High volumes on Friday and little clear market direction

The US Markets are still struggling to work out the underlying direction following Wednesday's interest rate cut. Softness post the cut on Wednesday was followed by a broad strong advance on Thursday and mixed performance on Friday. Over the coming four week we will see the Q3 results along with full year guidance. The Market will react to unexpected inflationary / recessionary news but we are now in a down cycle for interest rates and so the company guidance will likely be more important in driving the market sentiment - set against this we have an election and underlying valuations are high historically. Friday's volumes were very high across virtually every sector, this was unexpected and could signal a sector rotation is underway or perhaps money is leaving the market.

The US stock Markets were mixed on Friday. The VIX fell back slightly to 16 - it hit 65 intraday on 5 August, its highest level since Covid in 2020. The main indices were; DJIA +0.09%, S&P 500 -0.19% and Nasdaq -0.36% (Mag7 -0.4%). On an equal weighted basis (our measure) the overall market was down -0.72% with all market cap bands down. Breadth was a weak 31% (range of 12% to 88% over the last six weeks) with stronger daily volumes of 15b (the average daily volume over the last year of 7.8b). 

One day returns as follows - equal weight basis: Mag7 -0.4% (AMZN +0.9%, GOOGL +0.9%, TSLA -2.3% and NVDA -1.6%), large cap -0.37%, medium cap -0.68%, small cap -1.1% and micro cap -0.6%. On a 1 and 2 week equal weight basis; Market +1.1% and +5.2%, Mag7 +2.6% and +10%, Large caps +1.6% and +4.8%, Medium cap +2.2% and +5.9%, small cap +1.6% and +6.0% and finally Micro cap +0.4% and +4.6%. 

Only Utilities were in positive territory on Friday. Again there was no clear trend in the other sectors as whilst Tech was strong both Healthcare and Consumer Cyclicals lagged - for the third day running. Construction was a theme for both Basic Materials and Industrials again. Gold and Silver were strong, Uranium was also strong and is now +18% over two weeks.

A notable number of 52 week highs in the following sectors: Consumer Cyclicals (Homebuilders, Hotels/Entertainment, Specialty Retailers) Financials across the sector, Industrials (across the sector ex Transport), and Technology (Software and IT Services). Notable high volumes across the Market.