.
• The green bars in the bottom panel show the 1-week change in Investors Intelligence (II) of more bears.
• The red bars in the bottom panel show the 1-week change in Investors Intelligence (II) of less bears.

The Takeaway: Last week, I noted that more bears were beginning to enter the market. We have now experienced a further surge in bear activity, with...

Today's number is... 3

After 3 years, the Consumer Discretionary versus Consumer Staples ratio has exceeded its previous cycle highs from 2021.

Here’s the chart:

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Let's break down what it shows:

• The black line in the top panel is the S&P 500 Consumer Discretionary price.
• The blue line in the middle panel shows the relative ratio of S&P 500 Consumer Discretionary versus S&P 500 Consumer Staples.
• The black line in the bottom panel is the S&P 500 Consumer Staples price.

The Takeaway: As you have probably noticed, I have been focusing on bearish data points over the past few weeks, but it's always important to highlight some key bullish data points, particularly the breakout of this relative ratio from a 3-year base. 

This chart is one of my favorite ways to measure risk appetite. It compares discretionary stocks, which include products and services consumers buy with their discretionary...

Today's number is... 1

Yesterday, the bulls demonstrated that they are still present, with the S&P 500, 400, and 600 reaching their highest 1-month highs since November.

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's break down what it shows:

• The blue line in the top panel is the S&P 500 index price.
• The black line in the second panel shows the percentage of S&P 500 stocks making 1-month highs.
• The gray line in the third panel shows the percentage of S&P 400 stocks making 1-month highs.
• The red line in the bottom panel shows the percentage of S&P 600 stocks making 1-month highs.

The Takeaway: Yesterday, all major indices increased by over 1.5%. This was an impressive day for the Bulls on the back of eased inflation fears.

With this broad participation, we saw 1-month new highs move higher and have now reached their highest levels...

Today's number is... 16

My Fear or Strength Model has been in bearish mode for the last 16 trading days.

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's break down what it shows:

• The black line in the top panel is the S&P 500 index price.
  • The green shading highlights the model is in bullish mode.
  • The red shading highlights the model is in bearish mode.
• The black line in the middle panel is the 10-day average of the NYSE+NASDAQ net new high advance decline line - The “strength” component of the model. The gray shading represents the AD line is rising.
• The black line in the bottom panel is the Volatility index - the “fear” component of the model. The gray shading represents the VIX reading above 28.5.

The Takeaway: My Fear or Strength Model is a tactical framework that has two triggers: 

1. Buy stocks when...

Today's number is... 28.5

Market sentiment is shifting as the average bears reached 28.5 last week, the highest reading since November 2023.

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's break down what it shows:

• The blue line in the top panel represents the price of the S&P 500 index.
• The green line in the middle panel shows the average bulls from the Investors Intelligence (II) and the American Association of Individual Investors (AAII).
• The red line in the bottom panel shows the average bears from the II and the AAII.

The Takeaway: We're beginning to notice more bears entering the market, as the average sentiment among bears has reached its highest level since November 2023. At the same time, optimism appears to be fading, with the average sentiment among bulls hitting the lower end of a year-long range.

Typically, we say that nothing influences sentiment like price movement. However, that's not entirely the case in the current...

Today's number is... 19

My RORO Risk Range Summary, which includes 19 Risk-On versus Risk-Off ratios, has shifted to slightly favor risk-off assets.

Here is the chart:

(right-click and open image in new tab to zoom in)

Let's first break down what the chart shows:

This RORO Risk Range Summary compares the current trading ratios of 19 risk pairs to their 52-week range, represented by black diamonds, and their range position from one month ago, shown as gray triangles. The right side indicates Risk-On, while the left side indicates Risk-Off.

The Takeaway: When evaluating Risk-On versus Risk-Off ratios, I find the weight of the evidence approach to be very useful. 

In my RORO Risk Range Summary, the risk pair comparisons indicate a slight tilt toward Risk-Off assets over the past month. For 11 out of 19 pairs, the ratios are closer to their Risk-Off component, suggesting a weakening risk appetite.

Furthermore, 12 out of the 19...