Jim’s Notes – Jobless Claims Lift Stocks

Moving the Market – May 9th


Overall the markets were in positive territory with sentiment optimistic. The jobless claims posted the highest weekly rise since 2021 setting the tone. Yes, that is a negative for the economy, but bad news is good news when you want the Fed to cut interest rates. Thus, the markets took it as a positive moving higher. The NYSE index led the upside as the breadth was wider with the NASDAQ and mega caps lagging on the day. The Dow posted its seventh straight gain closing at a five-week high helped by HD posting better-than-expected earnings. Interest-sensitive sectors were the leaders with REITs and utilities leading the upside. Energy was stronger on the day as crude oil was higher for the second day. Semiconductors put pressure on the technology sector as earnings from ARM put downside pressure on the chipmakers. Financials continued the positive upside with a solid break to the upside led by JPM, BAC, C, MS, and GS. Precious metals were higher with GLD, SLV, SIL, and GDX up nicely on the day. The dollar struggled again on the optimism of the Fed cutting interest rates which in turn helped precious metals. Definitely a trend we are watching going forward. Retail is starting earnings season and XRT was up 1.7% as we watch how the sector performs near term. Overall a positive day for stocks as we head to the final trading day of the week. Expectations are a continued rise early and some profit taking into the weekend. Manage your risk accordingly.

The major indexes were higher on the day using the bad news as good news to lift stocks. The leadership came from utilities, REITs, and energy. The upside move remains in play with a continuation move on Thursday. Ten sectors closed in the green. The NASDAQ closed down 0.2%, DIA was up 0.9%, and the SP500 was up 0.5%. The major indexes closed higher. The SOXX was down 0.3%. Small Caps (Russell 2000) were down 0.5%. The ten-year treasury yield was 4.44% down 5 bps for the day. Crude Oil (USO) was up 0.5%. (UGA) was up 0.4%. Natural gas (UNG) was down 6%. The dollar was down 0.3%. 10 of 11 sectors closed in the green. We are focused on managing the risk in the current environment and letting it unfold.

Friday Outlook: Broad indexes started their next move higher on Thursday. Friday should see a continuation of the move early with some afternoon profit taking into the weekend… Looking forward. 1) short-term uptrend in play… testing of the move off the lows… expect to move higher in the second leg. 2) Economic data shows inflation rising. Stagflation starting. 3) Commodities mixed… GLD vs Dollar with metal winning nicely on Thursday, DBA inside day, USO ready to bounce, showed break higher on Thursday? UNG running higher on speculation. 4) Interest rates at 4.44%… watching along with the dollar… potential sentiment shift. 5) SOXX leading… paused. 6) Bank’s moving higher on rate speculation. KBE cleared $47. 70 resistance. It is all about the Fed… speculation of cuts, but the reality is stimulus. 7) GOOG trending higher. 8) AAPL $168.53? earnings missed up more higher. Holding above $180. 9) TSLA broke support. Crappy earnings up 12% but giving it back Still favor the downside trade. TSDD. 10) GBTC pulled back on a stronger dollar… looking for a bounce. 11) NFLX on the rise despite earnings mishap.

Chart of Sectors: The scatter chart below shows the activity of the sectors relative to the S&P 500 index. The red down trendline was broken and the leadership is clear. Watching how this unfolds moving forward.

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

Headlines Worthy of Note:

Fed’s Bostic: Rate cut likely despite sticky inflation… the pandering to the markets is just insane.

Taiwan Semiconductor sees sales jump 60% amid AI boost… this should impact the stock in trading on Friday along with SOXX.

China’s imports jump 8.4% in April, exceeding expectations as purchases from the US grow. FXI has moved higher the last three weeks and data from China continues to improve and their economy has shifted back into production following the long lockdown.

Oil benchmarks are rising after data this week signaled growing demand in the US and China. USO was up modestly on Thursday and shows a break above resistance on the charts… watching for confirmation and an entry point.

Quote of the Day: “Life isn’t about finding yourself. Life is about creating yourself.” — George Bernard Shaw.

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