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Morning Commentary

Mark Saves The Day?

By Charles Payne, CEO & Principal Analyst
4/28/2022 9:26 AM

These days, watching the market is like watching the 1975 cult movie classic “Rollerball,” which was roller derby without rules, all designed to snuff out the main character. Spinning around the rink and throwing punches with spiked knuckles and no rules. It was a brutal tour de force. 

Yesterday’s wild swings saw a strong open evaporate only to compose itself and then rally again even higher, and then the rally stalled and faded into the close. If you weren’t paying attention, you could be forgiven for thinking the session was a pedestrian walk around the park instead of a violent ride that tried to snuff out an already ailing and wounded market:

•    S&P 500: +0.21%
•    NASDAQ Composite: -0.01%
•    Russell 2000: -0.34%
•    Oil: -0.31%
•    Gold: -0.11%
•    10-Year Yield: +1.66%

Sector Performance

Energy (XLE) led the way along with Materials (XLB), but Technology (XLK) had the biggest impact. On the other end of the spectrum, Communication Services (XLC) took it on the chin ahead of the Meta/Facebook (FB) earnings release. 

Market Breadth 

The up to down volume was evenly split, underscoring equal conviction, but look at those new lows-to-highs – yikes. 

Market Breadth    NYSE    NASDAQ
Advancers    1,462    1,937
Decliners    1,853        2,822
New Highs    17    32
New Lows    591    873
Up Volume    2.50 billion    2.03 billion
Down Volume    2.31 billion    2.83 billion

Bond Yield Watch

The ten-year bond yield continues to trend higher in part as a flight to safety as much as a proxy for Fed rate hikes. Resistance in the shadows of 3.00% has been established; I am not sure what the key support is, although 2.65% looks intriguing. For now, the upside bias of these yields poses a hurdle for tech stocks, but this is only temporary – great stocks that deserve to trade higher will even if rates remain elevated. 

Did Zuckerberg Just Save the Market?

Meta (FB) posted financial results that didn’t blow the analysts away. Still, nobody cares about the top and bottom lines when eyeballs and engagement are up for grabs in the wild west of global social media. Daily active users edged up 4% to 1.96 billion.

Monthly active users climbed +3% to 2.94 billion against the consensus of 2.97 billion.

Technical View 

The stock popped as much as 20% in after-hours trading on something of a relief rally. However, it’s important to note at the close, shares were down 48% for 2022. The move last night took the stock to its 50-day moving average, which is just the first in a series of tests that would have given Hercules second thoughts. 

The Shifting Tides 

Nowadays, the market starts off in one direction, and the slightest breeze turns it to another. The ideal week would be a series of days that open under pressure, finds buyers, and closes higher. Seeing this happen several sessions in a row would send a message. 

Portfolio Approach

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

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Today’s Session

The morning has mostly been about great earnings results and better than expected guidance from some of the biggest companies.  But some of the air came out of the pre-open sessions when first quarter GDP came in well-below consensus.

First Quarter GDP

Consumption was strong but change in inventory exports weighed heavy on the report.  Government spending also declined.

Real GDP: Percent change from preceding quarter

Hello again, Charles.....Just my 2 cents. Yes, yesterday's up to down vol.= evenly split. But the market action was on below avg. vol. and trading range. Not very convincing! Re: Shifting Tides...Conversely, a dismal week finds several sessions opening higher, finds sellers and closes lower. The one item that did catch my eye, NEGATIVE GDP. And not by just a hair. A real decline here. I did not see negative growth coming until at least the 2nd. Q, and to be honest I really did not think we would see it until the 3rd or at latest the 4th. Q. So, my Friend, just remember: It's not buy for sell, or sell for buy, but bye for now. CH

Charles Haselberger on 4/28/2022 9:58:36 AM
No energy in your Hotline Model Portfolio??

mike on 4/28/2022 10:35:30 AM
We took profits on moist new and legacy oil ideas into strength. We have been doing them on the swing because I am worried about the long term upside. Things that could seen oil much lower End War on Ukraine Iranian supply Global economic slowdown ESG movement - anti investing

Charles Payne on 4/28/2022 11:22:02 AM

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