See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes.” – Thomas Jefferson, Declaration of Independence

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

S&P 500 futures are unchanged as we type this, and Dow and Nasdaq futures are also barely on either side of the unchanged line. That follows what was a positive night in Asia and morning in Europe. In Asia, China was the only country that traded lower as the Caixin Services PMI came in more than two points weaker than expected (51.2 vs 53.4). In Japan, the Services PMI was also weaker than expected but much closer to expectations (49.4 vs 49.8) while India’s PMI for the sector was slightly better than expected and firmly in expansion territory (60.5 vs 60.4). In Europe, all major equity benchmarks are in the green following a stronger-than-expected services sector PMI for the entire region, although Germany’s reading was weaker than expected.

There’s a lot of economic data on the calendar today, but the only reports released so far are the ADP Employment report and jobless claims.  All of these reports were modestly weaker than expected which has caused some downward bias in futures, but the 10 AM reports on the Services sector and Durable Goods could move things further.

For those of us who will be working on Friday, we looked at historical market performance on July 5th.  The chart below shows the performance of the S&P 500 every July 5th that the market was open since 1954 (when the five-day trading week in its current form first started).  Overall, the day after our nation’s birthday, the S&P 500’s median performance has been a fractional gain of just 0.092% with positive returns only 58% of the time, so it’s not too much of a positively biased trading day.

This July 5th is also a Friday, and Fridays after a holiday are notoriously illiquid given the propensity to extend the weekend to four days.  In the chart below, the bars shaded in dark blue indicate days when July 5th fell on a Friday.  Of those nine days, the upside bias has been stronger with a median gain of 0.40% and gains two-thirds of the time.

Illustrating the potential illiquidity of these days, the largest daily decline and gain both occurred on July 5th Fridays. Ironically, the worst was in 1996 when the S&P 500 was up over 10% heading into July 4th and fell 2.2% on July 5th while the best day was in 2002 when the S&P 500 was down 16.3% heading into the July 4th holiday but then rallied 3.7% the next day. Whatever the market’s direction this Friday, a lot will depend on how the June Employment report shakes out. Don’t forget about that!

See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“Our whole constitutional heritage rebels at the thought of giving government the power to control men’s minds.” – Thurgood Marshall

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

Futures are indicated to open down about 50 basis points (bps) this morning following weakness in Europe where the post-French election rally has been largely reversed. Corporate news flow is tranquil this morning, although an op-ed attributed to President Biden and Bernie Sanders calls on weight loss drug makers to lower prices. On the economic calendar, the only report scheduled is JOLTS at 10 AM, but right at the US open, we’ll hear from Powell and Lagarde speaking together from Sintra.

If someone had told you that four sectors were down over 2% over the last week, another three were down 50 basis points or more, and only three were higher, you’d probably think it had been a bad week. During that period, though, the S&P 500 rallied 0.50% and remains at overbought levels. As shown in the snapshot from our Trend Analyzer below, while the S&P 500 sits at overbought levels, only three sectors – Technology, Consumer Discretionary, and Communication Services – are in overbought territory. At the other end of the spectrum, just two sectors – Materials and Industrials – are oversold.

Below the snapshot, we also included two charts of the percentage of stocks above their 50-day moving average for the Technology and Materials sectors. At 73.1%, the Technology sector has the highest percentage of stocks above their respective 50-DMAs, but even for this sector, that reading is well below other points in the last year when more than 90% of the sector’s components were above their 50-DMAs.

Materials is the most oversold sector in the market, and it also has the lowest percentage of stocks above their 50-DMAs at just 10.7%. While this reading was lower in late October, it ranks in just the sixth percentile relative to all other readings since 1990.