Daily market review June 25, 2024 (Why market is not near intermediate term top yet )
Broad market overview
On June 25, 2024 Monday trading session, Semi led Nasdaq to outperform the broader market ( again ), where Semi and Nasdaq 100 gain 2.34% and 1.16% respectively.
While small and mid cap perform the worst losing abut 1% and 0.85% each.
Overall, Cap-weighted indices outperform small and Mid-cap, equal-weighted counterpart.
S&P 500 11 sectors overview
Technology and communications are the best performing sectors. While Real estate, materials and utilities are the bottom ranking sectors.
MOVE index
Move index is currently at 96.97, ( bond price implied volatility is expected to be around 9.7% 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
More Decliners relative to Advancers.
Generally after Memorial day holiday, volume will decline gradually heading into the summer season.
On June 25 2024,
1.78 to 1 NYSE Decliner to Advancer ratio (1783/1008 )
1.54 to 1 Nasdaq Decliner to Advancer ratio (2567/1662 )
% of stock above 20Day, 50Day, 200Day
Shorter-term Breadth is declining while SPX is stabilizing, Cap distortion effect at work again...need I say more ?
% of SPX stock above 20D MA : 52.4%
% of SPX stock above 50Day MA : 51.2%
% of SPX stock above 200Day MA : 70.2%
Is the market topping ? ( answer ? not in the near/intermediate term top yet )
Recently , there’s a lot of big flutter in the financial sphere about market being too toppish/in a bubble top, which can be summarized into following 3 reasons,
both charts showing the market concentration percentage
1) Market cap of top 5/7/10 approaching highest level as a percentage of total market cap. (extreme concentration / top heaviness )
2) Historical low % of short interest
3) extreme narrowness of rally by AI-related mania only
But I don’t believe these aforementioned reasons are convincing signs of market top, and I believe this extreme concentration/Top Heaviness will be sustained long into the future for reasons that are too long to be stated here, because we need to get into another research area/long articles.
I will just list out a technical argument for why market top for market is not in place yet.
Normally, one of the near/intermediate term topping sign require high % of SPX stock above 50D MA, as high as 85% or above.
Happen 4 out of 5 times during current market bull since 2nd half of 2022.
1) Aug 2022 ( fell 19% subsequently )
2) Dec 2022 ( Fell 8.3% subsequently )
3) Jul 2023 ( Fell 10.7% subsequently )
4) end march 2024 ( fell 5.9% subsequently )
the one time it fail to be topping sign ?
1) Dec 2023 ( only "retrace" 2.3% )
To add in more context, there were breadth thrust and 80%-90% upside occurrence day from October 27 low to December. So that’s why it fail to be a topping sign.
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 defended 60K support level as of now, still cannot say for sure that the near term bearish trend is over.
Bitcoin is currently below 20D and 50D MA, 20D MA has crossed below 50D MA
BTC RSI has breached 30 level, making a new low at sub 26 level
BTC has come close to 200D MA. making a 1-month-new low at 58.4K
Coinshare crypto Flow
Based on Coinshare crypto flow data, money has been flowing out for the past 2 weeks, as long as the outflow doesn’t stop, it would be challenging for Bitcoin to recover from recent bout of weakness.
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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