Market being driven by Mag7 and Small/Micro stocks

The indices were all strong up yesterday, led by Mag7 stocks and the Small / Micro end of the Market. The VIX is flat at 15 but hit 65 intraday on 5 August, its highest level since Covid in 2020.

DJIA +0.58%, S&P 500 +0.97% and Nasdaq +1.39%. On an equal weighted basis (our measure) the overall market was actually up a healthy +1.34% with breadth of 71% (vs 12% on 5 August and a high of the mid 80s% at the end of July) and daily volumes of 7.8b (vs the average daily volume over the last year of 7.9b).

One day returns as follows - equal weight basis: Mag7 +1.62% (NVDA +4.4%, TSLA +3.1%, GOOGL +2.3%), large +0.94%, medium +1.11%, small +1.23% and micro +1.58%.

On a 1 and 2 week equal weight basis: Mag7 +7.4% and +11.9%, Large caps +4.3% and +7.5%, Medium cap +5.0% and +7.6%, small cap +5.4% and +6.8% and finally Micro cap +5.3% and +4.8%.

On a weekly basis the market was flipping between favouring large caps to back to small/micro the following week. Our risk monitor remains in favour of the larger cap stocks but the benign Market is favouring Micro and Small. Micro Cap stocks had positive relative momentum four weeks ago, this reversed post release of the July nonfarm payroll figures. The one week differential currently at 2.1% in favour of Large caps with the gap reducing.

Generally the sector performance has being determined by the daily direction of the market with Bull days (>0.5%) favouring Healthcare, Consumer Cyclicals and Technology and Bear days (>-0.5%) favouring Academic & Educational Services, Consumer non-cyclicals, Financials and Utilities. For a comparative map of stock performance in these sub sectors have a look in the Spotlight page.

Yesterday's sectors performance favoured the Bull stocks, with Materials performing strongly for the third consecutive day - they had underperformed over the last month.

Notable number of 52 week highs in pretty much all of the sectors, Basic Materials (Gold and non-Gold precious Metals), Financials (across the sector), Consumer non-Cyclicals (Food & Tobacco), Financials (across the sector), Healthcare (Biotech and Pharma), Industrials (Business Support Services), Real Estate (Commercial and Specialized REITs), Technology (Software and Technology Equipment) and Utilities (Electric and IPPs).

Notable high volume in Consumer Cyclicals (across the sector), Healthcare (Biotech and Pharma), Technology (Software and Online Services), Industrials (all ex Transport).

Trending Sub Industries - Gold, Aluminium, Speciality Chemicals, Footwear (BIRD, NKE), Personal Products (SKIN, DSY), Integrated Oil & Gas, Consumer Lending (UPST, TROO, QFIN, BFH, LDI, GDOT, TREE), Airport Operators (SKYH, CAAP), Office Services and Supplies, Phones and Handheld Devices (ZEPP, WTO), Semiconductor (ACMR, ONTO, FORM, ASYS, AMKR, ASX, KLAC), Independent Power Producers.