Daily market review Nov 9 (poor reception @ 30Y treasury auction, market down&consolidate, latest NAAIM exposure index)
Latest info on NAAIM exposure index, it has jump to 61% mark, therefore investment managers are not as underinvested as I think ( FYI, NAAIM exposure index is a lagging data ). But this sudden jump shows that they were the buyer behind big surge last week. ( Nov 2, 3 breadth thrust and huge up volume day ). This jump may have revealed other motives,
1) The fear of missing out could be very real among them. After all, if they didn’t perform well in 2022, and is still underperforming benchmark in 2023, they wouldn’t want to missout the big rally if it materialize in Nov&Dec.
2) They have vested interest in the continue progression of this rally, so dips are buyable
All in all, let’s wait and see how deep/shallow the pullback goes.
Overview of S&P 500
Finally we have a down day after 8 consecutive up day. So what causes the down day ? 30Y Treasury auction reception were poor, receiving 60.1% foreign demand which is lesser than historical average, and 30Y yield goes up. ( 10Y yield also goes up to 4.6% level )
Retracement scenario 1 & 2 applies( details are stated in the chart ) and we will monitor how shallow/deep the retracement goes in the coming days.
Nasdaq 100
Broken out of downtrend line and is pulling back to retest downtrend line (previous downtrend line resistance could probably become support ) and we will monitor how shallow/deep the retracement goes in the coming days.
Bollinger band (63Day-MA + 2SD)
Rationale for this model are explained in previous blog entry (Weekly market review Oct 31 - Nov 3 part 2) if new readers would like to know more.
Looking at SPX and NDX using this model,
SPX retraced to retest 63day -MA, market might potentially consolidate in around 63Day-MA before deciding on the next move,
NDX stay above 63day-MA for 5 days in a row, but will see if price retest 63Day-MA in the coming days.
Broad market overview
Every US indices are going down on Nov 9, retracement/consolidation in progress until CPI release next week( or even longer , consolidate until Thanksgiving period)
MOVE index
MOVE index closed at around 117, would like to see it closing below 120 consistently and move closer to 100 in the coming days.
10Year Yield (TNX)
10Y yield still hover around 50day-MA and resting at 2nd Uptrend line, perfectly possible for 10Y yield to retest 4.7-4.8 level further before breaking down further. ( US Indices retrace if 10Y yield retest 4.7 – 4.8 ) A break of 2nd downtrend line and 50Day-MA will provide further fuel for rally.
NYSE market internals
Tuesday Nov 7, 1.38 to 1 NYSE Decliner to advancer ratio
Wednesday Nov 8, 1.37 to 1 NYSE Decliner to advancer ratio (1664/1208)
Thursday Nov 9, 2.82 to 1 NYSE Decliner to advancer ratio (2126/754)
Even though there are more decliner than advancer, it occur at a lower volume compared to previous weeks, so there’s no concerning stats at the moment..
% of SPX stock above 50days and 200 days MA
Market breadth is consolidating from previous week jump. Still looking decent at this stage, would like to see further improvement. ( getting above 50% for both )
percentage of SPX-Stock above 50days-MA, currently at 40.8% .
percentage of SPX-Stock above 200days-MA, currently at 38% .
Sector performance
Offensive sector ( Technologies, Communications , Consumer discretionary), financials, industrials are outperforming Defensive sector (Utilities, consumer staples) on a 1-week basis, from Nov 3 – 9.
All other charts are similar to previous entry ( tight consolidation pending for next breakout ) , so I will skip them today until there’s notable changes.
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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