🔍 Examining the Indexes

Here are the indexes and stocks to focus on

Reviewing Key Indexes

It’s important to compare indexes to understand where we are sitting and where we are seeing relative strength. Let’s get into it!

Macroeconomic Environment

First we must understand WHY the stock market indexes have been rising. The black line denotes when the Fed announced that potentially two rate cuts were coming in 2024.

From that moment, you can see that the dollar and bonds have dropped while the indexes have risen. Just by understanding this macroeconomic shift, a golden opportunity for outsized gains was presented in the market.

Russell 2000

The Russell 2000 acts great. We undercut, moved higher, broke out of resistance, retested, and confirmed a move higher.

Note how the Russell has flipped the red bar from Wednesday and has made higher highs for multiple days.

This is the area you need to be focusing on as it has shown relative strength.

Nasdaq

The Nasdaq also acts great. It has broken previous resistance and flipped the red bar from Wednesday and is trying to move higher.

However note that the move from the Russell since that red bar on Wednesday is stronger than the Nasdaq.

S&P 500

From a relative strength standpoint, the S&P 500 looks the weakest. It is sitting right at the top of the red bar from Wednesday but has yet to fully break out.

Stocks to Watch

The names to keep an eye on shouldn’t surprise you. They are the same names we discussed when the rate cuts were announced. The companies that stand to benefit the most from lower interest rates are the ones to watch.

Here are some names as a reminder:

• Homebuilders: XHB, NAIL

• Regional Banks: DPST, NYCB

• REITS: SLG, VNO

• Lending: AFRM, UPST

• Biotech: LABU, CYTK

• Bonds: TLT, HYG

For more information, watch the video below: