July 2024 Monthly and First Week of August Market Review
Monthly Performance Overview
S&P 500
July 2024 was a positive month for the S&P 500, with the index closing up 61 points. Although this was the least performing month for the S&P 500 this year, the index managed to maintain its upward momentum. The best day for the S&P 500 was on July 31st, which saw an impressive gain of 85.86 points, ultimately saving the index's performance for the month.
Dow Jones
The Dow Jones had its best month of the year, surging 1723 points in July. This remarkable performance underscores the strength of blue-chip stocks, which outperformed other indices during the month.
Nasdaq
In contrast, the Nasdaq struggled in July, losing 133 points. This marks Nasdaq as the worst-performing major index for the month. The technology sector faced headwinds that dampened its overall performance.
Russell 2000
The Russell 2000, representing small-cap stocks, had an outstanding month, gaining 206 points. This was the best month of the year for the Russell 2000, signaling a strong rotation into smaller, more domestically-focused companies.
Daily Performance Breakdown
- July 1-10: The S&P 500 saw a steady increase, with multiple days of gains.
- July 11: The index saw a slight decline.
- July 12-14: The S&P 500 rebounded with three consecutive days of gains.
- July 31: The index’s best day of the month, which provided a significant boost to close the month on a high note.
Weekly Performance Overview (July 29 - August 2, 2024)
The first week of August started on a negative note, with significant declines across all major indices:
- Dow Jones: Down 852 points
- Nasdaq: Down 581 points
- Russell 2000: Down 150 points
- S&P 500: Down 112 points
The early August performance indicates a continuation of the volatility seen at the end of July, with two days of August contributing significantly to the weekly losses. Historically, August 1st tends to be a down day, and this year was no exception.
Market Trends
- S&P 500: Long-term trend remains up to sideways, but the short-term trend is down.
- Nasdaq: Both long-term and short-term trends are down, reflecting continued weakness in the technology sector.
- Russell 2000: Long-term trend is up, but short-term is down, aligning with the broader market's short-term declines.
Correlation Analysis
- S&P 500 and Nasdaq: These indices are 94% correlated, indicating they move closely together.
- Russell 2000: Positively correlated at 38% with the S&P 500, showing less alignment.
- Volatility: Currently positively correlated with the S&P 500 at 9%, which is unusual as they typically move inversely.
- Bonds: 64% correlated with the S&P 500, a decrease from 83% due to recent market action.
- Gold and Oil: Positively correlated with the S&P 500 at 43% and 53%, respectively.
- Bitcoin, USD, Copper: Inversely correlated with the S&P 500. Copper is particularly notable as a leading indicator. It recently received its first buy signal since May 20th, suggesting potential market shifts in the coming months.
Market Breadth and Sentiment
- Fear and Greed Index: Currently at 27 points, indicating fear. This is down from a neutral 45 one week ago and 38 points a month ago. A year ago, the index was at 77 points, reflecting extreme greed.
- VIX: The VIX saw significant movement, reaching a high of 29 points last Friday before closing at 23. This indicates rising market volatility.
- SKEW: Currently at 139, indicating some level of market risk but not extreme.
- Put/Call Ratio (CPCI): At 1.3, suggesting that put buyers are becoming more active as caution increases.
- Volume and Tick Data: Last Friday showed a decrease in volume and tick data, aligning with the overall market downtrend.
Weekly Forecast and Projections
Next Week's Price Projections
| Symbol | Upside | Downside | Deviation |
|---|---|---|---|
| S&P 500 | 5463 | 5229 | 117 |
| Nasdaq | 18949 | 17958 | 495.5 |
| Russell 2000 | 2166 | 2049 | 58.5 |
Upcoming Economic Reports
Next week will see the release of several key economic reports, including:
- CPI and PPI Reports
- MBA Mortgage Applications
- PMI Composite Flash
- Jobless Claims
- Existing Home Sales
- Fed Balance Sheet
- Retail and New Home Sales
While next week is not packed with major market-moving news, these reports will still provide important insights into the health of the economy and potential market reactions.
Conclusion
July 2024 was a mixed month, with the Dow Jones and Russell 2000 showing strong performances while the Nasdaq struggled. The S&P 500 managed to close the month on a positive note, thanks in large part to the gains on July 31st. However, the first week of August has introduced significant volatility, with all major indices showing declines.
Market breadth and sentiment have shifted towards fear, with rising volatility as indicated by the VIX. The correlations suggest a complex market environment, with some assets moving in unexpected directions.
As we move forward, it's important to remain vigilant and responsive to market signals and economic reports. The current environment suggests potential for continued volatility and market shifts, particularly as we approach key economic releases in the coming week. Investors should prepare for choppy market conditions and adjust their strategies accordingly.