Daily market review Apr 11 , 2024 (market regain lost ground after CPI drop, Bitcoin hover around 70k handle )
Broad market overview
On thursday, Market recover lost ground due to higher than expected CPI from yesterday
Semi and Nasdaq 100 are the top performers, Gaining 2.3% & 1.6% respectively.
Overall Cap weighted outperform equal weighted, Mid & Small cap counterpart.
S&P 500 11 sectors
Technology, Communications and Discretionary are the top ranking sectors, while financials and healthcare lag behind all other sectors.
MOVE index
MOVE index closed at 108.86 level, ( bond price implied volatility is expected to be around 10.89% per annum. ) it has close significantly higher than 100level for 2 days in a row
Bond volatility moving higher translates into bigger haircut to bond, in which less liquidity can be extracted from the collateral pool.
NYSE & Nasdaq market internals
A-D ratio was nothing to shout about, lacklustre volume
On April 11th 2024,
1.03 to 1 NYSE Advancer to Decliner ratio (1415/1379 )
1.23 to 1 Nasdaq Advancer to Decliner ratio (2320/1886 )
% of stock above 20Day, 50Day, 200Day
Shorter-term breadth has fallen quite a bit, which explain why SPX is has breached 20Day MA
SPX is also on the verge of testing 50D MA ( although it largely depends on longer term breadth, % of SPX stock above 200Day MA )
We will only see deeper retracement if % of SPX stock above 200Day MA drop to around 60%.
McCllelan oscillator and Summation index
SPX McCllelan oscillator is trending down again and Summation index is decreasing to sub 800 level
As for NDX, momentum as represented by NDX McCllelan oscillator is trending down significantly. Summation index has drop to sub 200 level, it’s still not showing any signs of bottoming yet.
Small cap growth base breakout
Price retest previous base breakout support. Will it retrace deeper or bounce from there ? likely to bounce higher if price can stay and hold above 270
Economic data
US inflation
The recent CPI uptick was mainly due to Auto insurance and auto related charges.
Good news for Fed, lagging component ( Auto insurance + Shelter ) drove Core+Supercore CPI hotprint
The not so good news, % of all CPI items below 2% are ticking down , and % of all CPI items above 4% are ticking up.
let’s turn to consumer side of the story
Stock market and economy is hot, but why consumer is still kicking up a fuss ? yesterday we cover half of the actual causes ( grocery prices ), today we will cover the other half of the causes.
If you look at average household debt servicing ratio, Average asset – liabilities coverage, things are relatively rosy. Household networth is rising and higher than historical average.
but houses are becoming unaffordable to the masses. Since 2022, consumer annual income has been consistently below the required threshold to buy a median home. ( to the tune of USD 28K – 38K )
and this has been causing Gen Y adult in hitting their adulthood milestone later, which is shown in the increase in median age of first time homeowner
This is not help by the data of full cash buyer, ( more than one third are cash rich property downgraders, Corporation, investment fund…etc. ), bidding up prices and pricing Gen Y out of their first time homebuying.
Reference
https://www.thezebra.com/resources/home/average-age-of-first-time-homebuyers/
Bitcoin
According to the foremost Global Liquidity Expert, Bitcoin ( bitcoin only, other cryptocurrency has not been tested, which has lesser datapoint than Bitcoin) track the Global Liquidity relatively closely, lagging only by about 6 weeks, it display the quickest responsiveness to changes in liquidity conditions. No other instruments come close to it in terms of liquidity sensitivities. And this is why I dedicate a section to Bitcoin ( I look at it daily even when I am not writing any new blog entry )
We are approaching the halving event, and technical picture has been quite solid.
Bitcoin is hovering around 70K level,
Price is above 50D MA since February,
Range is contracting and seems to be forming a pennant formation
RSI above 50
As always, we will continue to monitor the charts, assess the bullish/bearish evidence day-by-day to make appropriate capital allocation and investment decisions on all time frame ( short, mid & long term )
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