Jim’s Notes – Buyers follow through

Moving the Market – April 24th

It seemed like the stock market was poised for an upward swing, with many indices posting gains, especially in the tech sector. However, these gains turned out to be less significant than initially expected, despite notable jumps in stocks like TSLA (+12%) and TXN (5.6%). Regardless of the early surge, the indices retreated in afternoon trading. Most indices, excluding DJ20 and SOX, formed doji patterns, suggesting a potential pause in the recent upside activity. META, NOW, and IBM showed disappointing results in earnings, while F and CMG posted solid numbers and moved higher after hours. META fell more than 12% after hours, IBM was down more than 8%… Could make for a tough day in the technology sector. The first round of earnings from the large caps are not meeting expectations. Then again maybe like TSLA, bad news will be good by the time the markets open on Thursday. Durable Goods Orders, March +2.6% versus 1.8% expected versus 0.7% (revised down from 1.4% reported) prior. Y/Y -2.2%… largest decline since the lockdown period. That is the eighth consecutive month the number reported from the previous month has been revised lower from the prior number having beat expectations… there seems to be something fishy about the upbeat reports getting revised a month later hidden by the higher-than-expected headline number for the new month… Maybe this administration is bad at math. Breaking down the numbers after the revisions of durable goods orders without aircraft were not good at all.

The major indexes were mixed as the intraday trading was up and down. The broad sectors of technology, consumer discretionary, and consumer durables closed in positive territory. The NASDAQ closed up 0.1%, DIA was down 0.1%, and the SP500 was flat. The major indexes closed mixed with volatility moving to 15.9. The SOXX was up 1.3%. Small Caps (Russell 2000) were down 0.4%. The ten-year treasury yield was 4.65% up 6 bps for the day. Crude Oil (USO) was down 0.4%. (UGA) was up 0.4%. Natural gas (UNG) was down 7%. The dollar was up 0.1%. We are focused on managing the risk in the current environment and letting it unfold.

Thursday Outlook: Markets were mixed on Wednesday. After-hours activity was worthy of reading with META and IBM missing badly and being punished on the downside. F and CMG beat but they are not going to offset the tech reports. Watching how all the tech sector responds to earnings with more reporting after the close on Thursday.

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, XLI. Leading the downside currently is XLK and XLY… those were the leaders on upside move from October. NOTE: Ten of the eleven sectors have bounced with XLB lagging.

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

Headlines Worthy of Note:

MarketWatch reported the Treasury is ready to implement a program to ‘make the bond market more resilient.’ The Treasury is planning what is called the first Treasury buybacks in 20 years. Why? Wait for it, ‘support liquidity in the Treasury market.’ Why would we need to do this? Simply put, nobody wants the US debt paper. We are essentially going down the same path as Japan. For further rationale on this move by the Treasury, the New York Fed will conduct the Treasury buyback operations. Imagine the Fed and the Treasury teaming up to monetize debt the Treasury issues. Again the question is why? Let’s turn our attention to the BUDGET that the Biden Administration released on Monday… their own figures on the low side would grow the debt to $54 trillion versus the $34 trillion currently over the next 10 years. That is $2 trillion per year for those who don’t want to do the math. Those are insane numbers from the crazy people running the country currently. Talk about the highway to HELL, we are currently on it going as fast as we can.

Earnings from META pushed the stock down more than 14% after hours. Maybe the headline on Monday that Mark Zuckerberg was ahead of Elon Musk in total net worth was a jinx… he won’t be after the open on Thursday. Meta will be down more than $200 billion in market cap on Thursday. The guidance of higher expenses and lighter revenue didn’t sit well with investors.

Quote of the Day: “I saw a woman wearing a sweatshirt with Guess on it. I said, Thyroid problem?” — Arnold Schwarzenegger

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