Morning Commentary
Yesterday, there was a moment when it appeared the entire stock market would finish higher, but despite a valiant effort, large-cap growth continues to be thrashed about.
By the closing bell, small-caps continued their domination, as the ruling class of the stock market held on for dear life.
Even with the performance of the last two weeks, Wall Street remains skeptical. Many think this is the consequence of hedge funds being maxed with long mega-cap names and max short small names. Yet, there have been massive inflows, which underscores the nature of the stock market these days to focus on the short-term only.
Ironically, momentum investors chased mega-caps higher and are now eschewing those names to chase small caps.
Putting the Move Into Perspective
The July drubbing of Big Tech and reversal of small-caps have seen the NASDAQ-100 (NDX)’s monumental lead over the Russell 2000 ETF slip back to January’s level of de minimus gains.
It is something to behold.
However, this adjustment is a blip on the radar compared to the freefall of the NASDAQ-100 in the aftermath of the implosion of Technology and Telecom in 2000.
The bottom line is this move is still too premature to offer a verdict.
Moreover, we know the Big Tech names in question today are of a higher caliber than those of the ‘Tech Bubble.’
More Frustrations
Market breadth was better in all categories, but the market finished its intraday highs after the kind of intraday reversal that sparked rallies into the closing bell.
Market Breadth |
NYSE |
NASDAQ |
Advancers |
1,847 |
2,537 |
Decliners |
937 |
1.687 |
New Highs |
178 |
213 |
New Lows |
29 |
108 |
Up Volume |
2.48 billion |
3.26 billion |
Down Volume |
2.04 billion |
2.78 billion |
Broad Market Blues
Only four sectors finished higher, and many names that rallied on earnings news gave back gains and morphed into losers (we had our fair share).
Energy (XLE), Industrials (XLI), Financials (XLF), and Materials (XLB) are the sectors the book says we want to own as the economic tide turns and the Fed begins cutting rates.
It’s Happening
This is a handy reminder from the Carson Group that there are pullbacks of 5% and one of 10% in any given year. So far, in 2024, the S&P 500 has only experienced a single pullback of 5.4%.
Technical Handicapping
The S&P 500 is nearing oversold using the Relative Strength Index (RSI), but selling volume has increased. The last upside breakout came with a close above 5,400. I expect 5,400 to 5,350 (small gap) to be the big downside tests.
Today’s Session
Personal income came in at +0.2%, which is down from +0.4% in May which also was the consensus.
Personal spending came in at +0.3% was in line with consensus, but down from +0.4%.
Real Personal Spending (adjusted for inflation) was +0.2% down from +0.4% and below consensus of +0.3%.
Tweet |
2/14/2025 1:40 PM | Exhibiting Mixed Action |
2/14/2025 9:51 AM | MAKE LOVE, NOT WAR |
2/13/2025 1:35 PM | Bouncing Back |
2/13/2025 9:54 AM | Feast or Famine Setting In |
2/12/2025 12:59 PM | CPI Reaction Overdone |
2/12/2025 9:54 AM | MARKET RESOLVE |
2/11/2025 1:05 PM | Powell Testimony in Focus |
2/11/2025 9:40 AM | MOMENTUM RULES |
2/10/2025 1:18 PM | Tech Stocks Rebound |
2/10/2025 9:54 AM | INFLATED INFLATION FEARS |
2/7/2025 1:15 PM | Inflation Uncertainty |
2/7/2025 9:41 AM | BIG REMAINS BEAUTIFUL |
2/6/2025 1:00 PM | Quiet Day |
2/6/2025 9:43 AM | BOND DIGGING DOGE |
2/5/2025 1:28 PM | Recovering |
2/5/2025 9:29 AM | RETAIL RIDES THE WAVE AND WALL STREET FROWNS |
2/4/2025 1:03 PM | Financial Media in Overtime |
2/4/2025 9:52 AM | FRIENDS MAKING NICE |
2/3/2025 1:42 PM | Market Reacting to Tariff Headlines |
2/3/2025 9:37 AM | TARIFFS ARE HERE |
1/31/2025 1:33 PM | Mag Seven is Back |
1/31/2025 9:00 AM | WINTER IS HERE |
1/30/2025 1:33 PM | Bumpy Day |
1/30/2025 9:47 AM | POWELL WALKS THIN LINE |
1/29/2025 1:24 PM | Watching for Big Tech Earnings |
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