Yesterday, one could see the market was going to slip into the closing bell, and it did, but it didn’t implode, which is a bright spot worth noting. In fact, buyers emerged all session long at times when a trapdoor would have sprung open at any time in the last couple of weeks.

S&P 500 -0.02%

NASDAQ Composite -0.14%

Russell 2000 -0.67%

At this point, many names in the Russell 2000 and the NASDAQ Composite look extremely attractive.

There was nibbling in Technology (XLK) as investors climbed out of their foxholes to do a little bottom fishing.

But the ten-year yield was higher yet again – this parabolic move continues to dazzle and intimidate. Major decisions have to be made by millions of investors getting rocked in their 60-40 portfolios.

Market Breadth

Market Breadth	NYSE	NASDAQ
Advancers	1,258	1,590
Decliners	2,070	3,196
New Highs	157	93
New Lows	321	512
Up Volume	1.58 billion	1.54 billion
Down Volume	2.11 billion	2.62 billion

New 52-weeks lows are mounting once again on the NASDAQ, but the difference between highs and lows was -419, a far cry from where the same ratio was when the index was at similar levels. By the way, the NASDAQ closed at a head-and-shoulders formation (bullish).

Financials

The sector has been a major disappointment after bolting out the gate to form the Fin-Energy trade.  Despite the spiking bond yields, Financials (XLF) have slumped, led by the big banks that should power them higher. Shares of Synchrony Financial (SYF) were the number two mover after Twitter (TWTR).

Credit Card issues came to the rescue yesterday:

• Synchrony Financial (SYF) posted results that beat the Street, and management was so confident, the buyback was hiked to $2.8 billion, and the dividend upped 5% to $0.23.
• Loans 30 days+ past due 2.78% from 2.83% a year ago.
• Charge-offs on loan receivable 2.73% from 3.62% a year ago.

American Express (AXP) March Data:

• Delinquencies 0.8% from 0.9% in February
• Charge-offs 0.8% from 0.9% in February

U.S. Consumer and U.S. Small business loans:

• $77.7 billion March
• $73.7 billion February
• $73.2 billion January

Last week, we saw strong credit card use at big banks, and now we see it from pure plays in the space.  This is a double-edged sword, but we are a long way from this debt becoming a liability.

In another reverse head-and-shoulders formation, the Financial (XLF) sector is still below its 50 and 200-day moving averages.

Chips Held Up

Semiconductor stocks headed up nicely yesterday – and it was clear some big-time money went shopping. Even names that were downgraded or had targets lowered fared strongly during the session. 

• KLA (KLAC) target was lowered from $400 to $500 at Wells Fargo (WFC) as the stock erupted higher.

Bullard the Strongman

When Fed Vice Chair Lael Brainard slammed the market for the second time this month, Fed James Bullard was looking to regain control as the shadowing Fed Chairman from his Dallas Fed office. After all, there is no doubt in my mind Bullard pushed Powell into a more hawkish position.

Now Bullard is saying the next rate hike could be 75-basis points (BPS) on the way to a Fed fund rate of 3.5%. 

Portfolio Approach

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

 

Today’s Session

Earnings are coming in steadily, nothing earth shattering, however.  All eyes on Netflix (NFLX) after the close.

Surprise Housing Starts

The 1.793 million annual pace for March was better than the 1.745 million expected. In addition, February was revised higher to 1.788 million from 1.769 million.

I worry single family housing might still be in trouble.

SFH (Single Family Housing)

• Permits -4.8% month to month -3.9% from year ago
• Starts -1.7% month to month -4.4% from year ago

MFH (Multi-family housing)

• Permits +10.9% month to month +33.6 from year ago
• Starts +7.5% month to month +28.1 from year ago

Ironically, this might not be good news at the Federal Reserve where they want to crush the animal spirits in the nation – but the nation was built on animal spirits and freedom – just ask folks flying around the nation without face masks today.

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