[Chart courtesy of MarketWatch.com]

1. Moving the market

The stock market opened on a positive note but soon fluctuated around their respective unchanged lines, as traders focused on earnings reports and the Federal Reserve’s policy meeting. By the end of the session, only the Dow managed to close in positive territory, while the S&P 500 and Nasdaq ended in the red.

Interestingly, despite the Nasdaq being the top performer year-to-date and Small Caps lagging, today marked a point where both indices realigned.

Earnings reports have been well received so far, with about 80% of the more than 230 S&P 500 companies that have reported beating expectations. Analysts seem comfortable with the consensus earnings per share (EPS) and the corporate commentaries provided.

The two-day Federal Reserve meeting began this morning, with traders eagerly awaiting clearer signals about the timing and extent of rate cuts expected for the rest of the year. The likelihood of a rate cut in September has now risen to 100%.

The MAG7 stocks experienced a tumble but managed to rebound from their lows by the close. Meanwhile, most shorted stocks and semiconductors faced significant declines, reminiscent of last year’s performance.

The dollar suffered volatility but ended the day unchanged, while gold prices steadily increased. Bond yields slipped, Bitcoin approached $66,000, but Nvidia had a particularly rough day, losing nearly 8%.

This raises the question: Is this pattern still in play but on a much larger scale?

Read More

[Chart courtesy of MarketWatch.com]

1. Moving the market

With a busy week of earnings ahead, the major indexes began the session on a positive note.

However, after much fluctuation, they ended nearly unchanged. The tech sector is poised for significant movement as industry giants like Microsoft, Meta, Amazon, and Apple are set to report their earnings in the coming days.

Additionally, the Federal Reserve is scheduled to announce its latest policy statement on Wednesday. Although an interest rate cut is not anticipated, traders will be closely analyzing the Fed’s language for any hints of dovish changes that might occur during their September meeting.

Last week was marked by volatility in the markets, with major indexes showing divergence: the S&P 500 and Nasdaq declined, while the Dow and Small Caps saw gains. The tech sector’s cooling off contributed to the S&P 500 and Nasdaq’s drop.

Small Caps fell today as the short squeeze lost momentum, bond yields remained stagnant, and expectations for rate cuts in 2025 increased. The dollar strengthened, gold prices remained steady, and crude oil prices retreated to two-month lows. Bitcoin’s value dropped from $70k to $67k after the administration decided to transfer $2 billion from its stockpile.

It seems that traders and markets were on edge today, anticipating the Fed meeting and major earnings releases later this week. These upcoming events will certainly impact market sentiment.

But in which direction?

Continue reading…

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 several early attempts to rally, the major indexes ultimately closed the session with minimal change, hovering just around the unchanged line.

Similarly, our TTIs showed little direction throughout the day, though they did manage to close slightly higher.

This is how we closed 07/29/2024:

Domestic TTI: +6.74% above its M/A (prior close +6.59%)—Buy signal effective 11/21/2023.

International TTI: +5.82% above its M/A (prior close +5.80%)—Buy signal effective 11/21/2023.

All linked charts above are courtesy of Bloomberg via ZeroHedge.

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[Chart courtesy of MarketWatch.com]

1. 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?

Read More