Updated Models & Spotlight Chart 11/10/2024

Risk Appetite Improves, Stocks Gap Up, Price Hits an Upper Band, and VIX Drops After a Recent Peak Signal

The S&P 500 followed up the prior week’s decline with a strong bounce back this week, advancing nearly 5% with sector leaders being XLY, XLE, and XLI. Volatility continued lower following the Aggressive VIX Peak Signal highlighted in last week’s note. VIX is now back under 15. Bond spreads have also retreated lower, with the High Yield and AAA Corporate Bond Spreads reaching multi-year lows last week, a positive sign from the fixed income market about the health of U.S. public companies. Last week I wrote an update about the declining volume indicator shifting back above 0.5, this acted as a good ‘reset’ for the market as we saw stocks bounce higher after this occurred. While we saw strong price action, we didn’t get another 75+% day in large caps. While over half of stocks gapped higher on Weds. (the most since March 14, 2023), that bullish move still only resulted in 67% of stocks closing up on the day. Risk Appetite has seen a big improvement recently and momentum in the S&P 500 has continued to improve, reached the highest level since July.

Summary of Models