Jim’s Notes – Indicies again mark time

Moving the Market – April 9th

The markets were mixed as investors prepared for the CPI before the market opening on Wednesday. Stronger economic data the last week plus has prompted more volatility and uncertainty relative to the Fed. The major markets were essentially flat the last few days waiting for the data. The markets moved lower following the open then drifted sideways with a last-ditch move to the upside. Plenty of nerves heading into the data reports and earnings. No major data reports the last two days leaving investors to think for themselves. The one piece released on Tuesday early was the NFIB Small Business Optimism which fell to 88.5 from 89.4 prior, fell to an 11-year low… Bidenomics – Build Back Better is going well for this sector. GS and AXP both lowered their interest rates on high-yield savings accounts… an interesting move in front of the CPI data… do they know something? Bloomberg reported a group called ‘super users’ who receive data ahead of other users, including data that may diverge from expectations. The New York Times reported that a BLS economist corresponded with JPM, BLK, and others on data related to the monthly CPI. The BLS denied there was such a group, but emails obtained showed otherwise to the ‘super users’. The information contained changes in the weights of certain elements in calculating rental inflation may have led to the surge in that reading from January. How deep this runs is interesting yet concerning overall at the least. Big Bank getting data early… they wouldn’t use that to their advantage… no, never. Smells like Congress and insider trading information, ala Pelosi and friends. The trading day was modest ahead of the CPI with semiconductors, REITs, and telecom leading the upside moves. Based on the posturing/moves in some sectors along with ‘rumor’ sharing I would be surprised if the CPI data is hotter than expected. It will be an interesting day.

The indexes were flat overall. Commodities, precious metals, interest rates, and crude maintain the respective uptrends. The leaders were REITs, telecom, and utilities. The money flow was flat. The RSI was lower with below above average. Nine sectors closed in positive territory. The NASDAQ closed up 0.3%, DIA was down 0.07%, and the SP500 was dup 0.1%. The major indexes closed flat. The SOXX was up 1%. Small Caps (Russell 2000) were up 0.4%. The ten-year treasury yield was 4.36% flat for the day. Crude Oil (USO) was down 1.2%. (UGA) was up 0.5%. Natural gas (UNG) was up 2.8%. The dollar was down 0.04%. We are focused on managing the risk in the current environment and letting it unfold.

Wednesday Outlook: All eyes and talk will be about the CPI data reports at 8:30 am ahead of the open. 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. It is important to note the expected data is expected to rise slightly. This shows economists believe inflation is moving higher already. Thus, a higher number is even more impactful to the investor’s psyche. Maybe, some already know the number? SOXX, KBE, and IYR all moved higher in the last two days. Bank earnings start on Friday for the first glimpse at earnings. Technically speaking the SP500 and Dow closed near 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 patterns are weaker, trendlines are breaking, and volatility is rising. All of this makes us cautious, our stops are in place as we manage the risk and look for the opportunities.

Headlines Worthy of Note:

Inflation and 99 Cent Only Store announced the closure and liquidation of all its stores. They stated they could not operate in the current environment of rising prices. In turn, it has prompted complaints on social media about DLTR, whose prices are up to $7 on some items. This would prompt the question, is inflation going down if we are just starting to see complaints about DLTR pricing? DLTR is down 15% from the March highs.

GOOG announced its own ARM chip: The news that Google would release its first custom Axiom Processor which is a custom-based CPU designed for superior performance in their cloud-based platform. The stock was up on the news to add to the last two days of gain breaking above resistance. Maybe people should pay attention to prices on the shelf versus what talking heads in the media and Washington are telling them.

Metal prices are higher and heading higher based on the current speculation from analysts. Precious metals gold and silver continued higher on Tuesday as the charts continued their verticle moves. CDE, HMY MUX all added to the upside in Gold. AG and PAAS rallied as well on the day. Industrial metals FCX and SCCO gapped higher on volume as copper continued to rise. STLD, MT, TMC, CENX, and AA rested on the day but the charts still show solid upside trends.

TSLA – Elon Musk stated that Tesla would launch robotaxis in August. The stock was up 2.2% on the news. The bottoming pattern on the chart is worthy of attention. The downside trend remains in play.

Charts to Watch: See Notes on “Reality of the Markets” & “Jim’s Beliefs About the Market” pages…

Quote of the Day: “Frisbeetarianism is the belief that when you die, your soul goes up on the roof and gets stuck.” — George Carlin.

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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