The stock market is often seen as a measure of the economy’s health. But for those who are unfamiliar with financial markets, it can be difficult to understand the ins and outs of how the stock market works. In order to gain a better grasp of the stock market, looking at a few key charts can make it much less daunting. Here are three charts that provide a comprehensive overview of the current state of the stock market: market breadth, bonds, and sentiment.
Market Breadth: Market breadth is an important measure of investor numbers and activity in the stock market. When applied to a particular index, it can provide a greater understanding of the market’s overall health. The Nasdaq chart displays the percentage of stocks that are above their respective 200-day moving average. When the percentage is too high – such as currently sitting at nearly 86 percent – it suggests that there is excessive complacency among investors and may be a sign of an impending correction.
Bonds: Another useful chart for determining the stock market’s current condition is the bond market. The current environment favors bonds as they are considered a less risky asset compared to stocks. Treasuries are an important measure of bond market performance, and the chart shows that Treasuries have been steadily declining since mid-February with a recent spike. The yield spread between Treasuries and corporate bonds indicates that investors are bullish on corporate debt over government debt, which could be a sign of a strengthening economy.
Sentiment: Investor sentiment is an important piece of the overall stock market puzzle. Sentiment can be defined as the attitude of people, or groups of people, toward a certain situation, product, or stock market index as a whole. The sentiment indicator shows that the overall sentiment towards the market is positive, with sentiment scores currently sitting well above the historical average. This bullish sentiment could indicate that investors are anticipating future market growth.
In conclusion, looking at these three charts provides a comprehensive overview of the current state of the stock market. They offer insight into market breadth, bonds, and sentiment, which all help to create an understanding of where the stock market stands. With this information in hand, investors can better prepare themselves for the upcoming months and position themselves accordingly.
The stock market is often seen as a measure of the economy’s health. But for those who are unfamiliar with financial markets, it can be difficult to understand the ins and outs of how the stock market works. In order to gain a better grasp of the stock market, looking at a few key charts can make it much less daunting. Here are three charts that provide a comprehensive overview of the current state of the stock market: market breadth, bonds, and sentiment.
Market Breadth: Market breadth is an important measure of investor numbers and activity in the stock market. When applied to a particular index, it can provide a greater understanding of the market’s overall health. The Nasdaq chart displays the percentage of stocks that are above their respective 200-day moving average. When the percentage is too high – such as currently sitting at nearly 86 percent – it suggests that there is excessive complacency among investors and may be a sign of an impending correction.
Bonds: Another useful chart for determining the stock market’s current condition is the bond market. The current environment favors bonds as they are considered a less risky asset compared to stocks. Treasuries are an important measure of bond market performance, and the chart shows that Treasuries have been steadily declining since mid-February with a recent spike. The yield spread between Treasuries and corporate bonds indicates that investors are bullish on corporate debt over government debt, which could be a sign of a strengthening economy.
Sentiment: Investor sentiment is an important piece of the overall stock market puzzle. Sentiment can be defined as the attitude of people, or groups of people, toward a certain situation, product, or stock market index as a whole. The sentiment indicator shows that the overall sentiment towards the market is positive, with sentiment scores currently sitting well above the historical average. This bullish sentiment could indicate that investors are anticipating future market growth.
In conclusion, looking at these three charts provides a comprehensive overview of the current state of the stock market. They offer insight into market breadth, bonds, and sentiment, which all help to create an understanding of where the stock market stands. With this information in hand, investors can better prepare themselves for the upcoming months and position themselves accordingly.
