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Today’s Summary
Wednesday, July 14th, 2021
Indices: US Stocks were a mixed bag in today’s session. The Dow was pretty flat, inching up just 44 points or 0.13%. The S&P 500 was also flat (0.12%), while the Nasdaq slipped 0.22%. The Russell 2000 underperformed again, dropping 1.63%.
Sectors: 4 of the 11 sectors closed higher. Consumer Staples led, rising 0.89%. Energy lagged, dropping 2.98%.
Commodities: Crude Oil futures dropped 3.08% to $72.93 per barrel. Gold futures moved higher by 1.03% to $1,829 per ounce.
Currencies: The US Dollar Index fell 0.44%.
Interest Rates: The 10-year US Treasury yield dropped to 1.349%.
Here are the best charts, articles, and ideas being shared on the web today!
Chart of the Day
Today’s Chart of the Day was shared in a note by Bespoke. A handful of Mega-Cap stocks have been responsible for the S&P 500’s most recent leg higher. One way to view this Mega-Cap leadership is by comparing the equal-weight S&P 500 (left), to the traditional cap-weighted S&P 500 (right). As you can see, the equal-weight S&P 500 has made zero progress over the past two months, while the cap-weighted S&P 500 has climbed to record highs. Keep in mind, the five largest stocks in the S&P 500 ($AAPL, $MSFT, $AMZN, $GOOGL, and $FB) make up more than 20% of the cap-weighted index. In other words, the top 1% determines 20% of the average. This narrow leadership has raised some concerns, but it’s important to note that the equal-weight S&P 500 is still outperforming the S&P 500 YTD. So, you could also view this as the type of healthy rotation that bull markets thrive off of. Click here for the full note by Bespoke.
Quote of the Day
“It is one of the great paradoxes of the stock market that what seems too high usually goes higher and what seems too low usually goes lower.”
– William O’Neil
Top Links
S&P 500 Equalweight Lagging Badly – Bespoke
Bespoke points out that the equal-weight S&P 500 has dramatically underperformed the S&P 500 recently.
More Fear Than Greed but Stocks Trade to Record Highs – Potomac Fund Management
Dan Russo highlights some key takeaways from the current market environment.
The Most Important Index in the World has Doubled – Now What? -SentimenTrader
Jason Goepfert examines what has historically happened after the S&P 500 gains 100% from a major low.
Canary in the Coalmine? – LPL Financial Research
The team at LPL Financial Research points out that credit markets are behaving well despite falling Treasury yields.
Australian Dollar Breakout Could Send Gold to $3,000 – See It Market
Chris Kimble explains that the Aussie Dollar could provide clues for Gold’s next move.
Top Tweets
$NQ, 5m
Some levels are more important than others.
Nasdaq failed to move above 15000 five times during the last 2 sessions. pic.twitter.com/npIbpJdtgk
— Yuriy Matso (@yuriymatso) July 14, 2021
5 largest S&P weights vs. the "average stock" pic.twitter.com/mkQlSDZ3Nr
— Strategas (@StrategasRP) July 14, 2021
When the max drawdown was less than 5% in the 1st half of the year (has been '21), $SPX averaged return of 8% in the 2nd half with over 80% of returns positive.
Otherwise, #SPX has averaged less than 4% for the rest of the year. h/t @schaeffers pic.twitter.com/okwaxbhmJa
— Seth Golden (@SethCL) July 14, 2021
RTY/NDX ratio – lowest daily RSI since March '20 pic.twitter.com/liVi8PnKhu
— Jonathan Krinsky,CMT (@jkrinskypga) July 14, 2021
Risk Appetite Ratios continue to diverge from the S&P 500.
Small caps, high beta, equal weight and now HY debt all with poor relative performance.$SPX $SPY pic.twitter.com/BNX415nsjb
— Andrew Thrasher, CMT (@AndrewThrasher) July 14, 2021
$ARKK flirting w/ break of 200d MA
note $ARKK -1.8% vs $SPY +17% ytd pic.twitter.com/6A8RgAUaEB
— Christian Fromhertz (@cfromhertz) July 14, 2021
Will Regional Banks bounce off this key level relative to the Financial Sector?$KRE / $XLF pic.twitter.com/5Y2uJ1FSNT
— R. Alfonso Depablos (@AlfCharts) July 14, 2021
40wkEMA continues to be a thing for yields $TNX #yields #bonds pic.twitter.com/DVhoEdX4t5
— Drew Wells, CMT, CIMA® (@DrewTheCharts) July 14, 2021
Have been focused on next steps for Equities..
Was constructive Tech/Growth/Bonds since March – but outperformance may be ending.
Meanwhile – some Cyclicals at *great* Buy levels AND mood is down sharply.
Looks like a great setup to be contrarian (again). Back with more soon. pic.twitter.com/nIqlJqzLUe
— Macro Charts (@MacroCharts) July 14, 2021
? Soda popping.$KO $PEP pic.twitter.com/RFhJ5qzw4H
— ??????? ??? ??? (@BrandonVanZee) July 14, 2021
Indexers having their time in the sun.
— Greg Rieben (@gregrieben) July 14, 2021
You’re all caught up now. Thanks for reading!