Some of the larger trends that have been at work for quite some time here in the markets is the strength in Consumer Staples and some of the weakness in Consumer Discretionary but, where do we see some opportunities across that Market Space ? Is it the Dow Jones NASDAQ S&P or any other Asset ?
Market Day Performance – Dow Jones NASDAQ S&P
Overall the S&P finished lower, about 0.60 percent and a lot of that came right in the last 20 minutes of trading or so. S&P finished just below 4110, so again we are still well below that 4200 level or those February highs and also we are well below resistance. However the good thing is we are still holding on to 4100 and not slipping below for all these past days.
In a rollover day like Tue, markets did not end up So bad. We are still not too far off the highs for the year. The Dow leads the way lower about 1 percent. NASDAQ was initially in the green up until the last couple of seconds, then as we watched over it, NASDAQ started becoming less and less green and finally entered into the red. NASDAQ was down about 0.20 percent.
It was not a bad day, and the NASDAQ 100 actually finished just narrowly in the green. It was worth noting that Mid Caps and Small Caps led the way Lower.
The VIX
The VIX by the way moved higher by over a point up, and was above 18 now to 18.24.That low VIX has been one of the sort of I guess great descriptive illustrations of this Market the Market’s sort of stagnant, sort of sideways choppy.
A limited number of names of course the Alphabets and Meta is doing just fine, but the average stocks sort of flats and its down during this period, but the volatilities remained fairly low as a lot of stocks are sort of treading water and waiting to see which way they uh you know they net out and break out of this recent range. However, volatility increased today and that might be a really important uh signal to be watching.
Bonds
As we look at some other asset classes and have a quick look at interest rates, the whole yield curve from the short end to the long end, was all sort of drifting higher. The 10-year point which is where we tend to focus the most of our attention was around 355, the long bond yield was around 387. The short-term yields was of course still pretty high and that creates that inverted yield curve that we’ve been talking about for quite some time now, with the short end of the yield curve higher than the longer end.
Bond price is of course moving lower, particularly this is what you would have when interest rates are moving higher, which is a sort of the inverse of that of our bond prices.
The TLT was down about 0.3 percent. The Dollar Index did not have a huge movement but, we must keep a track of that higher rotation in the Dollar. In fact, the Dollar remaining relatvely weak has been one of the reasons, if not the main reason, as to why risk assets have been doing okay, at the worst in 2023.
If we look at the last week, we actually starting to see the dollar Index rotate higher a little bit, so the UUP was up, about a 0.25 percent from Monday’s close.
Commodity
Commodities sort of got worse as the day progressed. There was a big sell-off earlier in the morning. We could see sell-off into Gold and Silver, other precious and base metals like Copper.
Elsewhere, when we look into other soft Commodities for example, like corn, going into the close of day there was another sort of rollover as the equity markets rolled over.
Gold and Silver both were down by over 1 percent, Silver or the SLV was down about 1.3 percent. Gold has arguably been one of the better assets, year-to-date in 2023. Outside of Mega Cap Technology stocks as we look at things like Home Builders,
Gold has still been a really interesting sort of outlier from the rest of the market that’s been Struggling. We also notice that the Gold price is coming down quite a bit here this week.
Cryptocurrency
Cryptocurrencies again rolled over going into the close of day, but bitcoin’s still down just about 0.9 percent. Ether Was flat from where we were on Mon. It was worth noting that, Bitcoin just dipped below 27000.
Sector Performance
Amongst the 11 S&P sectors, Technology was just holding on to a little green space going into the Close. It still finished up about 0.1 percent but it was up a lot more than this, earlier in the day.
A lot of that deterioration just came right into the close. Everything else finished in the red and some of the weaker sectors really had a down day of it. Real Estate was down 2.7 percent, Energy or the XLE came down 2.5 percent, Utilities was down 2.2 percent. We therefore had a situation wherein very few sectors were actually in the positive, at close on Mon. Technology and Communication Services were basically flat from Mondays close.
On the downside we had some of the defensive sectors like REITs, Utilities and also Energy, they were all down in the range of 2.2 to 2.65 percent.
Stock Watch – Dow Jones NASDAQ S&P
Talking about Semiconductor stock, SMH shows a clear pattern of higher lows. What’s interesting is semiconductors actually pulled back a little bit from the end of March into sort of mid late April, starting to rotate higher here in May.
We have some earnings in stocks like AMD, which certainly could be a interesting one to watch. We would like to see if the momentum at the RSI can continue to improve from here but overall we are seeing the RSI beginning to turn higher as well. It could therefore be said that, it’s always a good time to own good stocks now.
