Executive Summary

July 8, 2024

• Big Picture: More of the same last week as mega-cap tech ripped higher each day at the market open, while the rest of the market lagged. The breadth divergences are at record extremes along with mega-cap tech concentration (which further implies record extremes in mega-cap tech outperformance). This week we will get the latest CPI report, which might finally give direction to the rest of the market. Will we see the laggards begin to rally or has their recent performance foreshadowed a breakdown?

• Composite Equity Relative Sentiment: Composite equity relative sentiment (CERS) held steady at 62% last week—a bullish reading. Since 1994, the market has annualized 21% with a Sharpe ratio greater than 1 when CERS has been between 60% and 80%. 

• Investor-Class Equity Positioning: Due to the midweek holiday, the Commitments of Traders Report has been delayed until Monday. The previous report showed institutions had been selling equities again after a mult...