Can Anything Stop the S&P 500’s Fed-Fueled Rally Now?

From Doug Short: The SPDR S&P 500 ETF Trust (NYSE:SPY) rose for a second day on Thursday, as the Fed’s dovish decision continued to fuel big equity gains in the U.S. and abroad.

Equities around the globe continued to rally on central bank policy, namely the Fed’s decision to to hold off on a rate hike. The rally was especially strong in Europe, where the DAX and CAC rose 2.3% and the FTSE 1.1%. The S&P 500 was a bit less jubilant. It popped at the open and traded in a narrow range to its 0.78% intraday high and then traded sideways to its 0.65% closing gain.

The yield on the 10-year note closed at 1.63%, down three basis points from the previous session and 10 basis point off its interim high seven sessions earlier on September 13th.

Here is a snapshot of past five sessions in the S&P 500.

S&P 500

Here is daily chart of the SPY ETF, which gives a better sense of investor participation. The ETF, like the underlying index, has jumped above its 50-day moving average. But investor participation in today’s rally continuation was a bit subdued.

S&P 500

A Perspective on Drawdowns

Here’s a snapshot of selloffs since the 2009 trough.

S&P 500 Drawdowns

Here is a more conventional log-scale chart with drawdowns highlighted.

S&P 500 MAs

Here is a linear scale version of the same chart with the 50- and 200-day moving averages.

S&P 500 MAs

A Perspective on Volatility

For a sense of the correlation between the closing price and intraday volatility, the chart below overlays the S&P 500 since 2007 with the intraday price range. We’ve also included a 20-day moving average to help identify trends in volatility.

S&P 500 Snapshot

This article is brought to you courtesy of Advisor Perspectives.