Morning Market Review: Jan. 24th, 2024

Headline of the day:

"Investors are chasing the strong returns. They poured about $4 billion into tech funds over the two weeks that ended Jan. 17, the largest two-week inflow since August"

FR: I'm not a big believer in fund flows as being predictive of what will happen in the future, but one thing is clear - after the December outperformance by small caps, investors have already returned to believing that only seven stocks are the "market". In the pre-market this morning, I see a bunch of Tech stocks higher led by Netflix, and on the downside I see industrial/cyclical stocks lower. I am referring of course to DR Horton (homebuilding), 3M (manufacturing), and Invesco (Financials) on the downside.

Investors have long forgotten that this year started with a mini crash in the first week leading to the market becoming short-term oversold. Subsequently, a small handful of mega cap Tech stocks have soared to new highs while small caps had a dead cat bounce (see below). Now, small caps have tested their 50 dma as they have in every other market rally. Breadth on Tuesday was negative again. This is usually the point in time when the downside selloff spreads to the rest of the market.

Tonight after the close, Tesla earnings.

This chart shows how Tesla has fared during recent earnings reports: