Monday, July 6th, 2020
Indices: US Stocks kicked off the week on a positive note with the Dow Jones Industrial Average advancing 460 points or 1.78%. The S&P 500 and Nasdaq gained 1.59% and 2.21%, respectively. Small-Caps underperformed with the Russell 2000 rising 0.77%.
Sectors: 10 of the 11 sectors moved higher. Consumer Discretionary led the way, gaining 2.39%. Utilities was the only sector to close lower, falling 1.23%.
Commodities: Crude Oil futures were little changed, slipping just 0.15% to $40.59 per barrel. Gold futures rose 0.22% to $1,794.
Currencies: The US Dollar Index dropped 0.39%.
Interest Rates: The US 10-year Treasury yield moved higher to 0.680%.
Here are the best charts, articles, and ideas being shared on the web today!
Chart of the Day
China $SHCOMP daily RSI hit 88 today, one of the highest of all time.
In the 30 years of this index, extreme momentum was very rare – associated with the early stages of massive rallies.
Looks like the summer could get hot. pic.twitter.com/TL7zvEVTdA
— Macro Charts (@MacroCharts) July 6, 2020
Today’s Chart of the Day was shared on Twitter by Macro Charts (@MacroCharts). It’s a chart of the Shanghai Composite over the past thirty years. Chinese stocks have been gaining some serious momentum recently. Macro Charts points out that the daily Relative Strength Index (RSI) printed one of its highest readings of all-time today. As you can see by the green dots, extreme momentum spikes like this have preceded sharp multi-year rallies. In a separate comment, Andrew Thrasher gave us a great way to think about this chart; “Elevated momentum is a good thing. Would you pick the race car speeding up or slowing down to win a race?” Could Chinese Stocks and the Shanghai Composite be in the early innings of another monster rally, similar to what we saw in 2006-2007 and 2015?
Quote of the Day
“A momentum investing strategy is the rather insane proposition that you can buy a portfolio of what’s been going up for the last 6 to 12 months, sell a portfolio of what’s been going down for the last 6 to 12 months, and you beat the market. Unfortunately for the case of sanity, that seems to be true.”
– Cliff Asness (Founder of AQR)
Chinese Stocks Break Out – The Reformed Broker
Josh Brown of Ritholz Wealth Management weighs-in on the big story of the day – the breakout in Chinese equities.
Fourth of July, APAC Stocks Fly – MurphyCharts
Sick of reading about Chinese Stocks yet?… Too bad, here’s another good read on the topic from Shane Murphy.
Tech and Biotech Continue to Lead – Momentum Monday
In their weekly Momentum Monday video, Howard Lindzon, and Ivanhoff highlight some of the strongest stocks and trends across the markets.
My Monthly Notebook – Jotting on Charts
Grant Hawkridge shares his in-depth analysis of the current market environment.
Another New High for Semi’s – Bespoke
Bespoke examines the ongoing breakout in Semiconductor stocks (SOX).
The S&P 500 fund, $SPY, has been up at least 0.5% for 5 straight days.
That's tied for the longest streak since its inception.
— SentimenTrader (@sentimentrader) July 6, 2020
— Andrew Adams CFA, CMT (@DayTraderGator) July 6, 2020
$QQQ Turns out the Chaikin Oscillator – money flow in & out of a fund is pretty decent intermediate indicator to assess risk. It will be helpful in calling the end of this rally. Yes, not at the top. FYI, it measures momentum of Accumulation Distribution Line using MACD formula. pic.twitter.com/mdovK5wmjC
— Alan Cohen (@al_xdpg) July 6, 2020
Looks like China's Great Ball of Money is rolling into stocks:
– CSI 300 up more than 10% over the past week
– State media is filled with the importance of encouraging a 'healthy' bull market in stocks after coronavirus.
– Trading volume is boominghttps://t.co/6stk8ChuUn pic.twitter.com/vqyzJfM0zp
— Tracy Alloway (@tracyalloway) July 6, 2020
Hong Kong stonks back above support, guys and gals. pic.twitter.com/Y4EYvUxDwh
— Tom Bruni, CMT (@BruniCharting) July 6, 2020
Last time China's CSI 300 was above 4600 was during that epic fall from grace in 2015 following that monster rally into late May/June.
Here we go! pic.twitter.com/43e6TNcOzr
— David Ingles (@DavidInglesTV) July 6, 2020
— Ian McMillan, CMT (@the_chart_life) July 6, 2020
Another major theme from our Portfolio Management trading room last week was the performance of $EEM vs $SPY. Interesting breakout above the relative strength line's 200dma today with strong rising momentum (chart h/t @StockCharts) https://t.co/JvRhCiq0Ak pic.twitter.com/1Xwbom8lrc
— David Settle, CMT (@davidsettle42) July 6, 2020
Keep a close watch on the Yuan this week… it's not about up or down, it's the rate of change/ momentum that matters – they manipulate this market in both directions, and it's always good information when they do $USD / $CNY pic.twitter.com/FfODT80ONl
— Steven Strazza (@sstrazza) July 6, 2020
— Koyfin (@KoyfinCharts) July 6, 2020
Amazon to infinity & beyond. Its shares just passed $3,000, for a market capitalization of nearly $1.5 trillion, bringing the company's year-to-date gain to 62%. pic.twitter.com/zpVhQxW8bq
— Lisa Abramowicz (@lisaabramowicz1) July 6, 2020
When charts are on your mind 24/7 pic.twitter.com/btdyEIi9d2
— TradingView (@tradingview) July 6, 2020