Market Update

(photo by Hello I’m Nik on Unsplash)

Here is a graph that reflects the stock performance of the four major indexes over the past TEN years (per TD Ameritrade website).

Orange: Nasdaq (technology & other) increase of ~475%

Blue: S&P500 (80% of market) increase of ~250%

Purple: Russell (small caps) increase of ~200%

Aqua: Dow Jones (30 Belweathers) increase of ~200%

Notice that since the initial pandemic drop during 2019, the Nasdaq (orange) has gone up around 275% in about two years. Amazing!

This past Friday, August 6, 2021, the S&P500 closed at an all-time high after the monthly jobs report came in better than expected, as the economy continues to recover from the Covid-19 pandemic, and investors shake off delta variant concerns (per TD Ameritrade website).

And per Sven Henrich’s twitter feed (@NorthmanTrader): S&P500 “new highs on Friday with only 45 components making new highs.”

The market indexes can be broken down into eleven sectors. While the INDEXES provide a general view of the market, the SECTORS provide guidance regarding how specific segments of the market are performing.

Here is a chart reflecting the most recent ONE YEAR performance of all eleven sectors against the S&P500 (per TD Ameritrade website). All sectors are in the green!

The following chart shows sector performance over the LAST MONTH timeframe (per TD Ameritrade website).

Financials and IT have led the way in both timeframes. On the plus side, Health Care and Communication Services have moved up. On the negative side, Consumer Discretionary and Energy have slid down to the bottom.

Within each SECTOR there are INDUSTRIES. We have identified the Consumer Discretionary SECTOR as the poorest performer over the past month. Which INDUSTRIES are driving this downtrend? The chart below lists all INDUSTRIES within the Consumer Discretionary SECTOR.

While one month is not a listed timeframe in the chart below, we can still use it as an illustration. The Diversified Consumer Services INDUSTRY is the only industry that has been down over the past three years. And the Internet & Direct Marketing Retail INDUSTRY has been down over the past year. Also, scanning the “YTD” and “1 Year” columns, it looks like all INDUSTRIES have seen a slowdown (per TD Ameritrade website).

Let’s focus on the Internet & Direct Marketing Retail INDUSTRY from the chart above. The chart BELOW reflects some of the specific companies that make up the Internet & Direct Marketing Retail Industry. On top of the list is Amazon (AMZN) (per TD Ameritrade website).

Here is an AMZN 30-Day Chart broken down in one-hour increments (per tastyworks trading platform).

Notice the big down gap around July 29. That is when AMZN reported earnings for the most recent quarter. They did not meet street estimates, which caused the stock to drop about 250 points. And since then (one week in) the stock has remained flat. I would venture to guess that this big drop in AMZN is one of the main drivers for the Internet & Direct Marketing Retail INDUSTRY and Consumer Discretionary SECTOR decrease (over the past month), as AMZN is, by far, the biggest company in this Sector-Industry.

To conclude, money is constantly flowing in and out of the sectors and sub-industries. Recognizing these shifts can be helpful in assessing where to invest your own money next.

 

 

10 thoughts on “Market Update”

    1. Yes, I find it confusing as well. That’s one reason I’m blogging about the market. By writing topics out, I hope to learn more, which in turn will benefit my trading results. Good luck to you.

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