Key Macro Charts: Can the double positive factors in the US stock market continue? (2024/10/16)
The U.S. stock market faces a double positive on October 16, 2024. Analysts point out that the S&P 500 Index typically performs well in U.S. election years, with an expected year-end target of 6270 points. However, insider buying is at its lowest level in 13 years, and S&P 500 futures trading volume is unusually low. The dual drivers of profit growth and valuation increase may continue, and the market is currently benefiting from this trend
Seasonality of SPX
Since 1928, in US election years, the median return of the S&P 500 Index from October 15th to December 31st is +7.04%. Applying this increase to the current level of the S&P 500 Index (5860 points), this means that it is expected to reach 6270 points by the end of the year.
Trading Volume in US Stocks
The extremely low trading volume in S&P 500 futures is very rare in history, usually only occurring in the last few days of the year or around major holidays.
Insider Alert
Do you know who is not chasing the rise in US stocks right now? The answer is insiders - the buying volume of executives of S&P 500 companies in the open market is at its lowest level in 13 years.
Double Positive
Analysts: As shown in the chart below, a major driver of strong returns is the dual drive of earnings growth and valuation increase. Typically, the trends of these two factors are opposite (because prices usually lead earnings), but occasionally they can rise together.
When they both decline, we will face a perfect storm of declining P/E ratios and earnings, leading to super bear markets like in 2008 and 2001; however, when both rise, we often see a "golden girl" rebound similar to 1995 and 2016.
We will wait and see if this trend can continue, but so far, the market has indeed enjoyed a double positive.
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