Daily market review July 17, 2024 ( market plunge across the board without damaging underlying breadth )

Apologies to readers and subscribers for not being able to provide timely update during this crucial period where so many things have transpired since last Friday. I was down with food poisoning and illness. Still not feeling my usual self, but will try my best to cover as much basics as I possibly can.

Broad market overview

The decline is nasty and swift after Trump Taiwan defence comment.

Semiconductors are the worst performers, losing over 7% and at higher than usual volume.

Benchmark indices such Nasdaq 100 lost close to 3%, S&P 500 lost close to 1.4%, while Dow Jones industrial average gain closed to 0.6%.

Overall, Mid&small cap, equal weighted indices outperformed Cap weighted indices.

It’s believed that the sell off/rotation out of technology sector is not over yet. ( still believed it’s short term in nature, but the degree of retracement might still be larger than expected )

S&P 500 11 sectors overview

The usual suspects are the worst performers in a day like this, Technologies, Communications and discretionary are the bottom ranking sectors. While Staples, Energy, real estates are the best performers.

MOVE index

Move index is currently at 91,  ( bond price implied volatility is expected to be around 9.1% per annum. ) Lower MOVE points to (implied) lower bond market volatility going forward.

Bond volatility moving lower translates into less haircut to bond, in which more liquidity can be extracted from the collateral pool.

NYSE & Nasdaq market internals

There are more Decliners than Advancers, but the ratio is not lopsided and seem mild

On July 17 2024,

1.4 to 1 NYSE Decliners to Advancers ratio (1629/1157 )

1.66 to 1 Nasdaq Advancers to Decliners ratio (2633/1587 )

% of SPX stocks above 20D 50D 200D moving average

Hardly any decline in breadth despite the sell off, but as institutions rotate money into other sector, cap-weighted indices will experience larger than expected pullback.

% of SPX stock above 20D MA : 80%

% of SPX stock above 50Day MA :  76.2%

% of SPX stock above 200Day MA : 80.4%

Bitcoin

According to the foremost Global Liquidity Expert, Bitcoin track the Global Liquidity relatively closely, lagging only by about 6 weeks, it display the quickest responsiveness to changes in liquidity conditions.

Bitcoin recent function as a liquidity proxy has gone completely kaput for the past few days, this is because Bitcoin is mired in its own market idiosyncrasy, while stock market is obeying in its own cycle characteristics

Both Mt Gox and German government move their bitcoin at liquidity thin holiday period around Independence day, contributing to the sell off. And we have emerge fully from the aforementioned chaos.

Bitcoin daily chart

Selloff in Bitcoin is officially over

1) Price rose above 20D, 50D, and 200D MA in quick succession

2) made a higher high at 66.1K

3) RSI is above 50

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