Stock Market Today: August 14th- 18th, 2023

Welcome StonkForums to the trading week of August 14th!

This past week saw the following moves in the S&P:


S&P Sectors End of Week:


Major Indices End of Week:



Major Futures Markets End of Week:


Economic Calendar for the Week Ahead:


What to Watch in the Week Ahead:

(N/A.)

 

Bonds & Big-Tech Battered As Inflation Fears Trump Payrolls Hope
FRIDAY, AUG 11, 2023 - 04:00 PM

The trend of weaker 'hard' data and hope-filled 'soft' data stalled a little this week as the latter failed to improve...



Source: Bloomberg

But the big theme of the week was 'inflation' appearing to be stickier than many 'soft landing' narratives had accounted for which pushed Fed rate expectations higher on the week (erasing the dovish response to last week's payrolls)



Source: Bloomberg

For the first time since December, the Nasdaq is down for two straight weeks as the smell of fear wafts across the AI-bubble-buyers. The Dow managed gains on the week but S&P and Small Caps joined big tech in the red on the week...



NVDA was the big loser, down over 8% on the week (its biggest weekly loss since Sept 2022... right on schedule...



Source: Bloomberg

'Most Shorted' stocks tumbled for the 2nd straight week, as all squeeze attempts were foiled by selling pressure as the index shifted to negative gamma. In fact, the most-shorted basket is down for 8 of the last 9 days...



Source: Bloomberg

SpotGamma's Gamma Tilt index is decidedly negative...



A chaotic week across markets left VIX lower but VVIX still in the danger zone around 100...



Source: Bloomberg

Treasury yields were up across the curve with the bally underperforming...



Source: Bloomberg

However, extending that a little, we see that bonds have basically roundtripped from before last Friday's payrolls



Source: Bloomberg

The dollar ended higher on the week, as CPI/PPI sparked USD-buying, erasing the post-payrolls drop...



Source: Bloomberg

Crypto was relatively quiet once again with Bitcoin chopping around the $29-30k range. Solana outperformed...



Source: Bloomberg

Gold and Silver were the week's biggest losers in commodity-land as NatGas soared. Crude was flat and copper slightly lower...



Source: Bloomberg

Finally, we noted that spec positioning on US equity futures vs. intermediate sector UST futures is about to take out all time highs...



...and US equities are excitedly divergent from Fed bank reserves...



What could possibly go wrong?

 

Looking for a Mid-August Bounce After Weak Start


Despite modest gains yesterday by DJIA, S&P 500 and NASDAQ, all the major indexes we track were down over the first eight trading days of August. As of yesterday’s close, August 10, NASDAQ was the weakest, off 4.24% this month. Russell 2000 was the second weakest, down 4.02%. S&P 500 slipped 2.62% while DJIA was down 1.08%. Compared to past pre-election year August performance since 1950, this August has tracked closely. Should the market continue to track the historical pre-election year August pattern, a mid-month bounce could begin soon. This historical mid-month move is shaded in yellow in the following chart.

Why $1 Trillion in Credit Card Debt Isn’t a Bad Thing
Posted on August 11, 2023

“It’s not what you look at that matters, it’s what you see.” -Henry David Thoreau

It finally happened, US consumers officially have more than $1 trillion in credit card debt, an all-time record. Not surprisingly, many claimed this was a sign the consumer was tapped out and simply spending and buying everything on credit cards. We don’t think it is that simple, in fact, we’d take the other side that this isn’t a major warning sign and the consumer is still quite healthy and not up to their eyeballs in debt.



Every quarter the New York Fed releases their Quarterly Report on Household Debt and Credit, and this is the report that just showed record credit card debt. Here’s a great chart that showed overall debt reached $17.06 trillion. Peeling back the onion showed that mortgage debt stood still at $12.01 trillion as of the end of June, making up a huge part of overall debt. Credit cards were up $45 billion to $1.03 trillion, meanwhile, car loans were at $1.58 trillion and student loans checked in at $1.57 billion.



What stands out to me the most about the chart above is overall debt was virtually flat the past two quarters, from $17.05 to $17.06 trillion. Tells a much different picture than what the media makes it sound like with all the ‘soaring debt’, huh?

I really like the chart below from the NY Fed’s report that zooms in on the relative size of each part of debt. If you look at credit card debt specifically, it has consistently stayed in the same range over the long-term. So, credit card debt might be at a nominal record, but by no means are we seeing consumers go nuts buying everything on credit anymore than they ever have in history.



