Financials act well but where can one look for leadership? There is a heavy concentration of capital in payment processing companies, but as a group, it is not a driver of capital. As I see it, it is a vehicle for momentum traders to nickel and dime individual names, or a way to gain exposure to financials ex-bank risk. The move in this group is similar to that seen in cyber-security stocks in 2017 and early 2018. Unfortunately, the strong moves in both groups spoke little about the markets identity. Small caps remain in a holding pattern. Doubtful we see a notable advance in that space (to new highs) until we advance well into earnings season. But if small caps are able to lead markets higher post earnings, it may be enough to push major indices back up against the February highs which could open the floor for continued price pressure. Small caps are perceived to be riskier assets. A bid in these names could give investors a clue of where capital is being put to work. The main risk remains emerging market debt which continues to lag other corporate, developed market debt and almost any other asset class. There is one of two possibilities here. Funds holding emerging market debt capitulate and rotate to other performing assets in the second half of the year in search of performance, which should act as a boon to equities long term, or there is renewed demand for emerging market debt alleviating short term fears of a larger waterfall decline. Long term, though, emerging market debt remains toxic. Political structures that remain in cahoots with large state-owned enterprises and banks provide little visibility for investors which only adds a dark veil over the asset class. I am afraid markets are waiting to see what fund(s) or emerging market (economy) gives up to ghost first. Someone will have to blink. The longer this carries on, the bigger the shock and impact on these economies. Are we in for a bailout of emerging market economies? But who, then, has the capacity to bail these countries? The Fed is focused primarily, as they should, on the domestic (US) economy; the ECB is entangled with the mess that has become the Euro; Japan has already cornered its bond market with little effect; The PBOC is allowing the Yuan to weaken its currency to combat tariffs and focused on assisting the government's efforts to build Chinas economy for the future. Emerging market central banks do not have the capacity to bail individual economies for their are limited, by mandate, and the risk spreads beyond their jurisdictions. If you ask me this is an event, much like the S&L crisis of the 80/90s or the Long-Term Capital Management, that must be allowed to run its course. Let funds who took on unprotected risk to fail, emerging markets that took on too much dollar denominated debt to enter recessions and institute reforms, that may hurt their economies short term but set them up for better growth down the line, and not risk another decade of global stagnation. If, for some unimaginable reason, we see the same tactics deployed in the US, Japan and Europe in these emerging markets, I am afraid it is the last fighting measure global authorities have to maintain status quo. If there is change that leads to a better world, the crisis in emerging market debt must be allowed to run its course. I may sound like a broken record but these are the real questions investors should ask themselves each day, not whatever other news bite that is throw around. This is what is shaping current trends, and in time, what will reveal the markets true identity.
Thin Rally? Thin Argument It continues to amaze us at how often we hear arguments that the market’s rally this year has been thin. A rally that is thin is one where just a handful of stocks are participating in the market’s gains, while the rest of the market languishes. An extreme example of this was in the late 1990s and early 2000 when tech stocks surged, while most other areas of the market declined. Today’s market is nothing even close to resembling that. Take, for example, the S&P 500’s cumulative A/D line. Since the S&P 500 last made a closing high in late January, the cumulative A/D line has seen close to 20 new all-time highs. That’s the opposite of a thin rally! Another way to look at this is to compare the performance of the S&P 500 on both a market cap and equal-weighted basis. Looking at performance on an equal-weighted basis tells you how the ‘average’ stock is doing, while the normal market cap weighted approach puts a larger emphasis on the bigger names. So far this year, the market cap weighted S&P 500 is up 5% YTD, while the equal-weighted index is up 3.1%. These performance numbers definitely imply that larger mega-cap stocks in the index are doing the best so far YTD, but all 500 stocks in the index are also up an average of 3.1%, so they’re not exactly slumping. Performing the same analysis on a sector by sector basis, proponents of the thin rally argument may be surprised to learn that in six of the S&P 500’s eleven sectors, the YTD performance of the weighted index is actually underperforming the performance of the equal-weighted index. Looking at the chart, the only sector where the market cap weighted sector performance is materially greater than the equal-weighted performance, it is in the Consumer Discretionary sector where Amazon’s 56% return and Netflix’s 87% gain have really skewed things. Outside of Consumer Discretionary, though, there is not s single sector where the market cap weighted sector performance exceeds the equal-weighted performance by more than two percentage points.
There's semiconductors, possibly. The strange thing is It seems to me that it's treated like a value sector, and the value stocks have lagged for a good long while. Growth/Value in the form of ETFs IVW/IVE, monthly chart to see back to 2007
Russell small caps firmly in the red all day, Nasdaq became slightly red after being up +1% to start thanks to Google. Those ones are leading the way down now.
Russell 2000 also down over 1% today A pretty selective rally today rather than almost everything going up
Yeah interestingly a lot of tech stocks in red today except those big ones like GOOGL, FB, AMZN, and AAPL, etc
I can't believe VIX was down today. It does not agree with my deep red accounts YINN, the 3x leveraged Chinese bull ETF, was +9.4%. Could be a good sign for stocks with China exposure, such as MU, SWKS.
The market does not know what it truly wants or how to go about it. Best to pick your levels on individual names you believe have strong potential by buying at predetermined levels or selling puts at important price levels. It's the only way of making anything out of it, otherwise you'll be driven mad. Let the market work for you rather you work for the market. Its not to say you don't have to manage your positions and do the homework that is required, you certainly do, but don't be driven into doing what you don't feel comfortable doing. That is how mistakes are made. Believe me. I've had my share. Ill now turn of the spigot and see how some names acted on the levels I drew out in time.
Growth stocks outperforming today after underperforming yesterday Just less than 2% away from new ATH for the SPX, at this point hard to bet against a new ATH relatively soon I guess
New-home sales slump in June as housing headwinds increase https://www.marketwatch.com/story/n...june-as-housing-headwinds-increase-2018-07-25 Homebuilders stocks and home improvement stores stocks like HD and LOW struggling today
A lot of big earnings such as FB, V, AMD, and GILD AH I own MA so kinda hope for good earnings from V
Trump secures concessions from Europeans to avoid trade war: DJ, citing EU official https://www.cnbc.com/2018/07/25/tru...ing-out-on-a-fair-trade-deal-with-europe.html Market close to HOD right now
