Stock Market Summary

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The News Buzz

• Semiconductor and mega-cap technology shares lead the market higher: e.g.  AVGO +5.4%, TSLA +5.3%, and AAPL +2%.

• This week, investors are eagerly anticipating several key economic updates that could significantly influence market expectations and the Federal Reserve's interest rate policy. The Commerce Department's May U.S. Retail Sales report, set to be released on Tuesday, is of particular interest. 

• One of the top concerns for investors is the potential impact of political shifts, particularly a move from centrist to more populist policies. Such a shift could potentially slow down exports, increase inflation, and introduce more volatility into the global markets.

• Rating agency Standard & Poors recently downgraded France's debt from AA to AA-. France's budget deficit currently sits around 5% of GDP and is expected by the International Monetary Fund to remain above the Eurozone's stated 3% threshold through the decade's end. There does not seem to be much room for additional spending.  

• Other advanced economies, including the U.S., U.K., and Japan, are also projected to have similar deficits in the years ahead.

New Highs in SPX/NDX with Deteriorating Breadth

• As I showed on Sunday, several relevant indexes topped in March or May, while SPX and NDX are pressing higher, largely due to Magnificent 7. More stocks reached new lows than new highs.

• The chart below, courtesy of SentimenTrader, shows that new lows exceed new highs in NDX as the Nasdaq 100 consistently pushes to new highs.

• Something needs to give. Either the market breadth improves dramatically, or SPX and NDX reverse. The latter is more likely, in my opinion.

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CNN’s Fear & Greed Index Dissected

• One must be puzzled by the Fear & Greed Index in the fear territory while SPX/NDX are pushing to new highs. Let us dissect it.

• Four of the seven components reflecting the market internals, i.e. internal weakness, are in the fear or extreme fear territory.

• The volatility, as measured by VIX, is neutral.

• Only the market momentum and put/call ratio are in the extreme greed and greed territory, respectively.

NDX Wedge Pattern

• NDX broke above the upper trendline of the wedge and its highest available target.

• This is usually called an overthrow, and normally, it should reverse soon unless “It Is Different This Time.”

Market Summary

Market Data

As of close on 17 June 2024.

What Has Been

•  Has Been

  • We “advertised” this push by SPX and NDX as the preferred option in the Premium content on Thursday and Sunday.

  • Unlike lately, major indexes were all nicely green today. 

  • Dow advanced 188.94 points or 0.49% to 38,778.1

  • S&P 500 advanced 41.63 points or 0.77% to 5,473.23

  • Nasdaq advanced 168.14 points or 0.95% to 17,857.02

  • Russell 2000 advanced 15.85 points or 0.79% to 2,022.01

  • Is this a last gasp?

  • Perhaps, but we must know there is generally a positive bias into OPEX on Friday. The keyword is generally not always.

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• Based on EW counts, cycles, and other factors, I expect SPX and NDX to . . .

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