Jim’s Notes – Markets Continue Higher

Moving the Market – May 6th

The markets continued their move higher as hope of a rate cut from the Fed continued to fuel the bounce. The reality is more likely the Fed is planning some type of liquidity injection for the markets, you know the drug of choice since the 2008 financial crisis. The NASDAQ has been the leader and nothing changed on Monday. Semiconductors continue to lead the index as MU and NVDA posted solid gains. The S&P 500 index equally had a solid day led by financials as interest rates continued to tick lower. The index moved above the 50-day MA. BAC, MS, and GS all posted solid moves higher. With a lack of economic data to disappoint, stocks were left to trade by themselves without news. XRT completed a bottom pattern breaking above resistance at $73.50 with COST confirming an upside move. Disney will announce earnings prior to the open on Tuesday and the stock was higher in advance of the news. Overall Monday was an orderly day without much fanfare or angst, just a solid move higher to continue the bounce from the April lows.

The major indexes were higher on the day as investors continued buying believing the Fed is receiving data that would allow them or encourage them to cut interest rates. The best part of dreaming is it avoids reality. The leadership came from technology, financials, and consumer discretionary. The upside move remains in play. Eleven sectors closed in the green. The NASDAQ closed up 1.2%, DIA was up 0.4%, and the SP500 was up 1%. The major indexes closed higher. The SOXX was up 2%. Small Caps (Russell 2000) were up 1.2%. The ten-year treasury yield was 4.48% down 2 bps for the day. Crude Oil (USO) was up 0.7%. (UGA) was down 1.1%. Natural gas (UNG) was up 2.5%. The dollar was up 0.1%. We are focused on managing the risk in the current environment and letting it unfold.

Tuesday Outlook: Markets were higher as money flow continued into the major sectors. Consumer credit is the only expected data on the day. We have added positions on the near-term optimism towards stocks albeit speculative at best. Thus, short-term trading opportunities. Commodities continued to consolidate with GLD and SLV leading the upside move. The dollar remains challenged near term as interest rate dip and talk of stimulus don’t favor the greenback. Rotation remains as the S&P 500 index breaks the current downtrend and renews the upside. XLK, XLY, XLU are the current leaders. The major shift in leadership from energy to technology over the two weeks is key.

Chart of Sectors: This chart starts at the bounce from the April 19th low and you can see the acceleration in technology to take the leadership role. XLU is benefitting from the renewed speculation on electricity demand relative to AI centers.

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

Headlines Worthy of Note:

The big talk on Monday was from Warren Buffet and Berkshire cutting their AAPL holdings 13%. Buffet still stated support for the company, but actions speak louder than words. AAPL was lower on Monday. Watching how the stock unfolds as it can’t seem to stay out of the headlines of late.

Amazon continues its spending spree as it intends to invest an additional $9 billion in Singapore cloud infrastructure over the next five years.

Google’s antitrust lawsuit is hearing closing arguments and it isn’t looking great for Google. This will have an impact on the search sector of technology regardless of the decision by the judge. Watching how this impacts the stock as well.

Quote of the Day: “Opportunity is missed by most people because it is dressed in overalls and looks like work.” — Thomas Edison.

Hot Topics

Jim's Notes latest update directly to your inbox!

Please enable JavaScript in your browser to complete this form.
Scroll to Top