Daily market review July 2, 2024 (Fed chair Powell disinflationary path remarks give market hope and inspire every US indices to close in green, review of trading session development for past 3 days)
Broad market overview
Powell disinflationary path remarks in ECB forum on July 2nd inspire market to close in green. Well, in truth if you have been a inflation data analysis wonk, you would have known that inflation is falling like a rock, and a few recent Fed governor statement that are still worrying about inflation ( hawks such as Bowman ) nothing more than a noise in a sea of signals. But Media chose to hype up on it anyway, which causes certain market observer or ill-informed investors to worry over a nothing-burger, this explains why I hardly ever read Financial media news, except maybe at certain juncture. And even then, I filter out lots of it, and are looking at them in an entirely different angle.
Tech indices such as Cap-weighted Nasdaq 100, equal weighted QQQ and semiconductors are putting in close to 1% rally by the close, resembling a broad based rally of sorts in tech
All the other indices close at +0.4%, except for S&P 500 , gaining +0.62%.
Overall, cap-weighted indices outperform Small and mid cap, equal weighted counterpart.
S&P 500 11 sectors overview
Discretionary, financials and communications are the best performing sectors, while healthcare is the worst performing sector.
SPX correction in time illustration
S&P 500 Seems to be going through correction in time, price moving sideway for extended period of time in order for Moving average to catch up before next directional movement.
MOVE index
MOVE index has breakup to the upside as 10Y yield spike, 2nd day of staying above 100 level
Move index is currently at 107.5, ( bond price implied volatility is expected to be around 10.75% per annum. ) higher MOVE points to (implied) higher bond market volatility going forward.
Bond volatility moving higher translates into more haircut to bond, in which less liquidity can be extracted from the collateral pool.
NYSE & Nasdaq market internals
More advancers relative to decliners.
Generally after Memorial day holiday, volume will decline gradually heading into the summer season.
On July 2 2024,
1.92 to 1 NYSE Advancers to Decliners ratio (1843/958 )
1.04 to 1 Nasdaq Advancers to Decliners ratio (2150/2062 )
% of stock above 20Day, 50Day, 200Day
Shorter term Breadth improve marginally while SPX still has not breakout from recent consolidation range, but I sense the breakout is near after this recent "correction in time"
% of SPX stock above 20D MA : 46.4%
% of SPX stock above 50Day MA : 46.8%
% of SPX stock above 200Day MA : 66.6%
TNX and high yield bond
10Y yield is at 20D MA and at 4.436%, 10y yield fell from 4.48% to 4.436% after Fed chair Powell disinflation path remarks, will watch closely whether 10Y yield drop or rise from 20D MA, more bias towards fall after Powell disinflation remarks
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.
But the strange thing is, Stock market is performing better and making new All Time High while Bitcoin is not; this is quite a stark contrast compared to Q1 situation, where Bitcoin made new high before benchmark stock market. Liquidity condition is still going up and getting better compared to April/May, so the only reason I could think of is that, Bitcoin is mired in its own market idiosyncrasy, while stock market is obeying in its own cycle characteristics
Bitcoin daily chart
Bitcoin is below 20D and 50D MA, with 20D MA below 50D MA
Bitcoin has resumed dropping after reconnecting with 20D MA,
RSI is falling again after failing to reach 50 level.
Review of the sessions for the past 3 days
June 28th session, not advisable to chase at high
July 1st session, advise subscribers to buy QQQ at the open or buy NQ/MNQ on Monday before US opening, due to better risk/reward ratio after June 28th session development.
There was initial swoon in the beginning, but the breakdown does not have follow through, which makes it a fail breakdown, coupled with other signals and indicators, this makes it a high probability bullish
July 2nd session, Subscribers opened trade close in green after Powell disinflationary remarks.
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