S&P 500 (SPX)/Producer Price Index (PPIACO) Leading Market Lower Short

SPX/PPIACOSP

Description

⋅ Jan 4, 2023 6:17 PM

Today, I wanted to share a chart setup that was inspired by @Badcharts that highlights the ratio of S&P 500 (SPX) / Producer Price Index (PPIACO) correlation — which, as @Badcharts recently highlighted on a Twitter space led (or very closely correlated) with the downturn in the S&P 500 (SPX SPY ES1!) starting in late 21’.

In addition to this, I wanted to layer on the S&P 500 (SPX), Unemployment Rate (UNRATE), & U.S. Recessions as these (3) inputs seem to have a very intersting correlation to the relative predictive timing of previous recessionary periods — both in 01’ & 08’.

I’ve also added the “MACD Indicator” (bottom indicator) & the “Distance from Moving Average” (first indicator), using the SMA 144 & 200 Bar Lookback as these help highlight overbought/oversold conditions in the ratio of S&P 500 (SPX) / Producer Price Index (PPIACO) — which could help you identify tactical market positioning opportunities (long or short).

Here is the chart key for this setup: 📊🔑

Black/White Bars = S&P 500 (SPX) / Producer Price Index (PPIACO)
Blue Line = SPX (SPY ES1!)
Orange Line = Unemployment (UNRATE)
Vertical Black Dotted Line = Pre-Recession Ratio Peak (SPX/PPIACO)
Vertical Orange Dotted Line = Pre-Recession Unemployment Trough (UNRATE)
Vertical Blue Dotted Line = Pre-Recession S&P 500 Peak (SPX)

1990 - 2023 Overview (Monthly) 📊

*2001 Recession* (Monthly & Weekly) 📊

*NOTE: First indicator peak/trough to last indicator peak/trough = 5 bars (months)*

Peak (SPX/PPIACO) = Mar. 00’
Trough (UNRATE) = Apr. 00’
Peak (SPX) = Aug. 00’

*2008 Recession* (Weekly & Daily) 📊

*NOTE: First indicator peak/trough to last indicator peak/trough = 5 bars (months)*

Trough (UNRATE) = May 07’
Peak (SPX/PPIACO) = June 07’
Peak (SPX) = Oct. 07’

2023 Recession? (Weekly & Daily) 📊

*NOTE: First indicator peak/trough to last indicator peak/trough = 7 bars (months), but no “technical recession”…*

Peak (SPX) = Dec. 21’
Peak (SPX/PPIACO) = Jan. 00’
Trough (UNRATE) = July 22’

What are your initial thoughts & observations from this chart setup? Let me know in the comments below! 👇🏼

Comment

⋅ Jan 4, 2023 6:23 PM

If you would like a copy of this chart template, you can copy that using this link: 📊

tradingview.com/chart/Nk1LpnuE/

Comments

kylemusserco

⋅ Jan 4, 2023 6:23 PM

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