Jim’s Notes – Stocks Little Changed

Moving the Market – April 8th

The markets were subdued to start the week as investors await the CPI and PPI reports. There was no real news to speak of All of the major indexes were flat on the day on below-average volume. Bank shares were one of the strongest performers up 1.7% on the day. Small and midcap stocks moved higher on the day as well. Crude oil was volatile as reports that Israel had removed troops from Gaza but managed to close the day down 0.5% and remains over $86 per barrel. Gold hit another new higher at $2357 per ounce on news that China’s central bank was buying again. Earnings season will kick off this week with banks reporting on Friday starting with C, JPM, and WFC. Delta (DAL) reports earnings on Wednesday interest is the airline’s capacity and fuel cost impact. Basically it was day of waiting. We remain patient and follow the money.

The indexes were flat. Commodities, precious metals, interest rates, and crude maintain the respective uptrends. The leaders were banks, consumer discretionary, and REITs. The money flow was flat. The RSI was lower with below above average on activity. Six sectors closed in positive territory. The NASDAQ closed up 0.03%, DIA was up 0.06%, and the SP500 was down 0.04%. The major indexes closed flat. The SOXX was up 0.2%. Small Caps (Russell 2000) were up 0.5%. The ten-year treasury yield was 4.37% flat for the day. Crude Oil (USO) was down 0.2%. (UGA) was down 1%. Natural gas (UNG) was up 3.6%. The dollar was down 0.1%. We are focused on managing the risk in the current environment and letting it unfold.

Tuesday Outlook: All eyes and talk will be about Wednesday and the CPI data reports. The expectation is for the M/M number to rise 0.3% and the core to rise 0.3%. The Y/Y number is expected to rise to 3.5% from 3.2%. If it is higher the markets will not handle the news very well. Bank earnings start on Friday for the first glimpse at earnings. Technically speaking the SP500 and Dow closed on their respective 10-day MA. The NASDAQ and NDX closed near the 20-day MA on sluggish trading and are closer to the 50-day MA. The rallies to highs continue to be met with selling… how long before the sellers take control? The patterns are weaker, trendlines are breaking, and volatility is rising. This all makes us cautious, our stops are in place as we manage the risk and look for the opportunities.

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. The follow-up was an inside candle on Friday and Monday showing more indecision as we await the CPI data. The price closed below the trendline for the third day.

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: “I like marriage. The idea.” — Toni Morrison.

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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