NASDAQ Outperforms; Treasury Yields Decline; Bitcoin Gains; China Bulls ETF Rally

Stay Informed and Stay Ahead: Market Watch, September 24th, 2024.

Early-Week Wall Street Markets

Key Takeaways

Markets: DOW, S&P 500, and NASDAQ all rise. 5 of 11 sectors declined, Materials leads, Utilities lags. Top industry: Metals & Mining.
Economics: Home prices in the 20 largest U.S. metro areas rose 5.9% in July year-over-year, falling short of the 6% forecast. New York led with an 8.8% increase. Meanwhile, the Conference Board reported a drop in the Consumer Confidence index to 98.7, indicating weaker sentiment.
Yields & Commodities: US Treasuries Following last week’s 50bps Fed rate cut, Treasury yields declined, with the 2-year note at 3.544% and the 10-year at 3.733%, reflecting expectations for further easing amid slowing economic conditions. Commodity markets Crude oil futures rose 1.61% to $71.50, while gold increased 1.12% to $2,682.30. Silver also gained, contributing to a 1.18% rise in the Bloomberg Commodity Index, reflecting strength in energy and precious metals.
Crypto & ETFs: Cryptocurrencies Bitcoin (BTC-USD) closed at $64,220, up $912, reflecting cautious optimism as its recovery gains momentum. ETF volume gainers, : Direxion Daily FTSE China Bull 3X Shares rose 29.13% to $32.85, with a significant trading volume of 15.6 million shares.
Market Tips: Focus on long-duration bonds and consider refinancing leading companies as Q4 rate will continue. Stay long in Ai (read-up on our top CAGR’S report) diversify with Russell 2000 ETFs.

Market Summary

Indices & Sectors Performance:

DOW, S&P 500, and NASDAQ rise. 5 of 11 sectors declined, Materials leads, Utilities lags. Industry Leaders: Metals & Mining (+4.51%), Semiconductor & Semiconductor Equipment (+2.59%), and Personal Care Products (+2.18%).

Technical:

The Dow Jones Industrials (DOWI) is on a strong upward trajectory with consistent gains. Over the 5-Day period, the index has risen by 1.45%, and this momentum extends to 17.07% over the 200-Day period. Stochastic values remain elevated, signaling potential overbought conditions. The Relative Strength is decreasing, but remains above 50%, indicating some ongoing strength. Volatility is moderate to high, with MACD oscillators showing increasing bullish momentum, particularly over the longer 50- and 100-Day periods, suggesting a sustained positive trend despite some cooling in short-term strength.

The S&P 500 (SPX) is showing solid upward momentum with notable price gains across key time frames. Over the 5-Day period, there’s a 1.75% rise, increasing to 26.02% on the 200-Day period, with moving averages steadily climbing. Stochastic indicators are elevated, nearing overbought conditions with values close to 100%. Volatility is moderate, with the MACD oscillator confirming bullish trends, especially over the 50- and 100-Day periods, reflecting strong momentum. Relative Strength indicates weakening over time, but overall, the trend remains positive with no immediate signs of a reversal.

The Nasdaq Composite (NASX) shows mixed performance with short-term gains but some volatility over the medium term. In the last 5 days, the index has risen by 2.53%, though it faced a 2.15% decline over the 50-Day period. Over the long term, the Nasdaq has gained 27.76% over 200 days. Stochastic indicators suggest a potential overbought condition, especially in the 9- and 14-Day periods, while the Relative Strength is declining, hovering around 55%-67%. Volatility is increasing, with the MACD oscillator indicating bullish momentum over the long term but signaling short-term caution.

Sectors:

Over the past month, the S&P 500 sectors In the past month, the Consumer Discretionary and Utilities sectors led with strong gains (+8.41% and +7.30% respectively), while Energy (+0.97%) and Health Care (0.00%) lagged, with overall market strength supported by steady technicals—RSI levels remain solid across most sectors, while volatility was moderate.

Economic Highlights:

Home prices in the 20 largest U.S. metro areas rose 5.9% in July year-over-year, below the 6% forecast, hitting record highs. New York led with an 8.8% increase, despite slowing growth.
The Conference Board reported a drop in the Consumer Confidence index to 98.7, below the forecasted 103.9, signaling weaker consumer sentiment and potential reduced spending.

NASDAQ Global Market Update:

NASDAQ saw 4.939B shares traded with a 1.32 advance/decline ratio. NVIDIA ^NVDA and ProShares UltraPro Short QQQ ^ SQQQ led share volume actives. Notable is Intel, Corp. ^INTC.

