Morning Commentary
Yesterday was another gruesome session that saw 90% of the names in the S&P 500 Index finish the session lower. The index is now hovering above critical support (4,194), the current 200-day moving average. The Relative Strength (RS) (see arrows) and the Moving Average Convergence/Divergence (MACD) (see circle) flash oversold signals.
Finding support is one thing; the other challenge is regaining upward momentum.
Seeing Red
All eleven sectors were in the red, and interestingly, the sector that’s supposed to provide cover when the market is getting slammed was the hardest hit.
Amazon (AMZN) was under pressure from telegraphed anti-trust action by the Federal Trade Commission (FTC). I do not think Lina Khan, Chairwoman of the FTC, will break her losing streak in this case, as the problem will linger for years.
Despite the current weakness, this year has been orderly, especially on down days. There has only been one down session greater than 2.0% versus 15 in 2022.
But the 12.0% spike in the CBOE Volatility (VIX) is noteworthy.
Fear & Greed
The spike in the VIX is just one of five indicators moving the Fear & Greed Index close to ‘extreme fear.’ The others include safe haven demand, stock price strength, stock price breadth, and put-to-call ratio.
The junk bonds demand is flashing ‘extreme greed.’
Leadership Void
Don’t look now, but the S&P Technology Sector (XLK) is in correction territory and at a critical support point.
The problem for the stock market is that no other sector(s) has stepped up and provided leadership.
Portfolio Approach
There are no changes to the sector weights this morning in the Hotline Model Portfolio.
Today’s Session
The market has been hovering above the flat line all morning, although not in any significant way. The biggest economic release is Durable Goods.
The Headline came in +0.2 against the -0.5% consensus, but it has to be noted that the prior month (July) was revised much lower.
The big development was the spike in business orders. For all the misleading talk about how strong household balance sheets are - some are strong, most are not - corporations are sitting pretty, and those with bonds that don’t mature in a couple of years can and should be putting money to work.
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7/26/2024 1:36 PM | Friday Recovery |
7/26/2024 9:29 AM | WRAPPED AROUND YOUR FINGER |
7/25/2024 12:58 PM | A Look at GDP |
7/25/2024 9:57 AM | TURNING THE PAGE ON RESOLVE |
7/24/2024 1:49 PM | Vulnerable Market |
7/24/2024 9:47 AM | Mega Misses |
7/23/2024 1:04 PM | Lay Summer Session |
7/23/2024 9:25 AM | MOST EXPANSIVE BREADTH = GREATER OPTIMISM |
7/22/2024 1:23 PM | Rebounding |
7/22/2024 9:47 AM | WILL THE HUNT FOR VALUE CONTINUE? |
7/19/2024 1:32 PM | Under Pressure |
7/19/2024 9:56 AM | STAR FOR ONLY A WEEK? |
7/18/2024 1:30 PM | All Eyes on Netflix |
7/18/2024 10:18 AM | BIG BETS ON TRUMP TRADE |
7/17/2024 1:37 PM | Technology Troubles |
7/17/2024 9:59 AM | EMPHATIC! |
7/16/2024 12:44 PM | AI Drifting Lower |
7/16/2024 9:52 AM | NEW KIND OF WINNING |
7/15/2024 1:32 PM | Small Caps On The Move |
7/15/2024 9:50 AM | FULL SPEED AHEAD |
7/12/2024 12:56 PM | Intriguing Small Caps |
7/12/2024 9:48 AM | IT’S GOOD TO BE THE KING |
7/11/2024 1:25 PM | Equal Weight Comeback? |
7/11/2024 9:42 AM | CALLING ALL STOCKS |
7/10/2024 1:15 PM | Rally Broadens |
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