Our own Equity Market Conditions Index (EMCI) showed marked improvement throughout July.
07/29/2022 PWA EQUITY MARKET CONDITIONS (EMCI) INDEX: 0
(from -41.67 on 6/30/2022)
Our EMCI’s advance from -42 to end June to 0 at the end of July is substantial — reflecting measurable improvement in general equity market conditions over the past few weeks.
Inputs that showed improvement:
Interest Rates (positive from neutral)
Sector Leadership (positive from negative)
SPX Technical Trend (neutral from negative)
Breadth (positive from neutral)
none
Inputs that remained bullish:
Dollar
Sentiment
Inputs that remained bearish:
Fed Policy
Valuation
Economic Conditions
Geopolitics
Credit Market Conditions
Fiscal Policy
EMCI inception (8/21/2021):
SP500 since EMCI inception:
The 10-year treasury yield currently looks to be failing its recent breakout above a very long-term down trend:
Global sovereign 10-year yields are falling in unison:
The 2yr treasury/Fed Funds spread is collapsing (market anticipating a softer Fed going forward):
Asian equities were positive overnight, with 14 of the 16 markets we track closing higher.
Europe’s a bit off so far this morning, with 10 of the 19 bourses we follow trading down as I type.
US stocks are weak to start the session: Dow down 178 points (0.54%), SP500 down 0.79%, SP500 Equal Weight down 1.00%, Nasdaq 100 down 0.74%, Nasdaq Comp down 0.81%, Russell 2000 down 1.19%.
The VIX sits at 22.80, up 6.84%.
Oil futures are down 5.35%, gold’s up 0.45%, silver’s flat, copper futures are down 1.33% and the ag complex (DBA) is down 1.56%.
The 10-year treasury is up (yield down) and the dollar is down 0.41%.
Among our 35 core positions (excluding options hedges, cash and short-term bond ETF), 10 — led by carbon credits, treasury bonds, Dutch Bros, Nokia, gold and consumer staples stocks — are in the green so far this morning. The losers are being led lower by energy stocks, uranium miners, base metals miners, Sweden equities and Disney.
“What most people and their countries want most is wealth and power, and money and credit are the biggest influences on how wealth and power rise and decline. If you don’t understand how money and credit work, you can’t understand how the system works, and if you don’t understand how the system works, you can’t understand what’s coming at you.”
–Dalio, Ray. Principles for Dealing with the Changing World Order
Have a great day!
Marty