Chinese stocks help push US Indices into positive territory.. just

The US Indices were all broadly flat on Wednesday ahead of Friday's nonfarm release, the underlying market was pushed higher by Chinese stocks and a bounce in Micro cap stocks. Mag7 underperformed the wider market and all market caps bands were up on the day, Micro cap stocks performed best. The VIX was up again at 20 - it hit 65 intraday on 5 August, its highest level since Covid in 2020. The main indices were; DJIA +0.09%, S&P 500 +0.01% and Nasdaq +0.08% (Mag7 -0.57%). On an equal weighted basis (our measure) the overall market was up +0.3%. Breadth was soft at 45% (range of 12% to 88% over the last six weeks) volumes were healthy at 8.6b (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 -0.57% (NDVA +1.6%, TSLA -3.5%, MSFT -0.8%, GOOGL -0.7%), large cap +0.03%, medium cap +0.28%, small cap +0.11% and micro cap +0.5%. On a 1 and 2 week equal weight basis respectively; Market +1.4% and +1.5%, Mag7 -1.5% and +3.3%, Large caps +1.2% and +2.8%, Medium cap +2.6% and +4.1%, Small cap +0.8% and +0.7% and finally Micro cap +1.6% and +1.0%. 

Our risk monitor remains in favour of the larger cap stocks. Small and Micro stocks have proved far more volatile than the Large and Medium cap stocks over the last six weeks. Micro caps have underperformed the market by 18% over the last 12 months albeit they are the second best performer after Medium cap stocks over the last week.

The sector bias slightly favoured the Bull market sectors on Wesdnesday, only Consumer non-cyclical was down. The run in Chinese stocks continues to distort and pushed Academic & Educational higher, this sector is now the best performer over every time period up to 6 months. Fintech bounced back after two down days and along with Software & IT Services, pushed the Tech sector higher. Energy continues to outperform following the Middle East escalation. Strength in Transportation helped push Industrials higher, elsewhere the remaining sectors were all modestly up with the exception of Consumer non-Cyclicals. Healthcare just about kept its head above water - the sector has underperformed the market by 11% over the last six months.

A notable number of 52 week highs in the following sectors: Consumer Cyclicals (Homebuilding, Media and a number of Chinese travel companies) Financials (across the sector), Industrials (Construction and Business Support and Aerospace and Defence presumably on the back of escalation in the Middle East), Real Estate (a number of Chinese companies), Technology (Software & IT Services including a number of Chinese online services companies) and Utilities (Electric & IPPs).

Notable high volumes in Consumer Cyclicals (across the sector) and Technology (Software & IT Services)