Mag7 is driving the US Markets again

The US Indexes were all strongly ahead on Wednesday, the Mag7 led the S&P and Nasdaq higher again. The VIX was down 1 at 13, this seems too low considering the recent market swings. The main indexes on Tuesday were; DJIA +0.69%, S&P 500 +0.61% and Nasdaq +1.3% (Mag7 +1.56%). On an equal weighted basis (our measure) the overall market was +0.14%. Breadth of 49% (daily range of 22% to 71% over the last 10 days). Daily volumes of 10b (the range since the election is 8b to 13b). 

Daily returns on - equal weight basis: Market +0.12%, Mag7 +1.56% (NVDA +3.5%, AMZN +2.2%, TSLA +1.9%, GOOGL +1.8%), large cap flat, medium cap, +0.3%, small cap +0.3% and micro cap +0.1%. 

Weekly returns - equal weight basis: Market +0.6%, Mag7 +5.5% ( META +7.8%, TSLA +7.7%, NVDA +7.2%, AMZN +6%, AAPL +3.4%), large cap +0.3%, medium cap +0.3%, small cap +0.2% and micro cap +1%.

Our risk monitor remains in favour of the larger cap stock. Micro caps have turned recently and have now outperformed the market by 1.7% over the two weeks - this differential has reversed from a peak underperformance of 1.2% two week ago.

Yesterday's relatively poor market breadth set against the background of strong Indexes movements seems at odds until you realise that the Mag7 was a big driver of performance. All market cap bands were actually rather muted. What we did see yesterday was pockets of performance in areas that have been hot recently including: Blockchain, Cryptocurrency mining, Renewable Fuels (nuclear), Quantum Computing, Drones/Space, Cruise Lines. Sector performance reflected the inclusion or absence of one or more of these 'hot' areas. Technology was best performing sector again yesterday, Blockchain +5.3%, bounced following Trump's SEC appointment and his supposed friendliness to crypto, but Software +0.9% and Online Services +0.8% were both strong again. Hotels and Cruise Lines lifted Consumer Cyclicals, Electric Auto was also strong. The Industrial Sector underperformed but Drone and Space stocks bounced on Wednesday with Aerospace 0.6%, Construction & Engineering +0.8%, was also strong. Healthcare was broadly in line with the market. Energy sector underperformed with weakness in Fossil Fuels -2%, Renewable Energy was +6.5% but it is a small part of the sect and this was not enough to help peformance, Uranium was -0.7%.

A notable number of 52 week highs was seen in the following sectors: Consumer Cyclicals very strong (across there sector ex Auto, but Hotels and Media & Publishing very strong), Financials, exceptionally high number, particularly Banking & Investment Services, Industrials (Machinery, Tools & Heavy Vehicles). Technology very strong (Software & IT Services, Technology Equipment).

Notable high volumes in all sector: High levels in Basic Materials (Metals & Mining) Consumer Cyclicals (across the sector), Financials (across the sector), Healthcare (across the sector), Industrials (across the sector) and Technology saw a very high number (Software & IT Services, Technology Equipment)