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Morning Commentary

INFLATIONíS SHADOW INVOKES FEAR

By Charles Payne, CEO & Principal Analyst
5/24/2024 9:37 AM

And just like that, it's back to ‘neutral.’  From ‘greed’ on Wednesday, last week, and a year ago, the gravitational pull of fear dominates. 

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Yesterday, all major equity indices finished in the red, as the “fear gauge” (Volatility Index (VIX)) surged 3.9%.

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All eleven sectors were down for the count. 

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In Greek mythology, Atlas was tasked with holding the world afloat, but that was a punishment. For a split second, Nvidia (NVDA) looked like it could pull off a similar act.

S&P 500 Map

Market Breadth was decidedly ugly, although there were more new highs than lows on the New York Stock Exchange (NYSE), especially decliners versus advancers. The ‘NVDA Effect’ was seen in more up volume than down volume on NASDAQ Composite.

Market Breadth

NYSE

NASDAQ

Advancers

446

933

Decliners

2,385

3,334

New Highs

82

139

New Lows

71

162

Up Volume

508.19 million

3.92 billion

Down Volume

3.30 billion

3.82 billion

Momentum arrows are still mostly pointed higher.

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However, higher yields significantly affected mid-caps and small-caps. 

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Still A Great Year

It's still been a great year but ignoring the persistence of inflationary pressures is harder. 

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Tide Goes Back Out

It has been the dream call for most on the Street - the broadening of the rally. The problem is the bounce from April’s low never had the kind of participation the market enjoyed earlier in the year. This time, the market hitting new highs with fewer names in the mix catching a bid was a red flag. 

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Today’s Session

Between yesterday’s shellacking and the three-day weekend, today's session has that summer vibe.  Lots of folks have already taken the day off and those sticking around have mentally checked out. Still, it's an important session.

The real story of the market continues to be NVDA and the magnificence of America’s tech sector.  Global the United States has outpaced the world in profit growth.

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Drilling down on this has been profits in information technology that have led the way – dwarfing everything including the S&P 500.

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There has never been a period like this before where one nation had the most dominant companies in the world.  The second industrial revolution began in the UK with the rails and quickly spread to the United States which took the baton to surpass England.

It should be reflected in the stock market, but it skews investing opportunities as well.  Those opportunities may take longer to materialize with respect to share prices – but they will at some point.   


Comments
Not sure what to make around the market volatility at this time of the year, along with the other factors in play. IDK, but it seems like it's more a day-to-day trader's market at this point. The word of staying "nibble", even longer term still has meaning.

Terry Dowler on 5/24/2024 10:50:55 AM
 

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