Daily market review Apr 15 , 2024 (Broad market sell off with defensive undertone, Bitcoin retesting range low ahead of impending halving)
Broad market overview
Market sold off yet again, ostensibly on “ geopolitical scare” again when both Israel-Iran threaten to tit for tat .
Semis and Nasdaq 100 sell off the most on Friday on Geopolitical tension, losing close to 1.5% and 1.65% respectively.
Overall, Mid and small cap, Equal weighted indices perform better than their their cap weighted counterpart in the sell off monday.
is it really triggered by geopolitics, don’t think so even though media would like you to believe that.
Is it triggered by 10Y yield , possibly.
it’s more of purely mechanical selling from big guys, definitely yes.
And does negative divergence that has been fairly obvious from few months back suddenly matters ? now that the breadth is weaker and big guys are selling, yes suddenly it matters.
S&P 500 11 sectors overview
Healthcare, Staples, financials are the top ranking sectors , while technologies, real estates discretionary are the bottom ranking sectors.
Post earnings Reaction of financials as a clue to upcoming earnings.
In the previous week earnings, which was kick off by financials sector companies most of them beat top and bottom line but share price are mostly down or flat subsequently.
Top line upside surprise
Bottom line upside surprise
Shareprice flat to down mostly
Is this a indication of what’s happening to the rest of companies for the ongoing earnings season , it’s a worrying sign that we cannot ignore.
MOVE index
MOVE index closed at 121.15 level, ( bond price implied volatility is expected to be around 12.11% per annum. ) Consistent close above 100 level is in general not a bullish sign for market.
Bond volatility moving higher translates into more haircut for bond, in which less liquidity can be extracted from the collateral pool.
NYSE & Nasdaq market internals
D-A ratio was relatively high indicating a sell off across the board fashion on April 15.
On April 15th 2024,
5.28 to 1 NYSE Decliner to Advancer ratio (2400/454 )
3.50 to 1 Nasdaq Decliner to Advancer ratio (3307/943 )
% of stock above 20Day, 50Day, 200Day
Shorter term breadth of 20D and 50D MA has fallen significantly, which largely explain why SPX breached both 20Day MA and 50D MA
We are starting to see signs of deeper retracement as % of stock above 200D is getting closer to around sub 60%.
McCllelan oscillator and Summation index
SPX McCllelan oscillator has been trending down significantly and Summation index is decreasing to sub 500 level and still not showing signs of bottoming yet
As for NDX, momentum as represented by NDX McCllelan oscillator has been trending down significantly. Summation index has drop below 100 level, it’s still not showing any signs of bottoming and is on the verge of breaking into negative territory.
End of 52-week high > low positive streak at 100 day level
As show in the charts, 52 week high more than low has ended.
10Y yield and DXY negative correlation with SPX
Both 10Y yield and DXY negative correlation with SPX are strengthening again. Which means, we may have to look at the peak of 10Y yield and Dollar index
Systematic positioning
Per GS data, Systematic flow ( vol control, CTA , Risk parity etc) are peaking at high level, almost fully allocated. If they de-risk their position even partially at close to max allocation level, then Stock have to watch out below.
Expected sell off in volume from CTA ( one component of Systematic flow )
Per GS estimate, CTA is expected to sell more than 40 billion if the tape is down big time
Bitcoin
Bitcoin daily chart
Bitcoin is currently hovering at around 63K level ahead of halving event
Below 20D and 50D MA (20D MA on the verge of crossing below 50D MA )
Barely staying above uptrend line connecting 60.8K and 64.5K low
RSI below 50
if RSI is consistently below 50, BTC may have further to fall and possibly breach below 60K support.
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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