Inside Markets

The SPX is trading below its 200-day average, which tends to trigger more CTA selling.

Eurozone equity markets have outperformed US equity markets lately with the Euro Stoxx 50 up +12.52% YTD while the SPX is down -2.20%.

The SPX tested levels below 5772 support (January 13 low) earlier this morning but is now higher.

Equity market internals reflect rising expectations for an economic slowdown/recession, but credit spreads remain below the recent peak in October.

There have been 16 momentum factor unwinds greater than -8% since 2008 with an average peak-to-trough decline of -12%.

In the short-term, markets tend to ignore whether the overall economy is good or bad but focus on whether things are getting better or worse.

Friday’s -1.7% sell off in the SPX was the worst day since December 18 but still left the index up +2.2% on the year, above all moving averages and only ~2% below its all-time high.

The SPX and NDX quietly extend to new highs after a relatively brief two-month period of consolidation.

The S&P 500 (SPX) gained

While US equities have managed to hold their own during the last three weeks, it’s important to recognize the outperformance in non-dollar markets, specifically China and Europe.