In the markets today, we look at some of the movements and rotations. we observed the major averages on Dow Jones, NASDAQ and Others, having a pretty decent day on Wed, and a lot of that came into the one to two o’clock hour. Then, from there things were sort of settling down a bit. Overall, it was quite a nice move to the upside, for a market that has been struggling in some cases to move higher.
Major Indexes – Dow Jones S&p NASDAQ Small Cap Mid Cap
In case of the NASDAQ, it just sort of continued to press the upside bet. We saw some of the the Fang stocks, for the most part, were having a pretty decent day of it. In another, latest up move, we saw that, the Dow stocks which have often been flat and down, as compared to the NASDAQ which has been, a little bit higher, within the context of a fairly strong 2023, but, on Wed, it was sort of everything was moving higher, includng the Dow Jones.
Although not dramatically, but certainly it was an impressive up move that we noticed on Wed. The NASDAQ Composite finished up about 1.3 percent, right above 12500, the S&P 500 was just below 4160, that’s up by 1.2 percent from Tuesdays close.
Mid Caps and Small Caps, both were up. Many a times, we would have observed the weakness in Small Caps so far, year-to-date, but Wed was a different day.
On Wed, Small Caps was first leading the way to the upside and was up 2.4 percent on the S&P 600 Small Cap Index. This was therefore a very nice move. Higher, again in a lot of ways, if we look at some of the Small Cap stocks or some of the main benchmarks, like the S&P 600 or the IWM, which is a Russell 2000 ETF, this is a nice move off from some pretty depressed levels. Therefore, it was nice to see a move higher in an area of the market that has been struggling for quite some time.
Volatility – Major Index Dow Jones ..
The VIX was back below 17, finishing the day just below 16.90.
Bonds
Talking about the other Asset classes, the yield curve overall moved higher The 5-Year and 10-year Point had the biggest move to the upside. The 10-year yields finished the day right around 3.6 percent and 10-yields seem to be setting to click just below the 5-Year Point. Bond prices of course are going down and the TLT was down by about a 0.30 percent. The Dollar Index not having a huge update And was just up about 0.2 percent and that’s using the UUP ETF.
Commodity
Commodities had a bit of a mixed bag on Wed. The Commodity ETF DBC was up about 1.2 percent. The Gold ETF was down about 0.30 percent. Corn was down by almost 2 percent. The Gold move is again a type of continued rotation, lower. The GLD year-to-date is still having a pretty decent 2023.
Cryptocurrency
Cryptocurrencies were all in the green and and this went up a little bit up. Ethereum was up 0.3 percent to1830, Bitcoin was up about 1.4 percent to 27400. Once the Equity Market opened up on Wed, and we saw some strength out of the opening session, the Cryptocurrencies also had a nice jump higher, and they rotated higher very Quickly.
The markets had calmed down on the previous day i.e Tue, due to perhaps the jitters that were felt about the debt ceiling, which certainly felt like, it had an impact on the markets on Tue. However, into Wednesdays close, we saw a sort of that recovery, which came from Wednesdays market elevation. This involved Risk Assets in general, including equities and together with cryptos that also had a nice reaction by moving to the upside.
Sector Performance – Dow Jones S&P NASDAQ Small Cap Mid Cap
If we look at the sector movements, particularly in the Consumer Discretionary(XLY) Space, we saw some of the stocks within the XLY leading the way higher on Wed. XLY was up over 2 percent. Financials was also right up there along with it. Therefore, two very different sectors that are currently in very different sort of trend phases but, both having a pretty decent day on Wed. This shows that we had a broad sort of move.to the upside on Wed.
Energy was third from the top. It was up almost 2 percent as well. Talking about Financials and Energy, we could probably have insurance companies which have been doing pretty well over Banks but, in the Energy space, a lot of the Oil Services are recently having a tough time for the past several months. However, inspite of this we had a nice move to the upside for Financials, on wed, to have a nice reaction move higher.
There were some defensive sectors at the bottom of the list. These were the only two sector ETFs that were in the red today. They were the Utilities sector, that was down about 0.30 percent and also Consumer Staples which was essentially flat for the day. Healthcare and Materials were also just a little bit above there as well.
Stock Watch
The New York Fang Plus Index or the NYSC Fang plus Index, is an index that the New York Stock Exchange Publishes. It’s really the Fang stocks and then some other things which is why it’s called Fang plus.
Things like Twitter, and some of the Chinese internet names are the Fang type of stocks. The Price trend on this Index, of course has been fairly consistent and strong year-to-date. At the beginning of this year, in Jan, this Index had come off, of a low, where it was retesting its last years November low. Post Jan this year, this index has a nice rotation to the upside. The relative strength of this index versus the S&P has been consistently strong as well.
Other than Fang stocks, on this same Index, we have other stocks like Meta, Apple, Netflix, Amazon, Microsoft, Google, NVIDIA and Adobe that are far above their 200-day moving average. These stocks are having a nice trend and a nice year to overall trend as well. We see that a stock like Netflix is not making any new Highs at the moment but, it is sort of rotating back to the upper end of the range and still making higher lows.
Amazon we see has really started to rotate up higher, over the last couple of weeks, and over the last couple of months. Adobe also moved higher on Wed and this was the final out of those eight stocks getting above that 200-day moving average. This means that all these eight stocks were above their 200-day moving average and therefore we can conclude that there’s no way that the market can be that bad, as long as this pattern, in these stocks, continue.
The second stock to look at is Charles Schwab Corporation. In the financial space, it’s certainly been a deteriorating story. The KBE and the KRE, which are the bank ETF and the Regional Bank CTF, are all certainly struggling because of the recent banking crisis that got magnified in early March. In fact, we are still feeling the Ripple effects of the same, as we see that every week we’re getting another headline or may be another story, that sort of suggests that we’re not quite done with the crisis and that we still need to think about it.
However, considering Charles Schwab Corporation, we see that this stock is Low and in March, April, and May, on a closing basis, this stock has been declining. If we look at the momentum sloping higher, for this stock then, every one of those new lows, made over the last couple of months, have been a less negative momentum.
This stock has not yet been oversold and this could be a bottom fishing candidate. For this stock, we will have to see, if we can get above the 50-day moving average from here on, at a time when we are not too far above current levels.
Finally, for the stock of Southwest Airlines, we could notice the lower lows, beginning from March into May and then also, we see the higher lows, where this stock has been getting some of the bullish momentum divergences. We would love to see if this could get above its 50-day moving average as well.
