In what could only be described as a weird week, it was difficult to keep a pulse on what was going on.
Tech name after tech name continued to be decimated. The Nasdaq made a lower closing low on Thursday, only to end up bouncing up 1.5 % Friday afternoon. For an index that was down sharply — 5.97% for the Nasdaq 100 on the week — the market was very mixed. All kinds of different ways to look at it.
Across Canada and US markets combined, there were 1016 stocks down more than 5%, even as 718 stocks were up more than 5%. Considering a plummeting index, there were only marginally more down than up, with just a ~300-stock difference; usually, it’s 1000 or more separating the ups from the downs on weeks with big moves in the indexes.
Canada closed flat on the week, Mexico closed up 4%, and the US was the worst of the week. Some North America we have going here; it was all over the performance spectrum! Shanghai, which has been terrible, and Hong Kong, which has been worse, performed well. And, considering all the problems in Europe, they didn’t crush the stock exchanges like the Fed did in the USA.
When I look at commodities, I can see investors were bored with them Monday through Thursday. While tech got ransacked this week, commodities were bid up, mostly on Friday, like we were having an economic revolution this week. Crude oil moved 5% on Friday, metals soared with Copper, and Steel jumped up on the back of a China reopening.
Check out the US indexes for the week. SLX closed up 7.9% on the week, but materials were flat. Crude oil and Natural Gas were up big (above) but the energy stocks lagged the commodities. The three largest growth sectors (XLY, XLC, XLK) were crushed. Steel stocks have been soaring, but technology has been plummeting.
So, for me, it was a very hard week to analyze. If the next great recession is on it’s way, it wasn’t in the job numbers. If the next global growth party is starting, it looks like it’ll kick off in Europe and Asia. If the next commodity run is starting in energy, the energy stocks aren’t the best way to play it.
Large Cap Tech:
The Fed really beat up the markets hard Wednesday and Thursday, so perhaps that was the reason for the big mixed message. Tech stocks were trainwrecks, with company ticker after ticker crashing lower. Amazon, Microsoft, Meta and Alphabet all made new 2022 lows this week. I realize the indexes are cap-weighted, but the markets were very mixed in their story telling.
Perhaps the best way to show it is the performance by sector, with the zero line being the $SPX.
That is just a wow.
Where do we go next, and where should we be invested? If institutions have to be invested, they are definitely rotating away from the nifty 7 into anything else.
On this week’s Market Buzz, I covered off industrials, which have been steadily rising for each of the last three weeks. Click here to see the video.
It is a wild trading environment out there. Keep protecting capital! If you are interested in how we examine the markets, there is more information and a $7 subscription available at OspreyStrategic.