Good morning to my faithful and interesting readers. I appreciate you. Please comment if you would like something different, more info, a follow-up, or just to say hello. The largest stocks, typically growth stocks with high expectations, fell yesterday. The largest market capitalization stocks, the ones where the money flows into when people buy passive index funds (like the S&P Index 500 or NASDAQ Composite 100) were lower, and significantly so. As seen above (thank you Finviz for the three visualizations), the largest rectangles tended to be red, with a few notable exceptions in "main street stocks" like Home Depot, Cat, Exxon Mobil and Chevron, Berkshire Hathaway, Coke and Pepsi, Merck, J&J and Abbvie. The homework we did last night showed 16 of the top 26 US listed stocks, by market capitalization of equity, fell yesterday and some of the declines were material, significant and meaningful. NVIDIA and TESLA falling more than 5% in a day. Most stocks being down 2% or more. This has the impact of reducing the total value of the stock market, without most people noticing. Technical analysts would call this day a distribution day, because people sold the most valuable stocks (maybe closing out long bets), and also bought smaller stocks (maybe closing out short bets). This is our hypothesis of what happened, investors moved to the sidelines on Thursday. You can see the largest rectangles, by far, were red. The losses were focused on the most valuable stocks. This chart, also from Thursday, July 11, 2024, also shows the impact on stocks. This view is by industry, and only shows S&P 500 Equity Index stocks that fell on that day (1-day change). The silver lining is that small caps screamed higher yesterday. This is an ETF that we like that moves with small capitalization stocks in a magnified way. It rose almost 11% yesterday.
In conclusion, what we saw was an exit of the equities market (maybe exiting long positions), and a rotation of buying into small cap stocks (maybe to close out shorts). We sell analysis of individual stocks, and we sell access (on a daily basis) to our full market analysis, which we call the Chicago Quantum Net Score analysis. If you would like to learn more, give me a call at 312.515.7333 or check out the website at www.chicagoquantum.com.
0 Comments
Leave a Reply. |
Stock Market BLOGJeffrey CohenPresident and Investment Advisor Representative Archives
January 2025
|