Morning Commentary
One, two, one, two, three, four,People moving out, people moving in
Why, because of the color of their skin
Run, run, run but you sure can't hide
An eye for an eye, a tooth for a tooth
Vote for me and I'll set you free
Rap on, brother, rap on
The sale of pills are at an all-time high
Young folks walking round with their heads in the sky
The cities ablaze in the summer time
And oh, the beat goes on
Evolution, revolution, gun control, sound of soul
Shooting rockets to the moon, kids growing up too soon
Politicians say more taxes will solve everything
And the band played on
Eve of destruction, tax deduction, city inspectors, bill collectors
Mod clothes in demand, population out of hand, suicide, too many bills
Hippies moving to the hills, people all over the world are shouting, end the warAnd the band played on – Temptations
This 1970s hit song “Ball of Confusion” was another Whitfield and Strong instant classic that jazzed up the Temptations sound and touched on all the challenges facing one of the most turbulent periods of American history.
Like many of songs of the era that served as protest anthems and pleas for help, it’s as relevant now as it was more than fifty years ago. One could argue there are more young folks walking around with their heads in the sky (drugs) or looking to the ground (staring at their phones). Evolution, revolution, and gun control are on full blast; and sadly, too many cities have been set ablaze in recent summers.
And then there’s this ditty- “Politicians say more taxes will solve everything.” Yes, the band plays on.
Weak Sectors Get a Play
Growth sectors enjoyed the largest gains yesterday, but it’s been a rough month and year for these former beasts.
Consumer Staples (XLP) eked out a gain as earnings continue to reflect pricing power and the ability to get away with shrinkflation.
The question is whether these moves will gain any traction. It’s kind of odd to wonder if high Beta stocks can put together back-to-back good sessions. But, of course, we’ll know a lot more after the close today when Microsoft (MSFT) and Alphabet (GOOG) post their financial results.
After every sector and style has been slammed, the question is where they will hole up while the dust settles? Value? Growth? Defense?
Heat Map
I was shocked at the degree of drawdowns in oil company stocks and pharmaceutical names.
We got a hammer formation yesterday, but the S&P 500 is well below key moving averages.
Shifting Through the Ashes
Ahead of the potentially most aggressive rate-hiking cycle in history, so-called long duration growth industries have taken it on the chin to such a degree that I think the selling is overdone. They bounced nicely yesterday but have a million miles to go to get back to break even:
The NASDAQ Composite rocks when the Fed begins hiking rates:
Cycle Begins |
Cycle Ends |
NASDAQ Performance |
2.3.1994 |
7.5.1995 |
+18.1% |
3.24.1997 |
9.28.1998 |
+40.0% |
6.29.199 |
1.2.2001 |
-13.3% |
6.29.2004 |
9.17.2007 |
+26.9% |
12.15.2008 |
7.31.2019 |
+442.0% |
Portfolio Approach
Yesterday, we added a new position in Consumer Discretionary in our Hotline Model Portfolio.
Today’s Session
Equity futures under pressure again this morning. Earnings for the most part have been good, but guidance guarded or lower. We are seeing big boost in buybacks for those companies that simply reiterate guidance.
Key support for the S&P remains at 4,200 which continues to hold.
The Ten-Year Bond Yield keeps easing lower, and yet, the impact on stocks has been negligible.
These sessions are needed to test the market and build reversals, but it’s a process, and we don’t want to try to game it too much.
Comments |
I like your song analogy - Balls of Confusion. Mine is Wheels of Confusion by Black Sabbath. "Lost in the wheels of confusion Running thru valleys of tears Eyes full of angry delusion Hiding in everyday fears" Bill Frohberg on 4/26/2022 10:06:47 AM |
Love the Temptations.......But right now, their song Ain't to Proud to Beg, is what I'm singing! Charles Haselberger on 4/26/2022 11:47:54 AM |
Zillow etc. constantly send out housing values skyrocketing and unless you are selling and moving into a tent, what I see are property taxes, sales taxes and insurance skyrocketing. larry hughes on 4/26/2022 1:50:04 PM |
Tweet |
4/19/2024 1:20 PM | Fair Chunk of Rotation |
4/19/2024 9:35 AM | DON’T OVERREACT |
4/18/2024 1:37 PM | Didn’t Break Down |
4/18/2024 9:40 AM | MARKET OFF SCRIPT |
4/17/2024 1:59 PM | Facing Pressure |
4/17/2024 9:37 AM | POWELL STILL WANTS TO HELP |
4/16/2024 1:35 PM | Muted |
4/16/2024 9:42 AM | FEAR ARRIVES |
4/15/2024 1:17 PM | Making a Statement |
4/15/2024 9:45 AM | Equal Opportunity Drubbing |
4/12/2024 1:37 PM | Pressure Overall |
4/12/2024 9:42 AM | WHO YA GONNA CALL? |
4/11/2024 1:38 PM | No Urgency |
4/11/2024 9:27 AM | Tough Sledding |
4/10/2024 1:22 PM | Hang In There |
4/10/2024 9:51 AM | HERE COMES THE LATEST RATIONALE FOR PERSISTENT INFLATION |
4/9/2024 1:56 PM | Fighting the Trend |
4/9/2024 9:46 AM | NEXT TIME, MAKE IT A HOLIDAY |
4/8/2024 9:45 PM | Cautious Feel |
4/8/2024 7:19 AM | IT’S ECLIPSE DAY |
4/5/2024 1:51 PM | Higher and Cheaper |
4/5/2024 9:23 AM | MARKETS REEL ON BIDEN’S ISRAEL ULTIMATUM |
4/4/2024 1:42 PM | Stocks Bounce |
4/4/2024 9:31 AM | ESCAPING GRAVITY = ESCAPING REALITY? |
4/3/2024 1:41 PM | Cuts Not Soon |
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