Another way to think about this is wouldn’t people likely have more credit card debt if they were worth more? I call this ‘denominator blindness’. All we hear about is the numerator at a new high, but in a lot of cases, the denominator has been soaring as well. Go read the quote at the top from Thoreau again. I love that one, as there are different ways to look at things and to me, seeing the denominator is very important.

Here’s a good way to show this, overall net worth has increased significantly over time, from $44 trillion in 2000 to close to $150 trillion today. Maybe more credit debt shouldn’t be a surprise?





Taking that same denominator blindness approach and looking at the percentage change of credit card debts and net wealth showed a much better backdrop. Since 2000, credit card debt has gained 106%, but net worth was up close to 250%. I will say it again, maybe more credit debt shouldn’t be such a surprise?



Yes, rates are higher and there’s a lot of debt, so one logical question is: can consumers pay for all this debt? Here’s a great chart showing household debt service payments as a percentage of disposable income was down to 9.6% in the first quarter, well below the pre-pandemic average of 11.2%. In simple English, there might be a lot of debt, but people are making more money so it isn’t such a stretch to service all the debt. The second quarter data isn’t out yet, but given disposable income has increased and debt likely stayed flat, this will probably fall again soon.



Here’s yet another way to show things aren’t as bad out there as it sounds. Credit card debt as a percentage of disposable income is 21%, still below the 22% from the end of 2019 and well beneath the 2003-2019 average of 26%. In other words, people have been making more than they have been adding to their credit cards the past few years.



But aren’t people just maxing out their credit cards? No they aren’t is the quick and simple answer. Here’s a chart that looks at credit utilization to show what we mean. Credit utilization is how much of your credit limit you are using. Sure enough, this has held steady at 22%, compared with the pre-pandemic level of 24%. Even home equity credit utilization is running at 38%, well beneath the historical average of 51%. Again, this might shock most people who saw on the nightly news how ‘high overall debt’ has been lately. It simply isn’t true.



That’s enough about denominator blindness. Another thing we keep hearing is how consumers are in bad shape and the glass house is about to crack. Yet again, this just isn’t true, as delinquency balances didn’t increase last quarter, with 97.4% of total balances current on payments, unchanged from last quarter and higher than it was at the end of 2019. The chart below shows that delinquent balances that are more than 120 days late (including severely derogatory) are just 1.3% of total balances, below the 2.8% level before the pandemic.



There has been a jump in serious delinquencies on credit cards, but this is also simply getting back to more normal levels. The good news is other areas haven’t jumped higher yet.



Here’s one that might shock most people, third-party collections hit an all-time low. If the consumer was in such bad shape like they keep telling us, this would probably show a much different backdrop. In fact, only 4.6% of consumers have collections against them, the lowest in history and well beneath the 6.3% from a year ago and 9.2% average through 2019.



Another way of showing consumers are in better shape than they keep telling us is business applications are soaring. In other words, entrepreneurship is soaring, not something you tend to see when people are worried about paying that next bill. Nearly 300,000 applications were filed the first half of this year, 2% more than last year and 21% above 2019.



I will end this blog (which turned out to be much longer than I expected) with some help from three of my friends.

First up, Callie Cox at eToro noted that credit card debt as a percent of total bank deposits was still historically low.



Neil Dutta at RenMac noted that household balance sheets are in fine shape, as household debt to income fell to nearly 86% in Q2, the lowest level since Q4 2021. Neil surmises that it is incomes, not debt, that are the main drivers of consumption lately.



Lastly, economists at Wells Fargo in a recent note said one major positive down the road is home equity. Consumers are sitting on trillions in equity and this could help in a lot of ways over the coming years. Read their great report for more on this concept.



We are aware the headlines regarding record credit card debt, student loan forgiveness and now some talk of credit card forgiveness are causing much anxiety for investors. Our take is we doubt there will be any forgiveness plans, especially in an election year. Instead, these headlines are being used in the media to create more division, eyeballs and clicks.

The bottom line to us is the consumer remains in much better shape than the average investor realizes.

Disinflation is Happening, And There’s More to Come
Posted on August 10, 2023

Inflation has been top of mind for investors over the past year and a half, both from the perspective of what that means for the economy as well as monetary policy. So, the latest release of the Consumer Price Index (CPI), which tracks a basket of goods and services purchased by households, looms large every month. The big question going into this report was: inflation has pulled back, but will it stay lower and continue to pull back further?

