Morning Commentary
Tuesday was another higher close for the market, but beneath the surface, it was a wild affair of violent rotation and crazy swings.
Record-breaking cash is pouring into this market, earmarked to chase the hottest stocks. A few downticks disqualified a name from being bought, meaning there will only be more selling.
According to Bank of America, we saw the fifth most significant equity inflows in their data history (since 2008).
The cash zeroes in on specific stocks in a flash and starts the feeding frenzy.
Go Big or Go Broke
Undoubtedly, those single stocks garnering all that buying are large-caps, with a smattering of small-caps.
Interestingly, many intelligent investors began betting on mid-caps in the early spring and thought the rotation would move there before smaller, lesser-quality names.
Yesterday, mid and small-caps were hit hard.
Radar Watch: Bank Stocks
Financials (XLF) were the best-performing sector of the session, led by banks two days before they kick off earnings season.
The XLF chart is very attractive, as money flows are moving higher. The Relative Strength Index (RSI) is reasonable, and it held above the 50–day moving average.
Testing Bond Buyers
Yesterday, the Treasury auctioned off $39 billion in 10–year Treasury notes as part of the $119 billion in issuance this week.
The Treasury notes may struggle to attract foreign buyers, but the Fed could step in. The slowdown in Quantitative Tightening (QT) now allows only $25 billion in U.S. Treasuries to run off the balance sheet, leaving $30 billion to reinvest.
The CBOE 10-Year Treasury Yield (TNX) is edging lower but will not succumb gently to that good night – watch for 4.20% as the critical test.
Today’s Session
The market bias remains on the upside and focuses on AI after a solid financial report from Taiwan Semiconductor (TSM). The stock was already a beast, but this shifts it into overdrive.
That means the entire halo should benefit, but the big question or challenge is whether the money comes out of their stocks (no matter the fundamentals).
There is a louder chatter about a broadening rally, but that has ebbed and flowed for a year, and the rally has only become more narrow.
That said, chasing eventually fails, but the value proposition is also changing for stocks where fundamentals are improving.
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9/6/2024 1:27 PM | Topsy-Turvy Market |
9/6/2024 9:49 AM | ALL HELL TO BREAK LOOSE |
9/5/2024 1:34 PM | Lacking Conviction |
9/5/2024 10:07 AM | LOOKING FOR MOXIE |
9/4/2024 1:34 PM | Cooling Down |
9/4/2024 9:38 AM | CLOBBERED! |
9/3/2024 12:55 PM | Hissy Fit |
9/3/2024 9:37 AM | WILL THE RALLY KEEP ROLLING? |
8/30/2024 1:25 PM | End of Summer |
8/30/2024 9:44 AM | FEELING THE WARMTH |
8/29/2024 1:27 PM | Rallying even as NVDA fades |
8/29/2024 9:45 AM | NOT MEDIOCRE BUT EXPECTATIONS WERE SKY HIGH |
8/28/2024 1:54 PM | Nvidia Day |
8/28/2024 9:50 AM | DEFYING GRAVITY |
8/27/2024 1:34 PM | Nerves Ahead of NVDAs Results |
8/27/2024 9:47 AM | TENSION MOUNTS AHEAD OF NVIDIA EARNINGS |
8/26/2024 1:25 PM | Rotation to Software |
8/26/2024 9:45 AM | POWELL SEES THE LIGHT |
8/23/2024 1:10 PM | Official Start |
8/23/2024 9:36 AM | NERVES AHEAD OF POWELL’S SPEECH |
8/22/2024 1:33 PM | Bad News is Bad News |
8/22/2024 9:56 AM | TAKE THIS JOB AND SHOVE IT! |
8/21/2024 1:04 PM | Bottom Fishing |
8/21/2024 9:48 AM | PAUSE ON THE ROAD TO NEW HIGHS |
8/20/2024 1:01 PM | Juxtaposition |
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