- Moving the market
The rotation out of technology stocks continued early today, with the Nasdaq experiencing another drop, albeit more moderate than before.
The indexes initially found some stability and rallied, but ultimately lost momentum by the close. The Nasdaq lagged, while Small Caps rallied, the S&P 500 sold off again, and only the Dow managed to eke out a meager gain. According to ZH, this marks the biggest underperformance of the Nasdaq compared to the Russell 2000 since the peak of the dotcom boom.
Traders sold off the year-to-date tech winners, dragging down the information technology and communications sectors. Nvidia and other mega-cap stocks, including Alphabet and Microsoft, slumped again as the fallout from disappointing earnings continued.
Adding to the confusion was the second quarter GDP report, which showed the economy allegedly growing at 2.8%, significantly higher than the expected 2.1%. This unexpected “good news” led to a pullback in rate-cut expectations. It will be interesting to see what the revision will reveal.
Other notable earnings misses came from Ford and Chipotle, despite Chipotle topping earnings and revenue expectations. The MAG7 stocks fluctuated but ended lower, bond yields were mixed, the dollar remained steady, and gold retreated to the 2,360 level. Bitcoin slipped but found support around $64,000, while crude oil returned to its unchanged level for the week.
I am pondering: Is the weakness in the economy now finally showing up in the markets?
2. Current “Buy” Cycles (effective 11/21/2023)
Our Trend Tracking Indexes (TTIs) have both crossed their trend lines with enough strength to trigger new “Buy” signals. That means, Tuesday, 11/21/2023, was the official date for these signals.
If you want to follow our strategy, you should first decide how much you want to invest based on your risk tolerance (percentage of allocation). Then, you should check my Thursday StatSheet and Saturday’s “ETFs on the Cutline” report for suitable ETFs to buy.
3. Trend Tracking Indexes (TTIs)
Despite a determined effort to recover, the major stock indexes ultimately reversed course and closed in negative territory. The Dow was the sole exception, managing to end the session slightly in the green.
Meanwhile, our TTIs showed mixed results: the international TTI retreated, while the domestic TTI experienced a modest gain.
This is how we closed 07/25/2024:
Domestic TTI: +5.73% above its M/A (prior close +5.60%)—Buy signal effective 11/21/2023.
International TTI: +5.38% above its M/A (prior close +6.00%)—Buy signal effective 11/21/2023.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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