Broader market spreads its wings

Reuters

Broader market spreads its wings

2024 10월 17, 오후 1:02 GMT

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Main U.S. equity index futures green: Nasdaq 100 up ~0.9%

Initial jobless claims 241k vs 260k est

Sep Retail Sales MM > est; Ex-Autos > est

Euro STOXX 600 index up ~0.8%; ECB cuts rates 25 bps

Dollar, gold, crude gain; bitcoin declines

U.S. 10-Year Treasury yield rises to ~4.07%

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BROADER MARKET SPREADS ITS WINGS

Now that the Fed has embarked on what is expected to be a protracted rate-cutting cycle, traders can't help but notice some pronounced relative strength shifts that have come barreling down the track.

Through Wednesday's close the benchmark S&P 500 index .SPX has gained more than 22% so far this year, while the NYSE FANG index .NYFANG, which includes all of the Magnificent Seven stocks, has advanced about 34%.

Against this, the equal-weighted S&P 500 index .SPXEW is about 15% higher, while the small-cap Russell 2000 .RUT is up 13%.

YTD gains not withstanding, more recent action is bearing out a broadening.

On July 10, the SPXEW/SPX ratio fell to 1.1888, which was essentially equal to its 1.189 November 2008 low:

Since the July ratio trough, the broader market has stepped up, while their larger-cap brethren and tech titans are the ones lagging.

Indeed, since July 10, the SPXEW has advanced about 10%, while the RUT has gained more than 11%. The SPX is higher by about 4%, while NYFANG is actually negative by about 5%.

With this, the SPXEW/SPX ratio has rallied to 1.26 and now faces an important hurdle in the form of its descending 200-day moving average (DMA), which is now just over 1.27.

The ratio has been below its 200-DMA since March 10, 2023, or 403 straight trading days. If the ratio can reclaim this long-term moving average, and in such a way that the moving average's slope inflects to positive, it may signal a more protracted period in which the equal-weighted S&P 500 index outperforms the cap-weighted version.

(Terence Gabriel)

*****

FOR THURSDAY'S EARLIER LIVE MARKETS POSTS:

BIG OIL CASH RETURN RESILIENCE IN SPOTLIGHT FOR 2025 - BOFA - CLICK HERE

ROCHE AND NOVARTIS TOPPLE NESTLE IN TIGHT RACE - CLICK HERE

SOVEREIGN DEBT DEFAULT LIST HAS SHRUNK THIS YEAR - TELLIMER - CLICK HERE

EARNINGS LIFT THE STOXX, BANKS BUOYANT - CLICK HERE

EUROPE BEFORE THE BELL: TSMC BOOST, NESTLE MISS - CLICK HERE

ECB TO CUT, MARKETS WANT CLUES ON NEXT MOVE CLICK HERE

SPXEWSPXratio10172024 https://tmsnrt.rs/3UAJ7yf

(Terence Gabriel is a Reuters market analyst. The views expressed are his own)

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