Jim’s Notes – Mixed Trading Day

Moving the Market – June 26th

The markets started lower but managed to fight back into positive territory on Wednesday. The NASDAQ and SP500 closed in positive territory as it was a struggle throughout the day to find leadership. Consumer discretionary found buyer erasing the last two days of selling in the sector. TSLA, AMZN, and CCL lead the upside move. Only two of the eleven sectors were higher on the day but the index still closed higher. QQQ fell to support Monday at the $474 level and produced a modes bounce the last two days. The dollar was higher, interest rates ticked higher at 4.31%, and Gold was lower along with crude oil. Crude inventories rose by 3.591m for the week showing a sizable build versus the last two weeks. Gasoline inventories rose by 2.654m barrels. XLF was lower for the second day as it remains in a short-term trading range. XLE and XLF led the downside. We asked the question of how tech deals with the upside on Tuesday… it tested slightly lower and still asking. Watching money flow and for clues where investors are willing to put money to work. IYT bounced back from the selling on Tuesday helped by FDX up 15.5% on positive earnings. Needs to clear the $65 level near term to reverse the downtrend. On the economic front, New Home Sales were $619k versus 640k expected versus 698k prior. Not a pretty picture falling 11.3% in May. But it was justified/rationalized by higher rates and lower inventories… 30-year mortgage rates have dipped to 6.93% of late and applications for up 0.8% for the week.

The major indexes closed higher on the day with most sectors lower on the day. The volume was above average with VIX dipping lower. The activity started lower and the afternoon bounce pushed the index to positive territory. Tuesday the NASDAQ closed up 1.2%, DIA was down 0.7%, and the SP500 was up 0.4%. The SOXX was up 1.5%. Small Caps (Russell 2000) were down 0.3%. The ten-year treasury yield was 4.23% down 1 bps and TLT was up 0.1% for the day. Crude Oil (USO) was down 1%. (UGA) was down 0.1%. Natural gas (UNG) was down 3.6%. The dollar was up 0.1%. Plenty to deal with moving forward as we manage our money and emotions relative to the current environment.

Thursday Outlook: The markets are in the final week of June and the end of the 2nd quarter. That means more data to digest. Watching how the parts look relative to the whole. As seen below the breadth is still very narrow for the overall market with some juggling over the last five days. The move on Wednesday came from XLY. Commodities continued to struggle as they look for direction and catalysts. What are we watching? 1) The dollar moving higher. 2) Interest rates at 4.31% and still showing volatility. 3) Crude oil remains above $80… 4) Natural gas remains volatile as it moved lower on Wednesday. 5) DBA moving lower as commodities overall look for direction. 6) Mega caps tested… is there more to come? 7) Small caps bounce is it real this time… not yet. Taking what is offered and balancing the risk.

The chart below shows the breadth issue for the SP500 sectors compared from the beginning of the current leg higher that started in April. The technology sector is the only one to outperform the index… Note the move in XLY on Wednesday.

Headlines Worthy of Note:

Federal Reserve says all 31 banks in the annual stress test withstood a severe hypothetical downturn… I feel better! What about the others that are on the FDIC most likely to fail list?

Micron shares fall as they fail to meet elevated expectations. AI is a double-edged sword that inflates prices and deflates them even faster if the beliefs are not met. The stocks we down nearly 6% after hours. NVDA has been in the same boat of late falling 7% from last weeks highs.

NASDAQ big names. AAPL bounced nicely up 2%. AMZN breaks higher up 3.9%. GOOG rested from Tuesday’s breakout. META added to the upside. MSFT inched higher. NFLX held the 10-day MA. TSLA surged 4.8%. They are still setting the tone for the markets overall.

Money Market Funds hit a record $6.12 trillion. Wall Street wants it invested… of course they do.

Quote of the Day: “Perfection is not attainable, but if we chase perfection we can catch excellence” — Vince Lombardi.

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