- Moving the market
Tech shares, which were the stars of last year’s bull run, faced significant losses this morning as last week’s sell-off continued. The Nasdaq led the decline, while the Dow remained in positive territory. However, a slow and steady climb helped the S&P 500 close in the green.
Some of the most popular tech leaders in the bull market, such as Nvidia and Palantir, dropped more than 2% each after falling 6% and 11% last week. Micron and Tesla also traded lower.
Surging bond yields have been the catalyst for the decline in growth-oriented stocks, with the 10-year yield rising steadily since the Fed adopted a dovish policy stance. In other words, the markets are not convinced by the Fed’s approach.
If the 10-year yield reaches the 5% mark, equities will face a significant challenge in maintaining upward momentum. This could signal the end of the current bull market cycle unless rates stabilize.
This situation could also be a short-term correction, with traders hoping that the upcoming earnings season will provide a much-needed boost to the struggling markets. The banking sector will kick off earnings reports this Wednesday.
Tomorrow’s Producer Price Index (PPI) and Wednesday’s Consumer Price Index (CPI) will also impact the markets, potentially stabilizing them or increasing bearish momentum.
Money market funds have seen a $165 billion inflow over the past three weeks, the largest since March 2023, indicating a lack of support for risky assets. Banks have been the victims of this move, experiencing a significant drawdown in deposits.
The mega-cap sector started the session with a plunge but managed to rally off their lows. The biggest loser of the day was Edison, which faced multiple lawsuits due to the LA fires.
Bond yields continued their upward trajectory, with the dollar maintaining its strength, causing gold to fall below the $2,670 level. Bitcoin temporarily dropped below $90k but rebounded strongly towards $94k.
Crude oil extended its recent gains and settled above $78. Does this mean that prices at the pump will follow?
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 rough start, the major indexes managed to recover and close in positive territory. The Nasdaq, however, was an exception. Although it rebounded from its lowest point of the day, it still ended the session in the red.
In contrast, our TTIs defied the overall negative sentiment, with both showing improvement compared to their positions at Friday’s close.
This is how we closed 01/13/2025:
Domestic TTI: +1.74% above its M/A (prior close +0.91%)—Buy signal effective 11/21/2023.
International TTI: -0.19% below its M/A (prior close -0.50%)—Buy signal effective 11/21/2023.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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