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Today’s Summary
Monday, January 22, 2024
Indices: Russell 2000 +2.01% | Dow +0.36% | S&P500 +0.22% | Nasdaq 100 +0.09%
Sectors: 8 of the 11 sectors closed higher. Industrials led, gaining +0.77%. Utilities lagged, falling -0.51%.
Commodities: Crude Oil futures rose +2.06% to $74.76 per barrel. Gold futures fell -0.35% to $2,022 per oz.
Currencies: The US Dollar Index rose +0.12% to $103.36.
Crypto: Bitcoin dropped -4.89% to $39,528. Ethereum dropped -5.91% to $2,311.
Volatility: The Volatility Index fell -0.98% to 13.18.
Interest Rates: The US 10-year Treasury yield fell to 4.109%.
Here are the best charts, articles, and ideas shared on the web today!
Chart of the Day
The S&P 500 closed at an all-time high last Friday while the Russell 2000 Small Cap Index was still in a 20.4% drawdown. That's the largest Russell 2000 drawdown we've ever seen with the S&P 500 at an all-time high.
What happened following the 3 previous largest Russell 2000… pic.twitter.com/9Q2LYOUegc
— Charlie Bilello (@charliebilello) January 22, 2024
🏆 Today’s Chart of the Day was shared by Charlie Bilello (@CharlieBilello).
- While the S&P 500 reached all-time highs last week, The Russell 2000 closed in bear market territory (-20.4%).
- The Russell 2000 has never experienced such a severe drawdown while the S&P 500 was at a record high. This sounds bearish, but history suggests otherwise.
- Looking at the three prior extremes, Charlie points out that both indices were higher over the next year, with the Russell 2000 outperforming the S&P 500 and joining it at all-time highs. The following stats were included:
- 1.) April 7, 1999 (-19.2% R2k Drawdown): S&P 500 gained 14.3% over the next year and R2k gained 36.5%.
- 2.) February 13, 1991 (-13.5% R2k Drawdown): S&P 500 gained 12.1% over the next year and R2k gained 35.5%.
- 3.) January 21, 1985 (-13.3% R2k Drawdown): S&P 500 gained 17.4% over the next year and R2k gained 18.2%.
The takeaway: The wide disparity between the Russell 2000 and the S&P 500 might seem unhealthy, but history suggests it’s not bearish.
Quote of the Day
“The more I see, the less I know for sure.”
– John Lennon
Top Links
A Lot of Debate For 10 Basis Points – Bespoke
Bespoke highlights the disparity between Small-Caps and Large-Caps.
February 2024 Almanac: Second Worst S&P 500 Month Since 1950 – Almanac Trader
Jeff Hirsch looks at how stocks have historically performed in February.
Understanding and Utilizing the Ulcer Index in Investment Strategies – John Rothe
John Rothe examines a risk measure known as the Ulcer Index.
The Market is in the Midst of an ‘Unconfirmed Breakout’, Says Fairlead Strategies’ Katie Stockton – CNBC
Katie Stockton shares her technical perspective on the breakout in the S&P 500.
Two Years in the Making – The Weekly Trend Podcast
Ian McMillan and David Zarling discuss some of the most noteworthy technical developments in this podcast.
Top Tweets
DJIA first close > 38k pic.twitter.com/oIDRcZlXGq
— Mike Zaccardi, CFA, CMT 🍖 (@MikeZaccardi) January 22, 2024
New highs after a 🐻market, what happened next?
Looking at the 10 other bears since 1950, the S&P 500 was higher a yr later 9 times.
With new highs after this bear officially happening, history would say the upward trend could very well continue. pic.twitter.com/pX6TCjR4Ql
— Ryan Detrick, CMT (@RyanDetrick) January 22, 2024
Friday's $SPX breakout to a new all-time high was the 1st in over 2 years. Only 6 other times since 1928 has there been 2+ year bases like this. Performance following previous instances shown in table. $SPY $STUDY pic.twitter.com/39uETarUAV
— Quantifiable Edges (@QuantifiablEdgs) January 22, 2024
What so many seem to misunderstand, is that the stock market spends MOST of its time in a state of drawdown.
Then, investors freak out and zip up their pockets when the market is sitting at all-time-highs, which couldn't be more bullish!
Top: S&P500
Bottom: $SPX drawdowns pic.twitter.com/mnpuI3ZKVc— Adam D. Koós, CFP®, CMT, CEPA (@AdamKoos) January 22, 2024
From Sunday's Thrasher Analytics letter…
Sector relative performance trends are showing clear favoritism for tech stocks with several sectors hitting new lows in relative strength. pic.twitter.com/hC805bfPZH
— Andrew Thrasher, CMT (@AndrewThrasher) January 22, 2024
How catastrophic can things be if Financials are reaching new 52-week highs? $XLF pic.twitter.com/qW4mga9mpo
— Alfonso Depablos (@AlfCharts) January 22, 2024
$XLF – Financials are strong. pic.twitter.com/skSr2lkeBB
— Larry Thompson (@HostileCharts) January 22, 2024
From today's Monday Morning Macro Meeting: Yields were oversold in mid-December at 4.00% and now are overbought at 4.33% while $SPX has managed to punch to an all-time high. Global yields look more vulnerable to downside. pic.twitter.com/rPYNHwfdeA
— RenMac: Renaissance Macro Research (@RenMacLLC) January 22, 2024
#Bitcoin is still under profit taking pressure
An important level of interest lies below just above 39K
it is the ⚓️VWAP from the beginning of the pre-ETF approval move pic.twitter.com/R6YjfUQBsk
— Brian Shannon, CMT (@alphatrends) January 22, 2024
On days like today people whine and complain that it’s like 2021 all over again
It’s not even close to being like 2021 pic.twitter.com/bJzeJOjSXp
— BuccoCapital Guy (@buccocapital) January 22, 2024