US Treasuries & Bond Markets:

US Treasuries: Following last week’s 50bps Fed rate cut, Treasury yields have broadly declined, reflecting a shift in market sentiment towards looser monetary policy. The 2-year note dropped 5.1 bps to 3.544%, leading the short end of the curve, while the 10-year fell 1.8 bps to 3.733%. This movement indicates market expectations for further easing, as investors seek longer-duration assets, driving prices up. The decline across the curve suggests the Fed’s policy shift is being priced in, with expectations of slowing economic conditions and lower inflation risks.

Global bonds: The upward trend in global bond yields is particularly evident in the U.S. and U.K. markets. The U.S. 10-year yield increased by 5.5 bps to 3.714%, reflecting market adjustments to rising inflation concerns. The U.K. showed a significant rise of 7.2 bps to 3.846%, indicating strong inflationary pressures in the region. In contrast, Germany’s yield rose modestly by 4.9 bps to 2.197%, while Japan’s yield remained stable, reflecting a divergence in monetary policy impacts across these major economies.

Market Factors:

The big picture trend in equity performance shows a notable divergence between growth and value, with mega cap growth leading at 23.3% year-to-date, closely followed by mega cap value at 17.2%. Large cap growth also performed well, up 23.2%, while large cap value lagged slightly at 14.7%. Conversely, small cap segments showed weaker performance, particularly small cap growth, which declined by 0.4% and is up only 12.1% year-to-date. Momentum strategies have excelled with a robust 29.2% gain, alongside high dividend and IPO sectors both at 14.3%, indicating strong investor interest in income-generating equities.

Volatility:

VIX at 15.39 (-3.15%); The VIX Index decreased 15.72% over the past five days, indicating a market recovery.

The Fear & Greed Index registers “Greed”, MCV Index returns to “Extreme Greed”.

Commodities & ETFs:

Commodity markets: Crude oil futures rose 1.61% to $71.50, while Brent crude remained stable. Gold increased 1.12% to $2,682.30, and silver surged 4.38% to $32.445. In contrast, natural gas fell 1.44%, and agricultural commodities declined. The Bloomberg Commodity Index gained 1.18%, led by energy and precious metals.

ETF volume gainers: Direxion Daily FTSE China Bull 3X Shares rose 29.13% to $32.85, with a significant trading volume of 15.6 million shares.

Cryptocurrency & Currency:

Cryptocurrency: In market hours, Bitcoin (BTC-USD) closed at $64,220, gaining $912. Post market Ethereum remained stable at $2,650.46, and overall sentiment shows cautious optimism as Bitcoin’s recovery gathers momentum.

Currencies: The U.S. Dollar Index fell 0.50% to 100.35, indicating a slight weakening against major currencies. The Euro and Japanese Yen remained stable, while the U.K. Pound and Swiss Franc showed minimal changes, reflecting a cautious trading environment.

Stocks:

Stock Advancers: Banzai International Inc. climbed 96.19% to $8.24 on 62.2M shares traded. WAVE Life Sciences rose 53.37% to $8.19, while Capricor Therapeutics gained 52.43% to $9.10 with 30.4M shares.

Notable Weekly Earnings:

Thor Industries (THO) beat.
AutoZone (AZO), and KB Home (KBH) miss.

Global Markets Summary:

Asian markets showed strength, with Japan’s Nikkei up 0.57%, Hong Kong’s Hang Seng gaining 4.13%, and China’s Shanghai Composite rising 4.15%, while European indices like France’s CAC 40 and Germany’s DAX also posted gains.

Historical Patterns and Market Impact September

Election Years: The S&P 500 typically experiences a steeper average decline in September during election years. In election years, this drop becomes even more pronounced, with the index falling in 60% of Septembers. Historically, the VIX has been 10-15% higher in these Septembers compared to non-election years.
Non-Election Years: The decline is less pronounced, reflecting lower uncertainty.
Historical Average (1928-2023): September tends to be weak overall, with an average decline of 0.7%.

Strategic Investment Adjustments:

Focus on long-duration bonds with leveraged ETFs like ZROZ (PIMCO 25+ Year Zero Coupon U.S. Treasury Index ETF) and EDV (Vanguard Extended Duration Treasury Index ETF) to gain on potential rate cuts. Nasdaq/Tech and growth sectors show strong long-term potential. Diversify with Russell 2000 ETFs and bank index ETFs. Election years historically boost market performance. Top Small-Cap ETFs Poised to Benefit: Vanguard Small-Cap Growth ETF (VBK), iShares Russell 2000 Growth ETF (IWO), iShares S&P Small-Cap 600 Growth ETF (IJT).

Strategic Investment Approaches

US Treasury Long Bond Opportunity

Small Cap Opportunities Fall 2024

Top 10 Fastest-Growing Technology Sectors Through 2028