Market Pulse — Day in Review — S&P500, NASDAQ, Commodities, Bitcoin — 2024–06–21

Comprehensive Weekly Market Overview and Insights: June 21, 2024

I. Overall Market Analysis

The S&P 500 (SPX) closed at 5,464.62, down 8.55 points or 0.16% on the day. This represents the third consecutive weekly gain for the benchmark index, which is now up 15% year-to-date. However, the overall market has shown signs of increasing fragility, with the technology sector in particular exhibiting cracks and fissures.

The technology sector was the primary drag on the S&P 500, led by a 3.22% decline in NVIDIA (NVDA) shares. NVIDIA’s outsized influence on the index’s performance has drawn comparisons to IBM’s dominance in the 1980s, a phenomenon described as “unheard of” by market experts. Other notable decliners included Broadcom (AVGO) (-4.39%), ResMed (RMD) (-3.49%), and Micron (MU) (-3.22%). In contrast, the financial and energy sectors showed relative strength, with Bank of America (BAC) and AT&T (T) gaining 1.53% and 1.60%, respectively.

The S&P 500’s advance-decline ratio stood at 0.72, indicating more stocks declined than advanced on the day. The CBOE Volatility Index (VIX), a measure of market volatility, edged lower by 0.60% to 13.20, suggesting a relatively calm trading session. However, the S&P 500 has now gone the longest stretch without a 2% sell-off since the financial crisis, raising concerns about the potential for a deeper market correction.

According to data from LSEG, US investors have shed nearly $30 billion in US equity funds over the past two weeks, indicating a potential shift in sentiment. This net selling of US equities comes despite the S&P 500’s strong year-to-date performance, potentially signaling growing caution among investors. Additionally, US retail sales data for May showed continued consumer weakness, with the advance estimate rising less than expected. High interest rates and inflation continue to burden US consumers.

The S&P 500’s resilience in the face of these headwinds is impressive, but the underlying cracks in the market, particularly in the technology sector, are cause for concern. The index’s reliance on a handful of large-cap stocks, led by NVIDIA, is an unusual and potentially risky dynamic that could leave the market vulnerable to a deeper correction. Investors should closely monitor the breadth of the market, sentiment indicators, and economic data for signs of further deterioration. A cautious and selective approach to equity investing is warranted, with a focus on diversification, risk management, and fundamentally sound companies across a range of sectors.

II. S&P 500 and Stock Market

The S&P 500 closed the week at 5,464.62, down 0.16% from the previous week’s close. This marks the third consecutive weekly gain for the index. Technical indicators paint a mixed picture, with the daily timeframe showing a “Strong Sell” signal, while the weekly and monthly timeframes are more neutral.

On the daily chart, the S&P 500 is exhibiting a “Strong Sell” signal, with the 50-day and 200-day moving averages both pointing lower. The Relative Strength Index (RSI) is in neutral territory at 50.078, while the MACD has generated a buy signal. On the weekly timeframe, the index is in a neutral position, with the moving averages mixed and the technical indicators providing conflicting signals. The monthly chart also paints a neutral picture, with the moving averages flat and the technical indicators suggesting a consolidation phase.

The S&P 500 has closed higher for three consecutive weeks, but the latest session saw a 0.16% decline, suggesting potential near-term volatility. Trading volume has been elevated, with the average daily volume over the past week coming in at 2.36 billion shares, indicating heightened market activity. Sector performance was mixed, with technology and consumer discretionary stocks underperforming, while energy and financials outperformed.

Macroeconomic factors, such as persistent inflation and the Federal Reserve’s ongoing interest rate hikes, continue to weigh on investor sentiment and market direction. The technical picture for the S&P 500 is somewhat mixed, with the daily timeframe signaling a potential pullback, while the weekly and monthly charts suggest a more neutral stance. Investors should closely monitor the impact of macroeconomic conditions, particularly inflation and interest rate movements, on corporate earnings and consumer spending, as these factors will likely continue to drive market volatility in the near term.

Despite the current headwinds, the S&P 500’s year-to-date gain of 15% highlights the underlying strength and resilience of the broader market, suggesting that long-term investors may still find opportunities amid the near-term uncertainty.

III. Overall Commodity Market Analysis

The commodities markets have seen mixed performance over the past week, with some key commodities experiencing gains while others declined. Crude oil and natural gas prices have been volatile, reflecting the ongoing uncertainty around global energy supply and demand dynamics. Precious metals like gold and silver have also seen fluctuations, impacted by macroeconomic factors and geopolitical developments. Agricultural commodities have shown a more muted trend, with grains and softs trading in a relatively narrow range.

