Yesterday, the market's aura shifted rapidly after being on autopilot since late October 2023. The Fear & Greed Index is squarely in the ‘fear zone.’

Nibbling on weakness has been seen in each session, masking the mounting damage, which is better seen in market breadth data.

Market Breadth	NYSE	NASDAQ
Advancers	998	1,426
Decliners	1,803	2,833
New Highs	9	31
New Lows	118	366
Up Volume	982.10 million	2.37 billion
Down Volume	2.98 billion	2.42 billion

NASDAQ Composite: 31 highs / 366 lows = 335 net lows

New York Stock Exchange: 9 highs / 188 lows = 109 net lows

Powell’s Sobriety

Jay Powell got over his skis when he took a semi-victory lap and openly discussed rate cuts in 2024. The Street hijacked the Powell Pivot and saw as many as seven rate cuts this year. Everyone has lowered their expectations recently, and it was time for Powell to state the obvious.

He will Leave rates at the current rate “as long as needed.” However, Powell also pointed out that the Fed is not considering rate increases.

And The Band Played On…

Jay Powell wasn’t the only Fed Head wielding an axe; just about the whole band made noise. I grabbed key headlines and quotes from Bloomberg.

The opinions varied, but it's clear members are coming to grips with the idea of higher for longer.

Dudley Says Fed’s Long-Term Rate Outlook Too Low (8:30 a.m.)

Interest rates probably won’t fall as far as Fed officials currently expect over the next several years.

Harker Says Inflation Still Too High (10:00 a.m.)

Philadelphia Fed President Patrick Harker said inflation remains too high, even as the economy has been resilient and job growth remains strong.

“We’re not where we need to be.”

Barkin Says Fed Has Time to Gain Clarity Before Cutting (12:10 p.m.)

Richmond Fed President Thomas Barkin said it’s “smart” for the central bank to take time to gain greater clarity about the inflation trajectory before lowering interest rates.

“No one wants inflation to reemerge.”

Goolsbee Sees Inflation Still on Track To 2% Goal (1:10 p.m.)

Goolsbee, the Chicago Fed Chief, said, “My overall assessment is that these two months should not knock us off the path back to target.”

Mester Wants ‘Couple More Months Data’ Before First Cut (2:00 p.m.)

The Cleveland Fed chief suggested that the central bank could be getting close to the e level of confidence it needs to begin lowering interest rates in the next few months.

Kashkari Says Rate Cuts Depend on Inflation’s Progress (2:00 p.m.)

The Minneapolis Fed leader said interest-rate cuts may not be needed this year if progress on inflation stalls, especially if the economy remains robust.

“If we continue to see inflation moving sideways, then that would make me question whether we needed to do those rate cuts at all.”

Not All Money Headed to Sidelines

An eclectic leaderboard with lots of names recently under pressure and/or considered oversold.

Curious Stock Action of the Day

On March 28^th, shares of RH (RH) soared on guidance of more lavish spending.  The stock rallied more than $50 that day on monster volume. It's given back that move and a lot more. If rich folks stop spending, it's game over for the economy, but the good news is the Fed would show up in a fire truck.

Here’s some good news…

Today’s Session

Earlier pre-open strength has faded.  This is fine, and in many ways, what we want to see.  The rally is being tested and weak hands will blink.

The most important things to remember:

• Hold based on fundamentals.
• Have cash to buy weakness.

Right now, I suspect the S&P 500 will close that gap around 5,000 and we could see some buyers test the waters.  Below there, we see some support around 4,900.

Conversely, the buy signal is a reversal and close above 5,192.

Comments

Inflation is rearing its ugly head. CPI-PPI-CONSUMER SENTIMENT-10 YEAR BOND. No one is talking about it but, but, but, a slowing economy and rising interest rates=STAGFLATION Mike T. on 4/17/2024 8:38:36 AM

I may be mistaken, but it seems to me the "non-political" Democrat Fed Presidents, such as Austin Goolsbee, are "talking their book," strongly advocating for rate cuts. How Sad! charles haselberger on 4/17/2024 11:46:44 AM

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