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The Monday Morning Playbook: Week of July 1, 2024

Reversion vs. rotation

Good morning,

One of my favorite market sayings is:

There is time to go long, time to go short, and time to go fishing
-Jesse Livermore

We’ve spent most of the past two months talking in these pages about the increasingly divided market. The “haves” vs. the “have nots”, the well-publicized breadth problems, the top tech names vs. the “average” stock, etc.

But if we take a step back, it becomes clear that what “the market” is doing is a lot of nothing.

Perhaps no stat better embodies that than SPX breadth above the short and intermediate-term moving averages:

  • 50% of stocks are above their 1-month moving average

  • 47% are above their 50-DMA

Hard to get more split than that.

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Brown Technical Insights
Brown Technical Insights
Scott Brown, CMT