Wednesday, July 19, 2023

Morning Note: Maybe Breadth Matters

Many a devoted buy-and-hold bull (the term "permabull" is just too derogatory for my taste) would tell you that breadth (when it’s bad) is worthless as an indicator... Well, for whatever reason, we nevertheless track it -- just like we did back in December 2021.

Here's a snippet from our December 22, 2021 blog post:

"...recall our recent coverage of the breadth readings for the Nasdaq Composite Index (which contains what have been the dominant market leaders since the 2008 crisis); i.e., the concerning advance/decline line showing that all boats within the index have definitely not been rising with the tide."   

So, maybe we should take a look at what the next 6 months had in store:

Oops! That was a 34% hit!

And now?

Uh oh!! 

Definitely not saying it's going to play out like it did the last time we had such a bearish divergence... Just saying it's, well, maybe something to pay attention to.

Stay tuned...

Asian stocks leaned slightly green overnight, with 9 of the 16 markets we track closing higher.

Europe's mostly green so far this morning, with 16 of the 19 bourses we follow trading up as I type.

US equity averages are up to start the session: Dow by 148 points (0.42%), SP500 up 0.37%, SP500 Equal Weight up 0.69%, Nasdaq 100 up 0.15%, Nasdaq Comp up 0.23, Russell 2000 up 0.52%.

As for last yesterday’s session, US equity averages traded higher: Dow up 1.1%, SP500 up 0.7%, SP500 Equal Weight up 0.6%, Nasdaq 100 up 0.8%, Nasdaq Comp up 0.8%, Russell 2000 up 1.3%.

This morning the VIX sits at 13.28, down 0.15%.

Oil futures are up 1.52%, gold's down 0.06%, silver's up 0.58%, copper futures are down 0.60% and the ag complex (DBA) is up 1.01%.

The 10-year treasury is up (yield down) and the dollar is up 0.28%.

Among our 34 core positions (excluding options hedges, cash and money market funds), 24 -- led by AT&T, Dutch Bros, XLE (energy stocks), DBA (ag futures) and HACK (cyber security stocks) -- are in the green so far this morning... The losers are being led lower by VNM (Vietnam equities), XME (base metals miners), Albemarle, MP Materials and XLB (materials stocks).

Yesterday's quote is worth repeating:
Here's a little wisdom we can apply to investing from the classic Zen and the Art of Motorcycle Maintenance:

"...spend your time being aware of things and meditating on them. On sights and sounds, on the mood of the weather and things remembered, on the machine and the countryside you’re in, thinking about things at great leisure and length without being hurried and without feeling you’re losing time."

-- Robert Pirsig

Have a great day!

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