Daily market review Mar 26, 2024 (market was having an uneventful day again, flow and macro data in focus, Bitcoin hovering at 70K level)
Broad market overview
Market struggle to follow through Again after initial breakout to all time high ( for DJIA, Nasdaq 100, Cap weighted and equal weighted SPX,S&P 400 mid cap ) is there hesitation on market ? or just small pinch before breaking out again, we remain attentive to the follow through action.
Range is contracting as well, so wait for the next breakout ( higher or lower )
The longer the hesitation, the more worrisome it is though. ( although we cannot entirely rule out the possibility of a low volatility, small range consolidation )
S&P 500 11 sectors
Energy and Utilities are the bottom ranking sectors. Continue underperformance of utilities is a relief.
MOVE index
MOVE index closed at 90.63 level ( bond price implied volatility is expected to be around 9.06% per annum. ) Consistent close below 100 level is in general bullish for market. FYI, It’s the lowest level since 1st half of 2021.
Bond volatility moving lower translates into lesser haircut to bond, in which more liquidity can be extracted from the collateral pool.
NYSE & Nasdaq market internals
Less lacklustre than yesterday , but still largely uneventful.
On March 26th 2024,
1.22 to 1 NYSE Decliner to Advancer ratio (1535/1255 )
1.34 to 1 Nasdaq Decliner to Advancer ratio (2425/1809 )
% of stock above 20Day, 50Day, 200Day
% of SPX stock above 20day MA has declined to around 64%, while the rest is holding up at 70%++ range.
Also notably in the past few weeks, % of stock above 50days Ma drop to mid 50% level, but SPX has not even fall below 20day MA, this is a testament to the strength in US stock market.
McCllelan oscillator and Summation index
SPX McCllelan oscillator is slowly trending up again and summation index is increasing after bottoming at 800 level( indication of other sectors picking up the slack after tech and Semi momentum slowed recently )
As for NDX, momentum as represented by NDX McCllelan oscillator is a bit lacklustre. Summation index has drop and stall at 500+ level but haven’t really show signs of bottoming.
Small cap growth base breakout
Price retest previous base breakout support. Will it retrace deeper or bounce from there ? likely to bounce higher if price can stay and hold above 270, although it’s struggling to get up to 270 level currently. Range is contracting as well.
Flow , sentiment and interesting Market data
BofA MoM changes in fund flow
According to BofA data, March saw fund managers rotating out of US and into Europe, Emerging Market, Japan equity as well as US bank &insurance, healthcare, staples sectors.
Equity sentiment
According to GS data, it’s still very high and stretch. But probably still not a reason to expect any consolidation yet.
Days without daily 2% drawdown
How long has it been since we experience a 2% drawdown day, 100 days probably still can go on longer for many months if volatility keep contracting.
Option volatility skew
The volatility skew data of both S&P 500 and Russell 2000 are approaching extremely low, lowest in past 10 years, showing that market participant is more concern about missing upside than downside, extreme optimism .
Economic Surprise
Economic surprise has been trending to the downside for the past few weeks as Q1 is drawing to a close ( more negative surprise than positive surprise )
Bitcoin
BTCUSD daily chart
According to the foremost Global Liquidity Expert, Bitcoin ( bitcoin only, other cryptocurrency has not been tested, which has lesser datapoint than Bitcoin) track the Global Liquidity relatively closely, lagging only by about 6 weeks, it display the quickest responsiveness to changes in liquidity conditions. No other instruments come close to it in terms of liquidity sensitivities. And this is why I dedicate a section to Bitcoin ( I look at it daily even when I am not writing any new blog entry )
BTCUSD hourly chart
Bitcoin hold the 61000 low and has broken out of contracting triangle to the upside, hovering at around 70K level currently
Coinshare Weekly Crypto asset flow
According to Coinshare flow data, market just had an outflow week @week 12, March 18 – 22, money is flowing out to the tune of almost 1 billion, and yet, Bitcoin recover and retake 70K level in about a week since 61K low in previous 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 on all time frame ( short, mid & long term )
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