EB Daily Market Report - Brief Update - Wednesday, July 18, 2024
Weekend Schedule
I'm traveling out of town today, so I'll make this brief. I've updated all ChartLists within the past week, so it's doubtful that I'll update them this weekend. The EB Weekly Portfolio Report will be sent out, but it's likely to be abbreviated. There will be NO EB Weekly Market Recap video on YouTube this weekend. I'll try to post a brief article on StockCharts this weekend (Trading Places blog).
YouTube
As I mentioned, I won't be around to do an EB Weekly Market Recap video this weekend, but I did record my weekly StockCharts.com video, "S&P 500 Poised To Tumble?" last night and it was just uploaded this morning. Please check it out and give it a "Like", if you don't mind. Subscribe to the StockCharts.com YouTube channel and feel free to leave me a comment.
Market Action
The first couple of hours, we're seeing more of the same - selling. Sector performance is bifurcated, with health care (XLV, -1.17%) and technology (XLK, -1.16%) the two primary laggards. Semiconductors ($DJUSSC, -0.93%) are taking another hit, but computer hardware ($DJUSCR, -2.58%) and software ($DJUSSW, -1.53%) are actually putting more pressure on the technology group. Those large cap names that were previously carrying the stock market higher remain on the defensive as sellers strengthen their grip. Check out performance among those 9 stocks over the last 6 days (since the June Core CPI was released):
- AAPL: -4.19%
- MSFT: -6.48%
- NVDA: -12.13%
- META: -12.77%
- AMZN: -8.64%
- GOOGL: -7.18%
- TSLA: -3.77%
- NFLX: -5.48%
- AVGO: -10.79%
NFLX reports its latest quarterly results after the bell today.
Volatility ($VIX, +10.91%) is soaring to its highest level (16.06) in nearly 3 months. I've said that short-term selling could result in a VIX in the 17-20 range and we're almost there.
The biggest question for me is whether this selling is due solely to July monthly options expiration, which is tomorrow, or is this the result of the Fed waiting too long to begin cutting the fed funds rate. I believe it's the former, but I'm not ruling out the latter. If it IS the latter, this selling could become more problematic and we could see much more selling ahead. Reactions to quarterly earnings will be very important to follow. If we see a lot of companies beating estimates, but failing to move higher, then that would be a hint that the stock market is fully priced and a period of market weakness is underway.
Long-term investors should ignore all of this and stay the course. Short-term traders should be managing risk in some shape or form. Protective puts, covered calls, smaller position sizes, NO leverage on long positions, raising cash, etc. would all be strategies to consider. I take the very easy route and am simply in much more cash right now, especially since I'll be out the next few days in a golf tournament.
Happy trading!
Tom