Global RISK OFF

This is the closing report for January 17th, 2024

Market Summary:

Yesterday I talked about the two year rally/crash cycle. For some reason - more than likely due to central bank policy - global risk markets have been alternating between bull and bear markets each year for the past several years.

This can be viewed visually via the chart of the day:

If the market follows the 2022 pattern shown above then the selloff will accelerate into this coming Monday. After that the market bounced ahead of the January FOMC. I'm not saying that will happen again, only something to consider. Also, on Twitter I pointed out via the NYSE Composite that the market is declining similar to last year just before the bank run. So, basically a constellation of risks are once again coalescing around Davos.

As for today, the pattern was the same as yesterday. Drop at the open, rally into European close. Fade in the afternoon. Rally into the close.

Market Stats:

Big jump in Nasdaq new lows during the past two days.

Closing Breadth

Advances-Declines (Source: Stockcharts.com)

NYSE: -1719

Nasdaq: -1060

Highs/Lows (Source: Stockcharts.com)

NYSE 67/87

Nasdaq 48/180

Leading/Lagging Sector(s):

Today, all S&P sectors were down at the close.

Bond proxies - Utilities and Real Estate - took the worst losses as bond yields spiked again.

Nevertheless, I question how a yield spike of this minor magnitude could cause so much global dislocation, other than to say the market was ready to implode for any reason.

Other Markets:

Commodities/Oil: Down

Gold: Down 1%

Bitcoin: Down

Currencies:

Here's a chart that combines macro risk with U.S. bank risk. It shows the Aussie dollar which is a proxy for global growth declining in lockstep with U.S. regional banks.

Same as last year, except both from a lower level. Basically a year of risk has been ignored between Davos conferences.