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Morning Review: January 19th, 2024

Morning Report for Friday January 19th, 2024

Market summary:

Another day, another bifurcated melt-up. The "market" is simultaneously overbought and oversold at the same time. It's overbought on those few stocks still keeping major indices pinned to all time highs. And oversold on everything else. There has never been a time when the market was this dependent upon a single sub-sector (semiconductors) and a single stock (Nvidia). A few days ago I showed that over the past year Nvidia's performance far exceeded the performance of the rest of the "Magnificent 7" stocks. Since the start of the year, the outperformance between Nvidia and the rest of the mega caps has continued to grow.

Notice volume momentum (lower pane) on the Nasdaq 100, in the chart below. It has already peaked and rolled over the same way as it did in July, but this time the NDX (main pane) kept rolling higher.

"...a closer look at Thursday’s action shows the benchmark equity barometer’s bounce mostly powered by big tech once again, particularly the chip sector"

“Technology’s ability to camouflage the recent deterioration can only last so long”

Market indicators:

Morning breadth is mildly positive on both the Nasdaq and the NYSE

Bond yields up again today.

Commodities mixed bag.

In summary, it's clear that the algos are trying to make a new S&P 500 all time high by any means possible. However, in the process they are creating a dangerously concentrated market - with the potential for the fastest high to low bear market crash in history.


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