On Tuesday, we could see the overall major Index averages were struggling as the markets were preparing for the Federal meeting which is scheduled today and tomorrow
Stock Today Market NEWS – S&P, NASDAQ, DOW JONES, NYSE and others. Post Tuesdays market hours, we come up with our Technical Analysis on the markets so that, we can provide inputs to our investors to better understand the markets around them and to focus on actionable movements in the Markets.
The markets are still very much guided by human behavior. The event and conditions around us are that we have Federal meeting this week, we also have the banking crisis which has not yet settled completely, and we also have a lot of other narratives like a debt ceiling and so on, All of these factors at play and it is this interplay of all these different macro factors that has obviously also reflected in the market behavior.
In our discussion on Tuesdays Market Recap, markets saw a choppy day. At the end of the day the market averages finished a little bit lower.
Stock Today Market NEWS – S&P and NASDAQ
The S&P the NASDAQ Composite were lower today. The S&P 500, was actually down about 1.2 percent and the NASDAQ Composite was down 1.1 percent. The New York Composite index was down about 1.4 percent and this could be a cause for concern. Mid Caps and Small Caps were down as well.
Stock Today Market NEWS – S&P and NASDAQ
The New York Composite Index( NYSE) is worth monitoring because it’s a broad index representing varied sectors and themes and styles.The NYSE has struggled to get above
resistance level and has remained below resistance level for quite some time, now. The major index averages were once again pulling back from resistance level on Tuesday.
The Volatility Index
The volatility index on VIX, at some point, was also well up for a good amount today. It was up by about 1.7 points touching 17.7. This was up from around 16 which is where it was, just untill recently.
One would expect higher stocks on Lower volatility index, as a sort of ideal bull case. If you are bullish at this market phase then, this is what you would like to see. However, we did not see this upon close of market hours on Tue. We are actually noticing a reverse scenario now, with volatility increasing.
Interest Rates and Bonds
Interest rates overall are moving lower and we can see the five-year point on the yield curve coming down a little bit. 10-year yields currently were around 344. Long bond yields were around 373 and the Short end bond yields is still much higher. With the FED changing rates now, this will directly affect the short end bond yields. This will then have a Ripple effect when they relate to the long-term interest rate space.
The current bond price is of course moving higher when present yields are coming down. We could see that the TLT was up about two and a half percent on Tue. The current scenario depicts underlying market trade movement or Strategy by traders to ensure safety by moving away from stocks by adopting a safe bet into the bond markets.
Stock Today Market NEWS – Sector Updates
Commodities displayed a familiar look with Oil prices lower. This is not a new development, as it has been happening for quite some time now. Specifically talking about Crude Oil, this is not going any higher. The Crude Oil Future, has been overall trending lower and at best it’s just not going up. US Oil (USO) crucial ETF, was down another 5.3 percent on Tue.
Precious Metals continued to move higher. The two metals in the green were the defensive players Gold and Silver.
It was observed that Crypto Currencies were also moving higher. This indicates that investors are moving away from stocks and taking their bets off stocks. On Tue, we had Bitcoin and Ethereum prices going higher. Both were up over two percent.
Market – Detail Analysis
While the S&P 500 and the NASDAQ Composite were down, we look at some of the market movement in a little more details.
We see that this daily movement of the S&P is crucial in terms of understanding the importance of resistance levels. For a couple of days, prior to Tue, the S&P whilst trading higher had opened at 4165 on Tue. This was above the 4180 mark but, by the close of Tuesdays trade, the S&P was right back where it started. The inference drawn here is that the initial buying power during the day was met with a lot of interest in selling, which ultimately pushed the price back lower again.
Just this last month, we had noticed that, how one of the uptrends in the market had moved the S&P up and led it back up to 4200 level.It did get above around 4140,..4150,.. upto 4100 and now it is not only about getting above that 4200 that is important but, it is all the more important remaining or staying above 4200.
The S&P and the NASDAQ both, usually not just trade to resistance, but upward through resistance. However, we’re not seeing that yet. We are seeing actually a move, lower away from resistance. Of course, this tells us that it is setting up for Wednesdays Federal meeting where investors are keen to wait and hear from chairman Powell to get their latest interest rate information and also want to hear the Q&A. Therefore, as usual, the markets are a little quieter and a little calmer leading into the press conference especially when you have a lot of volatility.
When we talk about the volatility or VIX being presently very low, we find that it is very likely that a bullish bet is on the cards, post the Federal meet. This is because investors normally do digest all that they have heard in the meeting and get back to business aggressively, very soon.
About the volatility environment and the fact that the VIX is back at the lows, similar to the one that we saw in 2021, Andrew Thrasher, last week at a professional gathering held in Manhattan from 27 to 29 April 2023, had commented about Volatility.
He said, “This isn’t anything unusual. This is just a low volatility environment. This is where we’re at right now. We’re sort of in that low volatility scenario. The last time we saw that was in 2021.
We have to remember that when we have a low volatility regime, that was usually during a bull market phase. it’s rare that you would have very low volatility and a bear market because, bear markets tend to be noisier, tend to be more uncertain. There tends to be a lot more volatility, just by definition because, people are Panicky, they’re nervous. We’re not seeing that now. we’re seeing a low anxiety reading using the VIX. For now we’re seeing the market rally on low volatility “
Tuesday, was a little different with the VIX. It spiked to almost up to 18.
Sector and Stocks to Watch Out For
To finish off briefly on Market happenings for Tue, XLY or Consumer Discretionary Services was at the top of the list. The XLY was the one that looked to be persisting marginally to remain in the green. All the other sectors were in the red with Financials and Energy pushing the way lower down.
Interesting and worthwhile perhaps to keep an eye on Energy which was down another 4.3 percent. Important to note here is that the energy sector or XLE just keeps rotating lower. Now, what’s worth noting is it closed below the 200-day moving average on Tue, for the first time since March.The last couple of times we got below the 200-day moving average was actually very short-lived. This is When Buyers came in and were able to push the Energy sector back up to the upside.
We may wonder, if Crude Oil prices can recover from here. So far Energy continues to stall out and is unable to make a new swing high. Therefore, we have to wait and see if we are getting anything different this time
We find that the banking crisis is not quite over and we’re saying that because of the persistent concern on the current projected earnings data by some of these regional Banks. Also a bullish momentum divergence is only good, if we find those higher lows and for now it looks like that is not quite happening.
To summarise the story of this Market environment, we base our reference to the new Dow Theory. Charles Dow’s work was really driven by the DOW Industrials and the Dow Transports but, in 2023 the DOW Industrials includes banks like Goldman Sachs and the Transports containing Airlines and other things that are not necessarily the Distributors of goods as they used to be defined in the railroad Index.
The new Dow Theory uses the S&P 500 in the top half, the NASDAQ Composite in the bottom half. Because of this change, there was a bull confirmed signal in early February when both the S&P and the NASDAQ made it to a new high as the cycle broke above previous resistance.That was absolutely good news then. We are not getting that good news now because, over the last couple of weeks, we’ve seen both S&P and NASDAQ stall out at their previous resistance.
TAP and other beverage companies certainly have done well. Brewers as represented by Molson Coors have done particularly well. TAP is up about 7.6 percent in the market today. It is interesting for us to note the movement of this stock. For a last couple of years, TAP is breaking out of a multi-year Base.This was a stock that was in a multi-year consolidation with a consistent resistance level but then this would finally break above the resistance for sure.
Staples are continuing to show strength. With the RSI on this one well above 80, that’s actually called a extreme momentum. This means we’ve potentially gone too high too quick. Wait to see if that Trend can settle down a bit.
