The Outlook: Downgrading the Cyclical Outlook
TIPS break-evens have slammed shut the door to upside beyond the 4818.62 SPX ATH in the near-term. Breadth divergences point lower, but downside likely limited to SPX 4300-4500.
On December 26, 2023 over 90% of US stocks traded above their 50-day moving average, historically one of the most powerful breadth thrust signals: Since 1970, never once has the S&P 500 been lower 12 months later on a price-only basis. This signal was critical to our cyclical outlook upgrade in late 2023 in the wake of the Fed’s decisive pivot toward a rate cutting/labor market defense posture.