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Thursday Market brief – Dow Jones and Other Major Indices

The Story of narrow leadership certainly starting to change. We see a change of character in the market. The breadth conditions are improving and sentiment is spiking higher. Let us analyze price and see what message we can drop back from Price Action. When we look at what’s happened on Thu, we also tend to check where we ended the day before on Wed, where we had a sort of dribble down move and finished more towards the lows of the Day. On Thu, the S&P moved back to the Upside. Now, let us go right to the market recap to understand the major indices like Dow Jones, NASDAQ and other Asset classes.

Market Recap – Dow Jones NASDAQ and Others

When we see the market movements from Wednesdays Opening until Thursdays close, we see a sort of v-shaped Experience because of Wednesdays downdraft and then because of Thursdays sort of rally, where we finished near the highs of the day.

We did not quite get above 4300 but, we got very close to that crucial level of resistance. Now, as we look at the major Averages, we had the S&P that was up 0.6 percent at the close, just below 4300 and around 4294. The NASDAQ Composite outperformed and was up 1 percent. We had some familiar sectors at the top of the list today with Consumer Discretionary and Technology at the 1st and 2nd position.

It was disapponting to see Mid Caps and Small Caps, which had been stronger areas of the market in the last week, giving away some of those gains. The S&P 600 Small Cap Index was down 0.6 percent.

Volatility continued to move lower and we saw the VIX pushing below 14 to around 13.7, on Thu. Again, that lower VIX is sort of an unusual feel to this markets, when you compare it to the last 12 months. Even, if we go back about two years ago, the VIX is pretty average and therefore volatility depends on what we call the volatility regime or what sort of mode we are in right now.

What we have seen is that volatility has sort of pushed to the downside and it’s interesting. If we talk about the relationship between Price Action and Volatility, it should be a lot of fun to kind of see the market movements.

Bonds

Bonds had come off on Wed but, pushed back to the upside On Thu. The TLT was up about 1.2 percent and that’s because of bond prices. Therefore, yields of course came down, with the 10-year yield down to around 371, long bond yield around 389.

Dollar Index was down from Wed aswell. We always see the dollar as a wrecking ball for risk assets and hence risk assets can accelerate to the upside when the dollar starts to weaken up a little bit. This is the sort of dynamic that we saw today in the market, with growth sectors for the most part, being at the top and the dollar coming off.

Commodity

It was sort of a really strange day in the Commodity Space. DBC had a big drop in the middle of the day but, when we look at Commodities in terms of the Net change from Wednesdays close until Thursdays close, there was not much of a difference.

The DBC was up about 0.2 Percent. This is quite an improvement from gold and silver. We connect this with our earlier analysis that we made in the past, where we highlighted gold breaking down below the lower Trend channel. Therefore, of course now, the market has caused gold to bounce back to the upside on Thu.

We think our past analysis still holds as we wait to see whether we get back into that Trend Channel. GLD for what it’s worth was up 1.3 percent on Thu. Silver had a much better day with 3.7 percent on the upside. Crude Oil prices came off a bit.

Cryptocurrency had a more noisy space than other Asset Classes but, settled down a little bit on Thu. On Wed, we had seen a big rotation lower for cryptos. Nevertheless, we saw a nice rebound to the upside but it was not a big move. Bitcoin was up about 0.7 percent, Ether was up 0.8 percent.

Sector Performance

Finally, looking at the S&P sectors, Consumer Discretionary was number one and a 1.50 percent higher, Technology was number 2 and 1.1 percent higher, Consumer Staples interestingly was third from the top, up by 0.60 percent. overall the others that were in the green were sort of flat. A handful of sectors were down a bit but, there was no real negative movement. The XLRE which is the real estate ETF, was down 0.6 percent, followed by Energy and Materials which were all in the red.

Trend Watch – Assets and Stocks In Dow Jones NASDAQ and Other Major Indices

When we talk about breadth conditions we may try to label things as bullish and bearish but, lets try to avoid that sort of simplistic label. However, it’s so tempting because it’s the easiest way we can just try to gauge where we are at and of it.

We believe that the direction of Price versus the direction in Breadth Indicators is super important. We think that, one of the big challenges to the sort of traditional bull market Playbook has been a lack of strong breadth indications as the S&P is testing key resistance levels, particularly Now versus February. we’re starting to see an improvement in the last couple of weeks as we see lot of stock charts beginning to rotate higher.

Now, a lot of that is, effected by all the other stocks which are not the Fang stocks that have started to improve a little bit. Sectors like Energy and Financials and Industrials and Healthcare and other places where we are starting to see some signs of Life are now expected to see further Improvements. These are now actually getting above their February Highs. We feel that these sectors are important to be watched continuously because we have a feeling that, further breadth will certainly not be a bearish thing.

Adobe is just another great example of the Fibonacci retracement analysis that we can do on stock charts. If we take the November high for Adobe and take the September low of last year then we see that in this week we are at a 38.2 percent retracement on 437 and that lines up really well with the highs from August and May, June of last year but now, Can we get above that level of 440.. 450?. That would be compelling but, it’s not happened Yet.