Based on the July report, the answer is yes.
Headline CPI rose 0.2% in July, as was expected. Inflation was up 3.2% year-over-year, a tick below expectations for a 3.3% reading. That’s well below the June 2022 level of 9%. As you can see in the chart below, energy, food, and vehicle prices have driven inflation lower. Over the past year:

• Energy prices are down 12%
• Food price inflation has eased to 4.9% (it was 11% in July 2022)
• Used car prices are down 6%

Looking at year-over-year numbers can be a little misleading, especially because they’re dependent on the data from a year ago and that’s not particularly helpful to understand what’s happening right now. At the same time, monthly data can be noisy. That is why I like to look at the 3-month average, and as of July, headline inflation is running at a 1.9% annual pace over the past 3 months.

We got good news on the core inflation front too, which is what the Federal Reserve focuses on since it removes volatile components like food and energy. Core inflation rose 0.2% in July, and over the last three months, it’s running at an annual pace of 3.1%. That’s a decisive shift lower from what we’ve seen over the past year and a half.



There are two big reasons why core inflation is pulling back, and it gets to why we believe inflation has more room to go lower. Vehicle and shelter make up 50% of the core inflation basket, and so what happens there is critical. Let’s talk about these.

As I noted above, used car prices are pulling back. In fact, private data indicates that used car prices have fallen 11% since March, but that’s yet to be fully reflected in official data. So, there’s further room to fall over the next couple of months. Also, new vehicle prices have fallen about 0.5% since March, and this could continue moving lower as auto production improves and inventories rise.



Shelter inflation has been decelerating for a while now. It was running at an 8-10% annual pace at the beginning of the year. That slowed to the 6-7% range between March and May, and over the last two months, it’s moved below 6%. That’s progress, albeit slow.

However, we know there’s a lot more room to go further down based on what’s happening in the rental market. Note that official shelter inflation does NOT include home prices and is just a measure of rents. Vacancies are up, and data from Apartment List shows that the national average rent is down 1% over the past year as of July.

Official shelter inflation may not get to that low a level, but safe to say, it’s heading a lot lower from where it is now. Shelter inflation averaged about 3-3.5% between 2018-2019, which was consistent with core inflation running at 2% (the Fed’s target). Based on what we know now, shelter could fall to an annual pace as low as 2.5%, and that would be a significant downward force on inflation.



Even beyond vehicles and shelter, there are positive signs.

A lot of supply-chain-impacted categories, like household furnishings and apparel, are also seeing disinflation. Airfares have been falling for four straight months now, with prices 20% lower from March. Even hotel/motel prices are down 4% over the same period. Of course, this is unlikely to continue, but it is more than welcome.

All in all, the big takeaway is that disinflation is happening, and we’re likely to see more of it going forward.

This also means the Federal Reserve is less likely to raise rates again at their September meeting. And if the inflation data progresses as we expect, the July rate hike may very well have been the last of the cycle. That’s going to be a big positive for investors as we head into the fall and winter.

Bulls and Bears Beat the Average for Ten
Thu, Aug 10, 2023

The S&P 500's selloff over the last week heading into today's CPI print caused bullish sentiment to dip a little. Compared to last week when 49% of respondents to the weekly AAII survey reported as bullish, this week only 44.7% reported as such. That is the weakest reading on optimism in a month, but remains well above the range of readings of most of the past year and a half.



The drop in bullishness was met with an increase in bearishness. Bearish sentiment rose back above 25% for the first time since the week of July 14th.



In turn, the bull-bear spread moved lower this week, crossing back below 20 to 19.2. That is the lowest reading in four weeks as the spread continues to point toward an overall bullish tilt to investor sentiment.



In fact, this week marked the tenth in a row that bullish sentiment sat above its historical average while simultaneously bearish sentiment was below its historical average. Looking across the past twenty years, there are not many examples of this sort of extended bullish sentiment streaks. In fact, only three other periods saw streaks of similar length. The most recent ended in May 2021 at 13 weeks. Before that, there was an identically long streak in the first quarter of 2012 and prior to that, you'd have to go all the way back to 2004 to find an example. In the 1990s through late 2000, such streaks were much more common.



Claims Seasonal Tailwinds Waver
Thu, Aug 10, 2023

Initial Jobless Claims have been back on the rise for the last two weeks with this week's reading coming in at 248k versus estimates for 230k. That is the most elevated reading since the first week of July and marks the largest week-over-week rise since the first week of June.



