Weekly Market Review: Week of July 7-13, 2024
Overview
The week of July 7-13, 2024, saw positive movements across the major indices, with the Russell 2000 emerging as the standout performer. Here’s a breakdown of the weekly performance:
- Dow Jones: Up 625 points
- Nasdaq: Up 45 points
- Russell 2000: Up 121 points
- S&P 500 (SPX): Up 48 points
The Russell 2000 showed significant strength, doubling its performance from the same week last year, moving up by 121 points compared to 62 points last year. This indicates a notable market rotation towards small-cap stocks, moving away from the high-tech or large-cap stocks primarily seen in the Nasdaq.
Market Trends
Index Trends
- S&P 500 and Nasdaq: The trends are consistently upward, from hourly to monthly charts.
- Russell 2000: Although the daily trend is still down, the hourly trend is showing signs of recovery, and the index is slowly picking up.
Correlations
- S&P 500 and Nasdaq: Highly correlated at 99%.
- Russell 2000: Correlated at 54% with the S&P 500 and Nasdaq, showing some divergence.
- Volatility (VIX), Oil, Bitcoin, and USD: Inversely correlated to the S&P 500.
- Copper, Gold, Bonds, and other commodities: Positively correlated to the S&P 500. Copper's correlation has dropped to 2% from 12% last week, indicating a market deviation from copper.
Market Breadth and Sentiment
- VIX: Trading in a tight range between 11 and 14 points. There is significant resistance at 14, suggesting buying pressure if VIX reaches this level. Conversely, a drop to 10-11 points might trigger selling pressure.
- Fear and Greed Index: Currently at 56, moving into the greed territory. Last week it was neutral, and last year it was at 78. The current level suggests improving market breadth and sentiment.
Breadth Analysis
- Momentum: Extreme greed, indicating strong price movements.
- Stock Price Strength: 52-week high to low ratio is below 3-4%.
- McClellan Volume Summation Index: At an extreme fear level of around 1056.
- Put/Call Ratio: At 0.62, indicating extreme greed with more call buyers than put buyers.
- Market Volatility: Neutral at 12 points.
- Safe Haven Demand: Increasing slightly as more money is parked in bonds.
- Junk Bond Buyers: In greed territory.
Future Price Action
Here are the forecasted price ranges for the upcoming week:
| Symbol | Upside | Downside | Deviation |
|---|---|---|---|
| SPX | 5668 | 5562 | 53.23 |
| NDX | 20648 | 20013 | 317 |
| Russell | 2187 | 2108 | 39.37 |
Upcoming Market-Changing News
Next week, several key economic reports are scheduled to be released, including:
- U.S. retail sales
- Business inventories
- Home builder confidence index
- Housing starts
- Industrial production
- Initial jobless claims
- U.S. leading economic indicators
- New York Fed President Williams speaks
These reports will provide insights into the health of the economy and can significantly impact market movements. Investors should 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.
The week of July 7-13, 2024, has seen a varied performance across major indices, with the Russell 2000 emerging as the notable performer by gaining 121 points. The S&P 500 and Nasdaq also saw gains, indicating continued strength in high market cap stocks, while the Russell 2000 showed significant progress, doubling its performance from the same week last year.
Market sentiment is shifting towards greed, as evidenced by the Fear and Greed Index moving to 56. Technical indicators like MACD and RSI are positive, suggesting ongoing bullish momentum. However, the VIX remains in a tight range, indicating potential for increased volatility if it reaches certain thresholds.
Copper's downtrend since May and its decreased correlation with the market signal potential caution for the upcoming months. As we move forward, it is crucial to monitor key economic reports and market signals closely to navigate the dynamic landscape effectively. The mixed performance and varied correlations suggest a need for careful and strategic investment decisions in the weeks ahead.