Stock Market Summary

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The News Buzz

• The S&P 500® index (SPX) eased from a record high after a report showed consumer sentiment soured this month. The index still posted its seventh weekly gain in the past eight weeks, boosted by cooler inflation readings that rejuvenated hopes for lower interest rates from the Federal Reserve.

• On Friday, the University of Michigan’s initial Index of Consumer Sentiment for June fell to 65.6 from 69.1 in May, the measure's third consecutive monthly decline and the weakest reading since November. Analysts expected the index to rise to about 73.0, according to Briefing.com.

• According to the survey's director, Joanne Hsu, "Consumers' assessments of personal finances dipped due to modestly rising concerns over high prices as well as weakening incomes. Overall, consumers perceive few changes in the economy from May."

• Google Trends reports an astonishing spike in searches for “petrodollars.” This is apparently because of a viral story that on 9 June, Saudi Arabia failed to renew a secret 50-year deal with the US to keep oil priced in dollars. 

• “Home foreclosures are on the rise again nationwide,” www.foxbusiness.com, June 14, 2024.

• Trump floated the idea of an all-tariff federal revenue system, large enough to replace the income tax. An all-tariff approach would (reverse)more than 100 years of economic policy that encourages free trade and requires higher-income households to pay higher tax rates than the middle class. Such a return to 19^th-century fiscal policy could amount to a tax cut for high-income people and, effectively, a tax increase on consumers, who would pay tariffs passed along to them in prices. —Lindsay Wise, Katy Stech Ferek, and Alex Leary, “Trump Floats ‘All-Tariff’ Federal Revenue System,” www.wsj.com, June 13, 2024.

Bifurcated Market

• While NDX and SPX have been pushing to new highs (with negative breadth on Friday), led by a handful of large-cap technology stocks, the rest of the market has been going down for a while. 

• RSP (S&P500 Equal Weight), DJT, and RUT topped in March. 

• DJI topped in May. 

• This is one more red flag, in addition to negative technical indicators and signals from cycles and EWT.

• In my opinion, NDX and SPX should also roll over soon. Unless it is "This Time is Different?"

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NASDAQ 100 Breadth

• Even in NDX (Nasdaq 100), more than half of stocks are in downtrends, i.e., below 100D MA.

• That’s not a healthy market that would support further advances.

• But perma-bulls might say wait for an up explosion once the breadth improves.

• I am doubtful of such a possibility. I think the opposite is more likely.

Market Summary

Market Data

As of close on 14 June 2024.

What Has Been

• The NASDAQ Composite Index closed at 17,133.13 on Friday. It its 5^th straight high. The total shares traded for the NASDAQ was over 4.49 billion. Declining stocks led advancers by 2.62 to 1 ratio. There were 1216 advancers and 3191 decliners for the day. On the NASDAQ Stock Exchange, 27 stocks reached a 52-week high, and 88 of those reached lows totaled. 

• The S&P 500 index fell 2.14 points (0.04%) to 5,431.60, up 1.6% for the week; the Dow Jones Industrial Average® ($DJI) lost 57.94 points (0.2%) to 38,589.16, down 0.5% for the week; Russell 2000 declined 32.75 points or -1.61% to 2,006.16

• The 10-year Treasury note yield (TNX) fell more than 2 basis points to 4.215%, after earlier dropping under 4.19%, its lowest since late March.

• The CBOE Volatility Index® (VIX) rose 0.72 to 12.66.

• This was largely according to my expectations communicated in the premium report on Thursday.

• With SPX and NDX at new highs, CNN Fear & Greed index in the fear territory is very puzzling.

• Bitcoin and Ethereum were down last week and are starting to show weakness as they tested their 116-day moving averages.

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• Most indexes peaked, except maybe SPX and NDX, which may . . .

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