The Unraveling of the Market Status Quo 7/31/24

By Jeffrey Marcus | July 31, 2024

For the majority of 2024 the story has been Big TECH. That story is unraveling at lightning speed. TPA has warned client about this in numerous reports.

The relative performance chart below shows that FANG stocks were up over 39% as of 7/7/24; 23% better than the S&P 500 which was up a healthy 16.72% in the same timeframe. Chart 2 shows that, since 7/7/24 FANG is down a whopping 11%, while the S&P500 has slipped 2.43%.

Part of the problem was the overweighting by portfolio managers as the market rally slowed. TPA warned that managers would be force to disproportionately sell Big Tech in any downturn since their portfolios were overweight Big TECH.

, The Unraveling of the Market Status Quo 7/31/24
, The Unraveling of the Market Status Quo 7/31/24

The second factor has been interest rates. TPA has pointed out that the US 10-year was in a downtrend and poised to break major support at the 4.2% level. This has happened (1st chart below). Chart 2 below shows that a break of 4.3% support leaves a wide gap down to long-term support at 3.4%. Of course, all this has occurred before the FED has even begun to cut rates.

, The Unraveling of the Market Status Quo 7/31/24
, The Unraveling of the Market Status Quo 7/31/24

Investors who are selling Big TECH are now looking at stocks that will benefit from lower rates. The obvious sectors are Homebuilders and REITs. In fact, that is exactly what managers are buying. The relative performance chart below shows that as investors had sold Big TECH, they bought Homebuilders and REITs. Since 7/7/24, ITB (Home Builder ETF) is up 24%, and IYR (REITs) is up 8%, while the S&P500 and FANG are down 2% and 11%, respectively.

, The Unraveling of the Market Status Quo 7/31/24
, The Unraveling of the Market Status Quo 7/31/24

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Jeff Marcus founded Turning Point Analytics (TPA) in 2009 after 25 years on trading desks and 13 years as a head trader to provide strategic and technical research to institutional clients. Turning Point Analytics (TPA) provides a unique strategy that works as an overlay to clients’ good fundamental analysis. After 10 years of serving only large institutions, TPA now offers its research services to mid and small managers, RIA’s, and wealthy sophisticated individuals looking for a way to increase their returns and outperform their peers.

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