Inside Markets

The VIX Index spiked above 65 this morning but has since pulled back to ~36.

Curve flattening changes the outlook as the preference to own cyclical/value over secular growth stocks (Tech) was driven by rapid steepening in the 5/30 yield curve following the cooler June CPI report on 7/11.

Last week, we called your attention to the NDX and Philadelphia Semiconductor Index (SOX) breaking intermediate-term technical support levels.

A very busy week ahead is likely to inform the equity narrative for the next two months.

The NDX reached short-term oversold status earlier this week with yesterday’s late-session sell-off showing signs of decelerating momentum.

The Russell 2000 (RTY) continues to be the strongest major US index as rising expectations for Fed rate cuts drives rotation into cyclically sensitive/small cap companies that tend to use more floating rate debt.

This week’s slate of macro reports and ramp in Q2 earnings season was expected to provide incremental direction for equity markets.

The first week of earnings season is always dominated by results from banks and Financials.

Last week, the SPX triggered a short-term sell signal near 5670, which happens to be the upper end of its trend channel.

The rotation into cyclical/value and Russell 2000 (RTY) doesn’t yet look exhausted.