Jim’s Notes – Market bounce to start the week

Moving the Market – April 23rd

The markets started the week on a positive note with the major indexes closing higher. Iran stated it would not retaliate further with Israel and all is good… for now. The central banks threw a bone with the ECB talking rate cuts in June. The Fed was talking savings decline, delinquency spikes, and all the challenges it creates… go figure, they are just seeing this now? That aside, Mr. Goolsbee sees challenges and what does the Fed do with these challenges? With the Fed admitting there are issues with the consumer, etc. they can now plan their next round of stimulus in whatever form to save the situation and the consumer… right? Maybe too simple, but there is always a rationale for the Fed admitting problems… they want to solve them and be the hero as well as keep the ‘system’ alive and well… maybe not well but alive. That aside stocks were higher but have plenty of work to do. The Interest rates moved above 4.62% and remain elevated in front of the FOMC meeting. Semiconductors bounced on Monday helping the NASDAQ. Financials continued the upside move adding to the bounce from last week. Ten sectors closed in the green with only telecom closing in negative territory. The markets bounce versus falling to the next levels of support. This raises the question of how much upside is there relative to the current environment of economics and earnings. As always we will see what unfolds and take what the market offers. Closed some short positions and looking where the opportunities lie. Money will always find a home we just have to follow it.

The NASDAQ and SP500 start the week higher thanks to the ECB comments. The broad indexes moved to the next level of support and bounced modestly. Inside day on the NASDAQ is worth watching on Tuesday. The NASDAQ closed up 1.1%, DIA was up 0.6%, and the SP500 was up 0.8%. The major indexes closed higher with volatility moving to 16.9. The SOXX was up 1.6%. Small Caps (Russell 2000) were up 1.1%. The ten-year treasury yield was 4.62% up 1 bps for the day. Crude Oil (USO) was down 0.1%. (UGA) was down 0.5%. Natural gas (UNG) was up 3.5%. The dollar was up 0.1%. We are focused on managing the risk in the current environment and letting it unfold.

Tuesday Outlook: Markets remain volatile and driven by data and speculation. Talking heads were out with ECB talking rate cuts. The Fed talking about the consumer situation being bad. Investors tried to shake off the selling with midday gains and a fade into the close. Technically the S&P 500 held the 4952 level of support. The NASDAQ held 15,158 level of support. The goal is to watch and see how this unfolds short term. We will manage our positions on the downside and our stops in place. Patience and risk management are key. Look for opportunities if the charts set up a bounce move at support.

Chart of Sectors: This chart starts at the previous high for the S&P 500 index on March 28th. Note that XLE has been the clear leader from that point. It joined the selling and is now moving higher along with XLU. Some of the defensive sectors have ticked up… XLP, XLF, IYZ. Leading the downside currently is XLK and XLY… those were the leaders on upside move from October.

Charts to Watch: See Notes on “Reality of the Markets”

Headlines Worthy of Note:

Earnings were mixed last week amid questions about the Fed rate cuts, geopolitical issues, and the government spending more money… $95 billion for Ukraine, Israel, and Taiwan. This week we face earnings from big tech companies and others… TSLA, META, IBM, QCOM, BA, MSFT, GOOG, INTC just to name a few… could set the tone for the markets short term.

Bitcoin completes its ‘halving’ move on Saturday. The speculation is the coin will rise in price as it has in the past. Watching how that works out… when the masses believe one thing the markets are notorious for doing the opposite.

Quote of the Day: “I’m spending a year dead for tax reasons” — Douglas Adams

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