Jim’s Notes – April 5th

Moving the Market – Sellers show up late to end lower

The markets gapped higher to start the day then traded higher only to see the sellers take control the last few hours of trading. The intraday activity wasn’t volatile it was just the tale of two cities. All said, indices broke trendlines, broke support levels, broke moving averages, and put one big question mark over the market’s direction. The comments from the Fed continued to emphasize it may take time before they have clarity on when to cut interest rates. The 10-year bond moved lower on the day offering some help but that faded in the late-day trading. Economic data wasn’t any help as investors continued to weigh out the factors relative to the Fed. Talk of war in the Middle East pushed crude oil higher and offered some angst for investors. Recent leaders in the commodities struggle on the day but they still looked better than technology and other sectors. Hints of a banking liquidity issue are still hitting the news. Commercial Real Estate (CRE) is the underlying challenge as defaults and late payments continue to rise. BLS data was not believable much like the Jobs Report on Friday will have skewed data… taking those numbers with a grain of salt. Expect more volatility along with a test lower as we look forward.

The indexes traded higher to lower with selling the last two hours. Commodities were flat to lower. The leader was crude oil and bitcoin. Money flow was below 34. The RSI was below 50 as volume was above average on the selling. No sectors closed in positive territory as sellers controlled the day. The NASDAQ closed down 1.4%, DIA was down 1.3%, and the SP500 was down 1.2%. The major indexes closed lower. The SOXX was down 2.8%. Small Caps (Russell 2000) were down 1%. The ten-year treasury yield was 4.30% down 5 bps for the day. Crude Oil (USO) was up 1.2%. (UGA) was up 0.8%. Natural gas (UNG) was down 3.6%. The dollar was flat. We are focused on managing the risk in the current environment and letting it unfold.

Friday Outlook: The market turns lower as seen in the action on Thursday. The obsession with the Fed and interest rates continues to dominate the headlines and market direction. The data relative to inflation is the cause of the angst. Middle East issues are heating up causing concern of war escalating. The buyers tried to push higher but the sellers had a different idea. The sellers showed up late day and never relented control. Overnight futures are slightly higher as we watch how the last day of the trading week unfolds… Crude is higher as well. Patience as this all unfolds. Proceed with caution and manage your risk accordingly.

Headlines Worthy of Note:

Bearish Engulfing Pattern: This happens when the is higher than the prior day’s session high and the close is below the prior session’s low… A bearish indication. A look at the S&P 500 Index shows this clearly along with other indexes. Watch how this unfolds moving forward.

Crude Oil Prices are higher and heading higher based on the current speculation in the Middle East situation. As Israel and Iran return missiles and words, the outlook is for pressure on oil exports. Add in the Ukrain strikes on Russian refineries and you can see why the speculation cards are being dealt. This brings all the related ETFs into play. USO, BNO, IEZ, IEO, USL, UGA and others. Managing our risk in positions but taking what is offered from the spike higher in the commodity.

Charts to Watch: See Notes on “Reality of the Markets” & “Jim’s Beliefs About the Market” pages…

Quote of the Day: “In trading, you don’t try to predict what the market might do in the future; you simply trade the signals you see at the moment. If you are not seeing any signal, you wait until the market shows you one.” — Jesse Livermore.

Note of Changes on Website: The ‘Weekend Update & Outlook’ will now reside on the “Reality of the Markets” page. It will be updated throughout the week as needed relative to market changes.

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