Once again, yesterday, the session was the inverse of the year. Energy (XLE) stocks were lower as growth sectors were higher, led by Consumer Discretionary (XLY), which initially popped on Nike’s (NKE) earnings. Still, the sneaker maker gave up a lot of its gains, and investors shuttled back into Amazon (AMZN). It is amazing (to me) how many non-investors have contacted me about buying the stock before the split. Financials (XLF) popped; yet it’s nowhere near where the sector should be based on the spike in bond yields.

Market Breadth
There were more new highs than lows on the New York Stock Exchange (NYSE) for the third consecutive session – we are waiting on the NASDAQ Composite, but the up volume was amazing as advancers led decliners by almost a 3:1 ratio.  

Market Breadth	NYSE	NASDAQ
Advancers	2,032	3,379
Decliners	1,276	1,335
New Highs	82	82
New Lows	74	130
Up Volume	3.33 billion	4.26 billion
Down Volume	1.36 billion	1.01 billion

Bond Yield Spike

The ten-year yield is breaking through the top of the four-decade-long trading channel, and I think it’s very toppy. But I also think the great bond rally is over for now, and I see the rotation of bonds into equities being a driver of stock rallies.

Powell’s Lullaby

The very first time I looked at you

Since that day that's all I can do

So when I say that we're through

I only stop

So we could start all over again

-Blue Magic

I couldn’t help but think of that 70s soul classic “Stop to Start” by Blue Magic, one of many songs from that era to apologize for poor judgment in romantic relationships with promises to do better. It popped in my head as I watched the market yesterday because this is what investors have to be thinking about when it comes to the Fed.

Jay Powell has been able to have his cake and eat too, much  to the chagrin of market bears and regular old curmudgeons.

I’m not sure if the stock market remains at elevated levels to mitigate efforts by the Fed to slow or curb inflation. There is no doubt Powell loves the power of the so-called wealth effect. Perhaps folks have to go bust on all their investments before that stops them from paying over the sticker price on a new car.

But that is the only thing that will slow this down, as higher prices have not cured the insanity.

Technical View

The NASDAQ Composite continues to rally and has now eclipsed its 50-day moving average. I do not like that volume is ebbing again, but this has been a heck of a rally. Still, I want to see more money coming off the sidelines.

• The next resistance point is 14,600. 
• If gains are consolidated, I would like to see the 50-day moving average hold as support.

The Qs Join the Party

The Invesco QQQ Trust (QQQ) climbed above its 50-day; save for some resistance to 370, it could be revving up to move into the next gear.

Portfolio Approach

There are no sector weighting changes in our Hotline Model Portfolio.

Today’s Session

The futures are under some pressure this morning.  Oil is on the rise again with WTI rising about $111 per barrel.  U.S. crude inventories according to the API data declined by 4.3 million barrels last week. 

Comments

What popped into my head was the Euyrythmics song "Would I lie to you?" Charles Haselberger on 3/23/2022 12:53:15 PM

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