It was a wild session, which was doomed out of the gate, but found a bottom, as enough investors bought the dip to cut losses on major indices in half. Yesterday, by the closing bell, every sector in the S&P 500 was lower while market breadth continued to deteriorate. Not even Amazon (AMZN) could save the day.
To see the chart, click here.
Defensive sectors held up the best when Financials got hammered from plunging rates.
S&P 500 Index | -0.86% |
Communication Services XLC | -1.10% |
Consumer Discretionary XLY | -0.25% |
Consumer Staples XLP | -0.37% |
Energy XLE | -0.58% |
Financials XLF | -2.00% |
Health Care XLV | -0.55% |
Industrials XLI | -1.39% |
Materials XLB | -1.36% |
Real Estate XLRE | -0.09% |
Technology XLK | -0.95% |
Utilities XLU | -0.29% |
Market Breadth
Most S&P 500 names are higher for the year, with a somewhat exaggerated gain of 20%. More importantly, 87% of the components are up for the year, versus 65% for the NASDAQ Composite. It isn’t a big deal for your long-term holdings, but it speaks to the more cautious nature of the market, even when key mega growth names lead the way.
2021 Tracker | S&P 500 Winners | S&P 500 Losers | NASDAQ Winners | NASDAQ Losers |
Number | 438 | 66 | 617 | 338 |
Average | 20.08% | 6.77% | 33.93% | 17.39% |
The NASDAQ Composite is only 1.3% off its all-time high - and yet, it feels very shaky.
Not only do decliners continue to swamp advancers, but there were 144 new 52-week lows against only 70 new highs.
Market Breadth | NYSE | NASDAQ |
Advancing | 807 | 1,424 |
Declining | 2,507 | 2,860 |
52 Week High | 95 | 70 |
52 Week Low | 63 | 144 |
Up Volume | 951.64M | 1.82B |
Down Volume | 3.40B | 2.64B |
Individual Investor Steady
The American Association of Individual Investors (AAII) updated its weekly sentiment survey, and as expected, there was a sharp drop in bullishness. However, what I find more intriguing is how investors are shifting to a neutral sentiment when things get rough rather than rushing to bearishness. I know the Street likes to use this as a contrarian indicator. Still, I think it reflects growing independence among investors to reject Wall Street’s negative, panicky message and the financial media.
To see the chart, click here.
Tapping that Credit
Consumer credit soared by $35.28 billion in May, which is the largest monthly increase ever. From a percentage basis, the 10% move on an annualized basis was the highest since March 2016.
- Non-Revolving +26.085 billion
- Revolving +9.196 billion
Crude Inventories Evaporated
Keep watching crude oil, which saw its seventh consecutive weekly drawdown. The 6.9 million barrels were far more than the 3.5 million barrels anticipated.
Today’s Session
The S&P 500 found buyers into the closing bell after spending most of the session trying to gain equilibrium.
- Early resistance: 4,330
- Early support: 4,309
The major indices are in the green this morning.
Portfolio Approach
We are adding a new position in Industrials this morning in our Hotline Model Portfolio.
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