Weekly Market Review: Closing the First Week of July 2024
Weekly Analysis: Week of July 1-5, 2024
This past week, the stock market had a short trading week due to the July 4th holiday. With only three and a half days of trading, the S&P 500 showed impressive gains, closing up 106 points. The Nasdaq also performed well, gaining 620 points, while the Russell 2000 fell by 21 points, indicating that small-cap stocks are not performing as well as their larger counterparts.
Key Indices Performance
- S&P 500: Up 106 points
- Nasdaq: Up 620 points
- Russell 2000: Down 21 points
The high market cap stocks in the S&P 500 and Nasdaq drove these indices upwards. In contrast, the equally weighted S&P 500 (RSP) is downtrending, showing that smaller market cap stocks are not performing as well.
Market Correlations
- S&P 500 and Nasdaq: Highly correlated at 99%
- S&P 500 and Russell 2000: Only 47% correlated, showing a significant deviation
- Volatility (VIX): 80% inversely correlated to the market
- Bonds: 87% correlated with the S&P 500, indicating stable interest rate expectations
- Gold: Inversely correlated to the S&P 500
- Oil: 24% inversely correlated to the S&P 500
- Bitcoin: 3% correlated with the S&P 500
- USD: 28% inversely correlated to the S&P 500
- Copper: 12% positively correlated with the S&P 500 but downtrending since May 22nd, indicating a potential slowdown in the market in July and August
Market Breadth and Sentiment
- VIX: 12.48, indicating low volatility
- SKEW: 150, showing risk buildup
- Fear and Greed Index: Currently at 54 (neutral), up from 44 the previous close. One week ago, it was 48, and a month ago, it was 45. Last year, it was at 79 (extreme greed).
Technical Indicators
- MACD: Positive, indicating a strong buy signal
- RSI: Around 76, indicating bullish momentum
- Market Forecast: Upwards, with no current indication of a downturn
Future Price Action
Here are the forecasted price ranges for the upcoming week:
| Symbol | Upside | Downside | Deviation |
|---|---|---|---|
| SPX | 5628 | 5503 | 62.5 |
| NDX | 20703 | 20075 | 314 |
| Russell | 2059 | 1993 | 33 |
Upcoming Market-Changing News
Next week, several key economic reports are scheduled to be released, including:
- Home Sales
- Money Supply
- PMI
- MBA Mortgage Applications
- New Home Sales
- Fed Balance Sheet
- Consumer Sentiments
These reports are crucial as they provide insights into the health of the economy and can significantly impact market movements. Investors should be vigilant and monitor these releases closely to gauge potential shifts in market trends.
Conclusion
The first week of July 2024 has shown a strong performance in high market cap stocks, particularly in the S&P 500 and Nasdaq. However, small-cap stocks, as represented by the Russell 2000, are not performing as well. The market remains highly correlated between the S&P 500 and Nasdaq, while the Russell 2000 shows significant deviation.
Volatility remains low, and the Fear and Greed Index has moved to a neutral stance, indicating growing confidence among investors. Technical indicators such as MACD and RSI suggest continued bullish momentum.
As we look ahead to the coming weeks, it is essential to remain cautious and monitor upcoming economic reports closely. Understanding the interplay between economic indicators, market trends, and investor sentiment is vital for navigating the current landscape. While the market shows strong upward momentum, the downtrend in copper and mixed performances among indices suggest the potential for increased volatility.
Stay informed and responsive to market signals to make strategic investment decisions in this dynamic environment.