2024-07-15 06:26:24 ET
Summary
- CPI MoM inflation data on Thursday delivered the first decline in the rate of inflation since May 2020, fueling tremendous investor optimism.
- Market skew at historic levels with record divergence between S&P 500 market cap/equal weight since 2008 may become a catalyst for broad market gains.
- Momentum Gauges signaled the largest stock breakout since November 2023 with a positive market signal on July 8th in the largest daily momentum increase in 2 years.
- Mega cap skew driven by strong balance sheets, herding behavior of investors, and market anomalies may soon signal a new shift to value opportunities.
- This article highlights key signals, patterns, and money flows to watch in the coming days as election year dynamics and stimulus drive investor behaviors.
Introduction
This article updates my outlook for 2024 with the latest Momentum Gauge signals and a revisit of the January Investing Experts Podcast interview with Rena Sherbill at Seeking Alpha. In my last update for April, we shared the bearish Mega Cap signal that forecasted a -28% decline in the MicroSectors FANG+ Bull fund ( FNGU ) of the 10 largest market stocks. I am pleased to share this article today with a much more bullish focus for the third quarter. This article builds on our prior signal events shared here on Seeking Alpha since 2018 with more insights on how to benefit from changes in the market momentum conditions.
Market Skew At Historic Levels
Regular readers of my articles and followers of my daily posts know that I have been discussing this incredible market skew and the similarities to the 2021 "market" index peak for many months. The main points of this signal article are as follows:
- Market Indices are quite different than the US stock market. Long-time followers know that I often put "market" indices in quotes when discussing the three most popular corporate indices: S&P 500 ( SPY ) ( SPX ), Nasdaq 100 ( QQQ ), and the Dow Jones Industrial Avg ( DJIA ). These indices omit over 6,000 US and 10,000 OTC market stocks while overlapping on fewer than 600 of the largest stocks traded on the US exchanges.
- The current mega cap skew is the highest divergence in history and the largest divergence between S&P 500 market cap/equal weight ( RSP ) since the 2008 Global Financial Crisis.
- Trillion dollar outflows this past week from the mega cap giants began flooding into the broader market of over 6,000 stocks not tracked on the major "market" indices in the strongest breakout signal since July 2022.
Read the full article on Seeking Alpha
For further details see:
Record Market Skew Leads To Broadest Stock Breakout Since November