US Market direction is positive but trading volumes remain soft

The indices were all up yesterday with one and two week performance for the US Market (unweighted) +4.5% and +6.8%. Market volumes remain low during August holiday season and this is likely to persist until Labor day.

The VIX was unchanged at 16 - it hit 65 intraday on 5 August, its highest level since Covid in 2020. DJIA +0.14%, S&P 500 +0.42% and Nasdaq +0.57%. On an equal weighted basis (our measure) the overall market was much stronger at +1.2% with breadth of 70% (vs 12% on 5 August and a high of the mid 80s% at the end of July) and daily volumes of 6.9b (vs the average daily volume over the last year of 7.9b).

One day returns as follows - equal weight basis: Mag7 +0.46%, large +0.81%, medium +1.13%, small +1.18% and micro +1.35%. On a 1 and 2 week equal weight basis; Mag7 +5% and +12.2%, Large caps +2.9% and +7.0%, Medium cap +3.6% and +7.3%, small cap +4.2% and +7.1% and finally Micro cap +5.3% and +6.5%.

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 1.5% in favour of Large caps with the gap reducing.