Before seasonal adjustment, claims totaled 225.6K, up roughly 20K from the previous week. At those levels, claims are above those of the comparable week of last year and multiple pre-pandemic years. The past couple of weeks have seen particularly pronounced seasonal tailwinds which have historically ebbed this week and will again likely happen next week. However, those tailwinds are set to continue later this month into September when claims have typically reached an annual low point.



Lagged one week to initial claims, continuing claims came in lower than expected, dropping to 1.684 million from 1.7 million. That is slightly above the low from two weeks ago but does not yet disrupt the trend downward in continuing claims.



As for a state level breakdown of claims, in the heatmap below we show where continuing claims are most and least elevated as a share of the each state's respective labor force. As shown, the West Coast and Northeast are the two weakest regions of the country with the highest percentage of continuing claims. Some states in the Southwest like Texas and New Mexico and the Midwest like Illinois and Minnesota also have pockets of weakness. Given various states have different unemployment insurance program eligibility requirements, benefit amounts, and program lengths, that is not necessarily to say these are the areas with the highest unemployment rates, but rather these are the places contributing the most to national claims counts.



Small Businesses Less Concerned With Inflation
Tue, Aug 8, 2023

In an earlier post, we noted the improvement to small business sentiment per the latest data from the NFIB. The report also includes survey responses as to what small businesses perceive to be their biggest problems. The July report showed that small businesses have begun to take notice of easing inflation. As shown below, throughout 2022 and into portions of 2023, inflation has ranked as the number one problem among small businesses. But in July, Quality of Labor retook the number one spot as it had temporarily back in May. Meanwhile, there has been a rise businesses saying that government requirements and red tape are their number one problem, tying cost of labor for the fourth most pressing issue.



Obviously, as it still occupies the number two spot, inflation remains a major problem. Even though it is a big improvement from 37% exactly one year ago, there continues to be 21% of firms that report inflation as their biggest problem. That is also well above any reading observed pre-pandemic.



On a combined basis, cost and quality of labor are the most commonly reported problem for small businesses at 33% of responses. Unlike inflation which is hitting new lows, that is in the middle of the past few years' range.



Historically, the NFIB survey has had sensitivities to politics with a bias towards being more optimistic during Republican administrations and vice versa. Since the Biden Presidency began, government related problems have been on the backburner given that inflation has been playing a more pressing role. However, there has been a steadily rising number of responses once again reporting government red tape or taxes as their biggest issues. That has come hand in hand with an increase in the survey's Economic Policy Uncertainty Index which experienced a pronounced 4 point jump month over month in July.





Finally, we would note very few firms are reporting sales as their biggest problem. That is a significant disconnect from the index on actual sales changes which hit new lows in July.



Small Business Sentiment Bounces Back
Tue, Aug 8, 2023

Small business sentiment from the NFIB's monthly survey rebounded in July with the headline index reading 91.9 versus expectations of it rising only 0.3 points to 91.3. As shown below, small businesses are still reporting much weaker optimism than pre-pandemic or even in the first year of the pandemic, but sentiment has been making steady improvements in recent months.



In the table below, we break down each category of the NFIB's survey. Again, the headline index remains historically low in the 14th percentile of readings. However, that is up from the 9th percentile last month. Most other categories that contribute to the optimism index also rose month over month, albeit there were multiple that went unchanged. As a result of those moves, most categories remain at the low end of their historical ranges with a couple of exceptions: Plans to Increase Employment and Job Openings Hard to Fill. Each of those readings are in the 76th and 94th percentiles, respectively. However, as we noted in today's Morning Lineup, overall this survey's employment metrics have pointed to softening of labor market activity.



While several categories saw stronger readings in July, none rose more than Outlook for General Business conditions which jumped by 10 points month over month. That is the second 10 point increase in a row which makes for the largest two month increase since May 2020. Although that reading showed an increase in optimism which coincides with continued improvement in the number of firms reporting that inflation pressures have eased, readings on small businesses actual operations were less rosy. Even though sales expectations were up, actual sales changes hit a new low of -13, the weakest since the spring of 2020, resulting in earnings changes to also drop.



Long End Historically Oversold
Mon, Aug 7, 2023

Treasury yields at the long end of the curve are once again rising today with the yield on the 30 year up 3.3 bps as of this writing. That is in the context of what has already been a dramatic move higher in yields of long term Treasuries. As we discussed in Friday's Bespoke report, the ETF tracking longer-dated Treasuries, the iShares 20+ Year US Treasury ETF (TLT), fell 1% or more three days in a row last week (prices fall when yields rise). Meanwhile, that move higher in long end yields has also been observed in other places of the world like Germany, as discussed in today's Morning Lineup.

