- Moving the markets
Today’s market saw a continued rotation out of the tech sector, with the S&P 500 and Nasdaq retreating once again. The Nasdaq experienced its worst day in 19 months. Meanwhile, the Dow managed to stay above its unchanged line, eking out another green close.
Tech giants like Apple, Netflix, Microsoft, and Meta each lost more than 1%. Given their recent impressive runs, this is only a modest correction. Nvidia, however, dropped 6%, with semiconductors facing their most significant decline since the COVID-19 lockdowns. Traders shifted their focus to Small Caps, which had rallied recently but closed lower yesterday.
Even the MAG7 stocks were hit hard, losing an astounding $1.1 trillion in market cap. Despite this, the losses are minor compared to the sector’s overall gains.
Anticipation that the Federal Reserve might lower rates has buoyed Small Caps, as lower financing costs could be beneficial. Futures markets currently imply a 100% likelihood of the Fed lowering rates in September.
The recent short squeeze reversed, bond yields were mixed, and rate-cut expectations held steady but increased for 2025. The dollar dropped to a two-month low, while crude oil recovered from its recent slump, heading towards the $83 level. Bitcoin took a breather from its recent surge, as did gold, with the precious metal coming off its all-time high.
While the bulls remain in control, economic weakness is spreading, which could be reflected in the upcoming earnings season. The extent of this impact will likely determine the future direction of the market.
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)
Today’s market performance mirrored the previous day’s results, with the Dow standing out by closing in positive territory. In contrast, the other major indexes experienced losses.
Additionally, our TTIs showed a reversal in trends: the domestic TTI declined, while the international TTI saw gains.
This is how we closed 07/17/2024:
Domestic TTI: +8.63% above its M/A (prior close +9.01%)—Buy signal effective 11/21/2023.
International TTI: +8.88% above its M/A (prior close +8.78%)—Buy signal effective 11/21/2023.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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