China stimulus package pushes Basic Materials higher Tuesday

The US Indices were all up on Tuesday with all market caps bands ahead. The VIX was up slightly to 16 - it hit 65 intraday on 5 August, its highest level since Covid in 2020. The main indices were; DJIA +0.20%, S&P 500 +0.25% and Nasdaq +0.56% (Mag7 +0.74%). On an equal weighted basis (our measure) the overall market was up +0.5%. Breadth was average at 52% (range of 12% to 88% over the last six weeks) combined with firmer volumes of 8.1b (the average daily volume over the last year of 7.8b and hit 15bn on Friday 8/20). 

One day returns as follows - equal weight basis: Mag7 +0.7% (NVDA 4%, MSFT -1%), large cap +0.57%, medium cap +0.69%, small cap +0.68% and micro cap +0.31%. On a 1 and 2 week equal weight basis; Market +0.5% and +4.6%, Mag7 +4.3% and +8.6%, Large caps +1.9% and +5.0%, Medium cap +2.3% and +6.9%, small cap +0.8% and +5.9% and finally Micro cap -0.6% and +3%. 

Our risk monitor remains in favour of the larger cap stocks. Medium cap stocks (market cap band of c$5bn to c$15bn) remain the best performers over the last week and Micro caps (sub $0.8bn) continue to materially underperform, they have lagged the Market by 20% over the last year.

All but two of the sectors (Financials and Healthcare) were in positive territory on Tuesday. There was no clear trend in the other sectors as it equally favored the Bull and Bear sectors. Basic Materials continue to perform, this time the stimulus package announced by China on Tuesday morning pushed the sector higher. Copper stocks +4.3%, Silver 4.6%, Iron 3.8%. Medium and large cap Tech (Software and IT Services) and Consumer Cyclical (Auto Parts / Media Publishing) were strong again yesterday. Healthcare continues to be the worst performing sector and has underperformed the Market by 4.2% over the last two weeks and 10.6% over the last 6 months. Uranium was up again yesterday and is the best performing Industry over 3 days, 1 week and 2 weeks.

A notable number of 52 week highs in the following sectors: Basic Materials (Gold and Iron), Consumer Cyclicals (Hotels & Entertaining, Media & Publishing, Textiles and Apparel and Auto Parts) Financials across the sector, Industrials (across the sector ex Passenger Transport Services), Real Estate (Residential and Commercials REITs) and Technology (Software and IT Services, Communication and Networking). Notable high volumes across the Market ex Utilities.