Account

New to ADSS? Open an
account now to get started.

OR

Already have an account?

Add funds to your ADSS account

Account

New to ADSS? Open an
account now to get started.

Add funds to your ADSS account

Trends & Analysis
News

Gold prices test new trading levels. What’s next?

News

S&P 500 rebounds amid Trump’s soft tone on China

News

Gold gains amid renewed US-China tariff tensions

News

PepsiCo’s shares spike as results top estimates

News

Oil prices surge to highest since late September

News

Gold breaks above $4000. What’s next?

Trends & Analysis
News

Gold prices test new trading levels. What’s next?

News

S&P 500 rebounds amid Trump’s soft tone on China

News

Gold gains amid renewed US-China tariff tensions

News

PepsiCo’s shares spike as results top estimates

News

Oil prices surge to highest since late September

News

Gold breaks above $4000. What’s next?

Breadcrumb navigation close

Asset Watch

Could evaporating liquidity upend the S&P 500?

 

Tuesday, May 2, 2023

While the S&P 500 ended April with a bang, bearish seasonality has arrived and typically lasts through the third week of May.  However, with the FOMC meeting scheduled for May 3, Apple’s earnings on May 4, and U.S. nonfarm payrolls on May 5, fundamental volatility could be amplified.
Likewise, as the U.S. dollar index and Cboe Volatility Index (VIX) showcase seasonal strength in May, the bullish tone from April could shift if a short-term catalyst arrives.
The recent banking crisis forced the Fed to expand its balance sheet to help troubled institutions. Those flows have since reversed, and the metric has declined for five-straight weeks, shown by U.S. bank reserves have also fallen, and the development often hurts the S&P 500.
S&P 500 Stock Chart Trading View

Declining reserves constrain banks’ ability to initiate loans and finance growth. In other words, it can hurt economic activity.

 

The grey line below tracks the S&P 500, while the red line below tracks reserve balances held at the Fed (U.S. liquidity). As you can see, the S&P 500 has largely followed the metric since the 2020 pandemic, as QE optimism in 2021 turned to QT pessimism in 2022. More importantly, the divergence on the right side of the chart shows how the S&P 500 has rallied recently in the face of contracting liquidity.

 

Is the decoupling a cause for concern, or is this time different?


© ADSS 2025


Investing in CFDs involves a high degree of risk that you will lose your money due to the use of leverage, particularly in fast moving markets, where a relatively small movement in the price can lead to a proportionately larger movement in the value of your investment. This can result in loses that exceed the funds in your account. You should consider whether you understand how CFDs work and you should seek independent advice if necessary.

ADS Securities LLC – S.P.C (“ADSS”) is authorised and regulated by the Securities and Commodities Authority (“SCA”) in the United Arab Emirates under First Category: Dealing in Securities and Fifth category: Arrangement and advice (Introduction). ADSS is a Limited Liability Company – Sole Proprietorship Company incorporated under United Arab Emirates law. The company is registered with the Department of Economic Development of Abu Dhabi (No. 1190047) and has its principal place of business at 8th Floor, CI Tower, Corniche Road, P.O. Box 93894, Abu Dhabi, United Arab Emirates.

The information presented is not directed at residents of any particular country outside the United Arab Emirates and is not intended for distribution to, or use by, any person in any country where the distribution or use is contrary to local law or regulation.

ADSS is an execution only service provider and does not provide advice. ADSS may publish general market commentary from time to time. Where it does, the material published does not constitute advice, or a solicitation, or a recommendation to a transaction in any financial instrument. ADSS accepts no responsibility for any use of the content presented and any consequences of that use. No representation or warranty is given as to the completeness of this information. Anyone acting on the information provided does so at their own risk.