Crude oil prices have been mixed, with WTI crude settling lower by 0.86% at $80.59 per barrel, while Brent crude declined 0.64% to $85.16 per barrel. The demand outlook has improved, with the easing in China and signs of resilience in the global economy. However, concerns over potential economic slowdown have capped the upside. Natural gas prices declined 0.80% to $2.719 per MMBtu, as weather forecasts pointed to slightly cooler temperatures in the near term, potentially reducing cooling demand. The natural gas market remains tight, with supply-side challenges persisting.

Gold prices declined 1.45% to $2,334.75 per ounce, as the US dollar index strengthened and the Federal Reserve signaled its commitment to further interest rate hikes to combat inflation. Silver prices dropped 4.02% to $29.582 per ounce, underperforming gold amid the broader risk-off sentiment in the markets. Platinum prices rose 1.22% to $996.35 per ounce, benefiting from its industrial applications and potential supply constraints.

Corn prices fell 1.08% to $435.25 per bushel, weighed down by concerns over global economic growth and its potential impact on demand. Wheat prices declined 1.75% to $563.00 per bushel, as favorable weather conditions in key growing regions eased supply worries. Coffee prices dropped 2.39% to $224.85 per pound, reflecting the ongoing global oversupply situation in the coffee market. Cotton prices edged lower by 0.43% to $72.31 per pound, as demand concerns persisted.

The Thomson Reuters/CoreCommodity CRB Index, a broad measure of commodity performance, declined 0.73% to 293.22, reflecting the mixed trends across the commodities complex. The Dow Jones Commodity Index fell 0.85% to 1,031.99, as the weakness in energy and metals outweighed the relative stability in agricultural commodities.

The commodities markets are navigating a complex and volatile environment, with a mix of supportive and headwind factors. While the demand outlook has shown some improvement, particularly in the energy and select agricultural sectors, concerns over economic growth and tightening monetary policy continue to weigh on prices. Investors should maintain a diversified approach to commodities, with a focus on identifying opportunities in sectors that are likely to benefit from the evolving market dynamics. A data-driven, risk-managed approach is essential in navigating the complexities of the commodities markets.

IV. Cryptocurrency Market Analysis: Bitcoin (BTC-USD) Retreats to 5-Week Low

Bitcoin slipped 0.9% to $64.2K at 11:10 AM ET, after falling as low as $63.3K earlier in the session. The token is down 9.3% from a month ago, when it was hovering just below its all-time high of over $73K.

According to on-chain analysis, Bitcoin’s biggest whales (largest holders) have sold more than $1 billion worth of the coin over the last couple of weeks. The gradual price slump also comes as crowd sentiment for Bitcoin is in its fourth consecutive week of “extreme negative” reading, indicating fear and disinterest from traders.

Crypto-focused stocks also saw declines, with Riot Platforms (-4.5%), Marathon Digital (-4.8%), Coinbase (-4.4%), Bitfarms (-6.1%), and Galaxy Digital (-5.3%) all trading lower. Bitcoin ETFs also came under selling pressure, with funds like iShares Bitcoin Trust (IBIT -2%), Fidelity Wise Origin Bitcoin Fund ETF (FBTC -2.2%), and others declining 2–2.4%.

The 30-day price chart for Bitcoin shows a steady decline from the recent highs, with the token breaking below the 20-day and 50-day moving averages. The Relative Strength Index (RSI) has been in the oversold territory for the past week, indicating increased selling pressure. The MACD histogram has also turned negative, signaling a bearish trend in the short-term.

The selling by Bitcoin whales, coupled with the extended period of negative sentiment, suggests that the market may be in a consolidation phase before the next major move. If the large holders continue to take profits, it could lead to further downside in the short-term, potentially testing the $60K support level. However, the long-term outlook for Bitcoin remains positive, as institutional adoption and mainstream acceptance continue to grow. A bounce-back towards the all-time highs could be on the cards once the current selling pressure subsides.

In summary, the cryptocurrency market, led by Bitcoin, has experienced a pullback in recent weeks, with the largest holders taking profits and the overall sentiment turning negative. The technical indicators point to a bearish short-term trend, but the long-term prospects for Bitcoin and the broader crypto ecosystem remain promising.