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Today’s Summary
Friday, July 1st, 2022
Indices: Russell 2000 +1.16% | Dow +1.05% | S&P 500 +1.05% | Nasdaq 100 +0.71%
Sectors: All 11 Sectors closed higher. Utilities led, gaining +2.45%. Technology lagged, but still rose +0.23%.
Commodities: Crude Oil futures moved higher by +2.52% to $108.43 per barrel. Gold futures fell -0.31% to $1,802 per ounce.
Currencies: The US Dollar Index gained +0.36%.
Crypto: Bitcoin dropped -3.44% to $19,239. Ethereum fell -1.17% to $1,057.
Interest Rates: The US 10-year Treasury yield dropped to 2.889%.
**Reminder – The US Stock Market and Bond Market will both be closed on Monday for July 4th ?? Have a great holiday! **
Here are the best charts, articles, and ideas being shared on the web today!
Chart of the Day
Notice the difference now vs. 2020? https://t.co/USqyLFAuW3 pic.twitter.com/XUCNfMLBXv
— Drew Wells, CMT, CIMA® (@DrewTheCharts) July 1, 2022
Today’s Chart of the Day was shared by Drew Wells (@DrewTheCharts). The chart shows High Yield Credit Spreads over the past four years. Drew points out that Credit Spreads have continued to widen out, breaking their 2018 peak around 5.45%. Credit Spreads tend to widen out like this in times of major financial stress, so this is a clear risk-off signal. Drew highlights the fact that the recent ascent has been gradual, as opposed to 2020 where it was more of a vertical spike. This slow climb means that Credit Spreads are probably not near a climax, which could suggest further trouble for the markets.
Quote of the Day
“America is another name for opportunity.”
– Ralph Waldo Emerson
Top Links
“Guilty Until Proven Innocent” with Brian Shannon | Trendlines Over Headlines – The Chart Report
In this week’s show, we review the markets and discuss the VWAP indicator with special guest, Brian Shannon.
Credit Spreads Favor the Bears – All Star Charts
Ian Culley takes a look at the widening out of Credit Spreads.
Nvidia Stock On The Ropes As Semiconductors Leadership Tested! – Kimble Charting Solutions
Chris Kimble points out that one of the largest Semiconductor stocks is testing a key level
Money Rotating Out Of Insurance Groups Is Splitting The Financials Sector In Two – StockCharts.com
Julius de Kempenaer examines the rotation within the Financial sector.
Top Tweets
A 1.5% gain in afternoon trading with a close at the high of the day?
Not something investors are used to seeing these days.
Bulls will take it heading into the long weekend. pic.twitter.com/1aYcsjjoGv
— Bespoke (@bespokeinvest) July 1, 2022
2/5
The S&P 500 is off to one of its worst starts ever. With price-only data going back to 1927, the first six months of this year have been the fourth worst of any year on record. Only 1932, 1962, and 1970 saw worse returns in the first couple quarters of the year. pic.twitter.com/b5dhjXFT3F
— Jim Bianco biancoresearch.eth (@biancoresearch) July 1, 2022
The last 8 times the S&P 500 was down in a calendar year, Bonds finished the year up, cushioning the blow.
Very different story thus far in 2022 with Stocks and Bonds both down over 10%, something we've never seen. pic.twitter.com/QypyjXuROs
— Charlie Bilello (@charliebilello) July 1, 2022
Value Line Geometric finishes off June with a trip back to its previous respective highs from 1998 and 2007…$VALUG pic.twitter.com/nD1yIadcZU
— Ian McMillan, CMT (@the_chart_life) July 1, 2022
High yield spreads continue to widen. pic.twitter.com/6aE03F0FXX
— Andrew Thrasher, CMT (@AndrewThrasher) July 1, 2022
The spread between HY and Treasury bonds is 5.8%. The peak in 2018 was lower, but in the other three post-GFC peaks, spreads went to 9% (twice) and 11%. If recession is on the horizon, default risk rises and this likely widens. pic.twitter.com/rcL27PuzKr
— Liz Young (@LizYoungStrat) July 1, 2022
When the Fed hikes, things break. Aside from early 2020 surge, high-yield spreads are at their highest level since July 2016. pic.twitter.com/gh2gp65XCR
— Kathy Jones (@KathyJones) July 1, 2022
Markets have flashed some optimistic signals recently, but high-yield spreads are a sign that "risk-off" mode isn't over. pic.twitter.com/4LZpyCyRyG
— Jurrien Timmer (@TimmerFidelity) July 1, 2022
$AGG above its 50 DMA for the first time all year pic.twitter.com/olrGvSmmJE
— David Rath (@DJwrath) July 1, 2022
In terms of fwd returns for equities, below is probably the worst thing that could happen…
…Price action most consistent with a recession
And, right now, it looks more likely than not… pic.twitter.com/AHGZt5hErQ
— Mike Singleton, CFA (@InvictusMacro) July 1, 2022
Silver 2 year low pic.twitter.com/dGTx8J6CJH
— Tom Hearden (@followtheh) July 1, 2022
Friendly reminder you are the product pic.twitter.com/PJUkIYhja0
— Arun S. Chopra CFA CMT? (@FusionptCapital) July 1, 2022
You’re all caught up now. Thanks for reading!