It’s no secret that markets are volatile and often unpredictable: trends and outlooks can change in an instant. But analyzing broad market data and trends can give investors and traders valuable insight into the direction of financial markets. The Stock Market in 3 Charts examines the breadth of the stock market, the bond market, and investor sentiment.
The stock market breadth chart shows the number of stocks that are trading above their 200-day moving average, and can serve as a visual gauge of the health of the broader market. When the indicator is above 50% it means that there are more stocks trading above their 200-day average than below, and this is usually seen as a bull market signal. On the other hand, when the indicator falls below 50% it typically indicates a bear market and further downward movement in the stock market.
The bond market chart looks at the yield spread between the U.S. 10-year Treasury bond and the 2-year note. A narrowing yield spread means that investors are expecting slower economic growth and lower interest rates, which can be a sign of potential trouble ahead. Generally, a narrowing yield spread is a bearish indicator, as investors may be pricing in a slowing economy.
The sentiment chart looks at the amount of positive and negative news that investors receive about the stock market from various outlets. The ratio of positive news to negative news is examined and compared to previous periods, and can provide clues about investor sentiment toward the stock market. Generally, if the number of negative stories is greater than the number of positive stories, it means investors have a bearish outlook on the stock market and vice versa.
Investors and traders are always looking for clues to guide their decisions in the stock and bond markets. The Stock Market in 3 Charts provides a great resource for analyzing the breadth of the stock market, the bond market, and investor sentiment, helping investors stay informed and make informed decisions.