Last week was rough for the market, especially the hammered market darlings. Friday was a bifurcated session:

• S&P 500 (SPX) -0.88%
• NASDAQ (NDX) -2.05%
• Dow Jones Industrial Index (DJI) +0.56%
• Russell 2000 (RUT) +0.24%

I can’t remember when the NASDAQ and NASDAQ-100 (NDX) were down more than 1% (in this case, 2.0%) and the Russell 2000 traded higher.

Heat Map

On Friday, Nvidia (NVDA) was slammed by more than 10% and was down 13.6% for the week (it is now off more than 18% from the recent all-time high). Buyers moved to Financials (XLF), Energy (XLE), and Consumer Staples (XLP).

The carnage of the week was even more devastating. Trading opportunities are emerging.

Market Breadth

Unsurprisingly, that there were more decliners and advancers, more new lows than new highs, and greater down volume than up volume.

But the ratio of new highs to new lows improved into the weekend.

Changing of the Guard

Consumer Staples (XLP), Energy (XLE), Real Estate (XLRE), Materials (XLB), and Utilities (XLU) are too small to counter extensive Technology (XLK) and Communication Services (XLC) damage.

However, Financials (XLF), Health Care (XLV), and Consumer Discretionary (XLY) could offset continued selling. You might see sessions where the market is down, but there are more advancers than decliners.

Fund Managers continue to load up on bonds, which could be a generational investing mistake.

Here’s the good news – no Fed speak for a couple of weeks. Whew!

Today’s Session

A Rough Patch

The first real test of 2024 is upon investors.  The swoon speaks for itself, but is also underscored by a relative strength reading that’s the most oversold short-term since last October.

Those bodes well for a short-term bounce, but the underlying issues need relief.

1. Higher for longer - markets adjust, and there could be a time when the stock market sees new highs even if the ten-year yield is at 5.0%, but for now, the PCE report has to move lower.
2. Financial releases are not meeting the whisper numbers - especially on revenues. This week, we hear from four of the Magnificent Seven (MSFT, GOOG, META, and TSLA)

Hence, the near-term dilemma.

Drift lower to right above the 200-day moving average, find a spark on Friday, and resume moves toward record highs.

I think the rally resumes, but this week could be bumpy.

Tweet

 

Home | Products & Services | Education | In The Media | Help | About Us | Disclaimer | Privacy Policy | Terms of Use | All Rights Reserved.