Given the steep rise in yields and hence a drop in the price of TLT, the ETF is trading at extremely oversold levels. While it has come back slightly and is currently 2.66 standard deviations below its 50-day moving average, at the most oversold reading last Thursday, TLT traded 3.84 standard deviations below its 50-DMA. In its over 20 years of history, that is the most oversold reading on record.





As shown above there have only been a handful of other periods in which TLT has fallen at least three standard deviations below its 50-DMA as it did last week. In most circumstances, when an asset reaches such extreme levels of oversold, the thinking is that some upside mean reversion can be expected. However, the exact opposite has played out for TLT historically. As shown below, across the prior seven instances in which TLT got 3+ standard deviations below its 50-DMA, the ETF was lower a year later four times.

 

Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2022-



S&P sectors for the past week-

 

Here are the current major indices pullback/correction levels from 52WK highs as of week ending 8.11.23-


Here is also the pullback/correction levels from current prices-


Here are the current major indices rally levels from 52WK lows as of week ending 8.11.23-

 

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Here are the upcoming IPO's for this week-

 

Stock Market Analysis Video for August 11th, 2023
Video from AlphaTrends Brian Shannon


ShadowTrader Video Weekly 8/13/23
Video from ShadowTrader Peter Reznicek
(VIDEO NOT YET POSTED!)

 

StonkForumers! Come join us on our stock market competitions for this upcoming trading week ahead!-

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StonkForums Weekly Stock Picking Contest & SPX Sentiment Poll (8/14-8/18) <-- click there to cast your weekly market direction vote and stock picks for this coming week ahead!

Daily SPX Sentiment Poll for Monday (8/14) <-- click there to cast your daily market direction vote for this coming Monday ahead!

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It would be pretty sweet to see some of you join us and participate on these!

I hope you all have a fantastic weekend ahead!

 

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Here are the most anticipated Earnings Releases for this upcoming trading week ahead.

***Check mark next to the stock symbols denotes confirmed earnings release date & time***

Monday 8.7.23 Before Market Open:

Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES!

Monday 8.7.23 After Market Close:

Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Tuesday 8.8.23 Before Market Open:

Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Tuesday 8.8.23 After Market Close:

Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Wednesday 8.9.23 Before Market Open:

Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Wednesday 8.9.23 After Market Close:

Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Thursday 8.10.23 Before Market Open:

Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Thursday 8.10.23 After Market Close:

Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Friday 8.11.23 Before Market Open:

Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Friday 8.11.23 After Market Close:

Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES!

(NONE.)

 

And finally here is the most anticipated earnings calendar for this upcoming trading week ahead-
($HD $TGT $PANW $WMT $SE $AMAT $CSCO $GP $ZIM $NU $DE $ONON $JD $XPEV $SU $BILL $FTCH $UGRO $SNPS $GOEV $EL $WOLF $STNE $HUT $JKS $CAH $NVTS $A $ERJ $BTAI $COHR $PSFE $SQM $RUM $MNDY $HRB $GLOB $ECC $TME $LYTS $BEEM $TJX $ROST $ARCO $DLO $LLAP $LICY $IHS $DOLE $ESLT)


If you guys want to view the full earnings post please see this thread here-

• Most Anticipated Earnings Releases for the week beginning August 14th, 2023 <-- click there to view!

 

Top of the morning StonkForumers! Happy Monday to all of you and welcome to the new trading week and a frrrrrrrrrrrresh start. Here is a quick check on those futures as we are a little over an hour into the US cash market open.

GLTA on this Monday, August the 14th, 2023!

 

Morning Lineup - 8/14/23 - More Heaviness
Mon, Aug 14, 2023

August tends to be a quiet time of year in terms of events but a heavy period for equities, and that's exactly what we're seeing this year and this morning. Following the first two weeks of the month where stocks have had trouble holding on to their daily gains, futures kicked off the morning higher but have given up all of those gains as we approach the opening bell. So far the losses have been modest, but just as it's encouraging to see markets rebound on weakness, it's disappointing to see selling into strength. As noted on page five of today's Morning Lineup, however, the uptrends for major US and international equity ETFs remain intact.

Wherever the US equity market goes for the second half of August, a lot will likely depend on the direction of the Mega Cap stocks. Last week was a tough one for the group as everyone of them besides Alphabet (GOOGL) was down and in most cases down sharply, but some perspective is also in order as they're all still up by 34% or more YTD and only two of them (AAPL and MSFT) are oversold.

