Daily market review Mar 12 2024 ( market shrug off CPI figure )
Broad market overview
0.4% MoM Core CPI was shrug off by the market. Semis ETF perform the Best. Gaining more than 3% daily.
Overall , Cap weighted indices outperformed Equal weighted counterpart.
Small cap lose -0.28% and lag behind other because Fed cut is pushing back further, but there could be more than meet the eyes in those small and mid cap which conventionally is thought to be beneficiaries when the rate cut do arrive.
The shrug off could be because there is ample liquidity in the system ( even though the interest rate is still high ). And even if Interest rate remains high, market seems to think it’s when not if interest will be cut, only question is when and by how much.
Interestingly , if you want smooth upward trend in the equity market, you may be better served slower rate , pace-out rate cut rather than fast & furious cut which often signifies looming trouble on the horizon, hence the faster rate cut.
Aforementioned narrative is of secondary concern when price is rallying, so we as market participant have to get up and dance to the tune of music when the music/party is on.
S&P 500 11 sectors
Technologies, Discretionary and Communications/industrials are the top ranking sectors while Utilities and real estates are the bottom ranking sectors.
Small cap growth base breakout
Small cap growth seems to have woken up from Winter slumber. Stealthily breaking out of 2 year base. Even though it’s underperforming large cap, it’s still an interesting space to monitor going forward, how far will they go in the Gen-AI era and relatively high interest rate environment ? We are about the get an answer in the next 1 – 2 quarters.
MOVE index
Haven’t been reporting it for a while because it’s mired in tight 100 - 110 range. But it seems to be edging closer to 100 level. ( bond price implied volatility is expected to be around sub 10% per annum ) Bond volatility is expected to be lower, translating into lesser haircut to bond, and more liquidity can be juiced from the collateral pool.
NYSE & Nasdaq market internals
Market rally but the internal was lacklustre, in particular Nasdaq Decliner is leading Advancer. This is understandably caused by megacap distortion, where mega cap rally but more than 50% of the Nasdaq counter are declining. But then again, if the rest of the market rally in the subsequent days then it wont be too much of an issue.
On March 12th 2024,
1.23 to 1 NYSE Advancer to Decliner ratio (1553/1260 )
1.2 to 1 Nasdaq Decliner to Advancer ratio (2305/1921 )
Bitcoin
Bitcoin has retested 70K and hold the 70K support. An interesting place to watch in the next few week.
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.
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