Jun

Weekly market Recap – June 12th

The material in each presentation has been prepared by the respective participant for informational purposes only, and does not, nor does it intend to, provide tax, legal, accounting, or investment advice. This information is of a general nature and does not address the circumstances of any particular individual or entity. You should consult a qualified advisor on your situation to answer specific questions.

Keep printing money and we will see how this ends:

The bulls are partying, people are ignoring the news, and the US keeps spending money they do not have.

CPI due out this week, and the ISM trend points to recession:

Even has markets continue to rise a make new highs for the year, the ISM manufacturing data points to fundamental weakness, something markets can only ignore for so long.
The complacency in stocks implies the market is looking past a mild recession, if we have one all.
Any change to this feeling can dramatically impact markets and cause a correction.
With a large amount of data out plus a Fed meeting, this can be a “make or break” week and set the pace of the summer months ahead.

A very heavy economic calendar ahead:

CPI on Tuesday will set the trend for the week but watch for a Fed pause with “hawkish language” going forward.
If CPI remains “hot” the Fed may be in a very difficult situation, as other data remains mixed.

New-Home Sales may climb by the mid- to high single digits

The market continues to gain share from resales, which are still struggling amid record low affordability and inventory.

Are small cap stocks next to break out?

Small cap stocks recently broke back above the top of its recent trading range, surpasses its moving averages that have acted as resistance for several months.
Based on the charts above, the Russell 2000 looks poised to test its February high, and secondary indicators MACD/RSI show a little more room to run.

Sector rotation is slowly happening:

Areas of the market that can potentially rally: Consumer, Industrial, and Financials.
Vulnerable sectors: Energy, Basic Materials, and potentially, Technology.

Relative value among the sectors continues to improve:

Energy remains the most unfavorable group, followed by healthcare and utilities.
Sectors that are improving are industrials and consumer discretionary.

Korea is currently the top Emerging market performer:

Although emerging markets as a group have been underperforming, South Korean equities, combined with a stable political environment and currency, have outpaced the group.

The Bitcoin / Stock Market correlation seems to be over for now:

In prior years, Bitcoin was seen as a decent indictor of “risk on” overall market sentiment. Since 2023 started however, they have been drifting in opposite directions.
This can be mostly attributed to uncertainty around the future regulatory environment of crypto, and what the future may hold.
Either way, this proves as a very bearish indicator for Bitcoin near future.

Asian markets are showing bullish behavior in the options market:

The cost of puts and other synthetic short positions have gone down substantially this past month.
This implies a bottoming and lack of willing bearish participants, which could mean a turn-around to the upside could be next.

Retail traders a lot more confident than professionals:

Overall, 39% of the professionals in this survey expect a selloff before year-end, whereas only 29% retail traders feel the same way.