 

Here is a final look at today's market and futures maps, as well as how each sector performed individually at the close on Monday, August 14th, 2023.

 

Top of the morning StonkForumers! Happy Tuesday to all of you and welcome to the new trading day and a frrrrrrrrrrrresh start. Here is a quick check on those futures as we are a little under an hour into the US cash market open.

GLTA on this Tuesday, August the 15th, 2023!

 

Morning Lineup - 8/15/23 - Turnaround Tuesday (The Negative Kind)
Tue, Aug 15, 2023

After rallying to kick off the week with a late day surge into the close, today looks like a turnaround Tuesday (of the negative kind) as futures point to a sharply lower open. Several factors have contributed to the downbeat tone including some very weak economic data out of China (Retail Sales, Industrial Production, and Unemployment). One notable aspect that was missing from the Chinese employment data was the youth unemployment rate. In June, the rate of joblessness for those aged 16 to 24 was 21.3%, but with the latest data release, the Chinese authorities said they would temporarily stop releasing the data so that it could be refined. Don’t worry though, one official assured reported that the situation was ‘generally stable’. Out of sight, out of mind. Right?

Here in the US, it’s a busy day for data. Retail Sales and Import Prices came in significantly better than expected while the Empire Manufacturing report was significantly weaker. Essentially, it’s more of the same as Manufacturing survey remain generally weak even as the consumer holds strong.

It may be August and a lot of people are out on vacation, but they’re missing out on various financial assets as they converge towards their own individual crossroads. Starting with the S&P 500, yesterday the benchmark for the US equity market appeared to have successfully tested and held its 50-day moving average (DMA). While bulls had hoped for a one and done test, it’s not going to be that easy as futures indicate another test of that level today. The S&P 500 isn’t the only major US equity index testing its 50-DMA either. The Russell 2000 also successfully tested its 200-DMA yesterday but will also see another test of that level today. Lastly, the Nasdaq was already below its 50-DMA yesterday, and if it weren’t for a late day rally towards the close, would have finished the day there as well. With this morning’s negative open, yesterday’s move is going to end up looking more like a failed rally attempt.



The Dollar Index has rallied over 3% over the last month, but the move came to a grinding halt yesterday at the 200-DMA. This morning, it is modestly lower again, although we would note that it experienced a similar pause in the rally a couple of weeks ago before it moved up through its 50-DMA.



Saving perhaps the most important for last, the 10-year US Treasury yield is probably at the biggest crossroads of the three assets classes discussed here. This morning, the yield is at 4.256% which is above the closing high from last fall and less than ten bps below the intraday high. If the yield breaks above both levels, it’s going to be hard in the short-term for equities to stay above their respective 50-DMAs.

 

Here is a final look at today's market and futures maps, as well as how each sector performed individually at the close on Tuesday, August 15th, 2023.

 

Top of the morning StonkForumers! Happy Hump Day to all of you and welcome to the new trading day and a frrrrrrrrrrrresh start. Here is a quick check on those futures as we are a little over an hour from the US cash market open.

GLTA on this Wednesday, August the 16th, 2023!

 

Morning Lineup - 8/16/23 - Tentative
Wed, Aug 16, 2023

It's been a tentative morning in markets following yesterday's relatively large declines. Building Permits and Housing Starts were just released and while Permits were slightly weaker than expected, Starts were slightly better than expected although June's reading was revised lower. The only other reports on the calendar for the day are Capacity Utilization and Industrial Production at 9:15 Eastern. Also don't forget about the release of the Fed Minutes at 2PM.

2023 started off weak for the Industrials sector as it underperformed the broader market by a wide margin in the first five months of the year. As of the end of May, the sector was down fractionally YTD even as the S&P 500 was up over 9%. The chart below showing the relative strength of the sector versus the S&P 500 clearly illustrates this trend, but just as the sector underperformed in the first five months of the year, it has seen a rebound since then as concerns over a hard landing in the US economy shifted more to a soft or no-landing scenario. As the overall market has come under pressure in August, though, the Industrials sectors hasn’t been immune to the selling, and yesterday’s decline of 1.27% for the sector was the largest one-day decline since 5/31 when the sector’s relative strength bottomed for the year.



Unlike the S&P 500 which closed below its 50-day moving average yesterday, the Industrials sector managed to hold above that level for now and looking at a longer-term chart for the sector, it’s interesting to note that the support of the 50-DMA also happens to coincide with the sector’s highs from late 2021 and early 2022. Theoretically, these prior highs should act as support, but only time will tell.