The market put in a solid session yesterday after some early equivocation in response to the Gross Domestic Product (GDP) report. Unfortunately, it was a bust, even as some folks worked hard to make it a non-event. Meanwhile, it remains to be determined if the ‘pop’ in the market is a non-event or a sign of better things to come.

Finding equilibrium in a market in a decided downtrend is a tough process with a lot of false alarms. This is why you have to have more cash than usual and skip the bait of false moves as tempting as they can be. For instance, you can miss a lot of upsides on NASDAQ Composite stocks and still have a mountain of gold waiting once the dust is settled.  

Technology Remembers the Good Old Days

While the green on the screen was so refreshing, it was mostly a collection of dead cat bounces. This is not because there were a lot of strong earnings releases and guidance, but because the downside pressure remains the strongest force and the direction of least resistance is lower. But utilize the news, along with people’s reactions to the news, for notes and to create potential buy lists. 

Tech Opportunities

The semiconductor industry must lead the charge for all the big-name stocks in the Tech (XLK)sector. Yesterday, the semis were the best sub-industry but remained the biggest loser’s year-to-date.

There is so much upside in the tech arena, but these names are vulnerable right now. Unfortunately, results from Amazon (AMZN) and Apple (AAPL) will see a lot of yesterday’s gains fade.

The Apple numbers were fantastic, but there is some angst about the impact of rolling lockdowns in China.

Market Breadth

Market breadth was not spectacular considering the moves in the market yesterday. And new lows remained elevated. 

Market Breadth	NYSE	NASDAQ
Advancers	2,589	3,077
Decliners	743	1,731
New Highs	22	43
New Lows	523	831
Up Volume	3.82 billion	3.66 billion
Down Volume	947.35 million	1.36 billion

My Prediction? Pain

Stocks are selling off around the world, and this could be yet another week of declines.

In the American Association of Individual Investors (AAII) Sentiment report, Bears outnumbered the Bulls by 43%, which has happened only two other times. There is no doubt this hints at a near-term bottom – but how much more pain?

Portfolio Approach

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

Today’s Session

Yesterday was the one year anniversary of the Fed using the word “transitory” to describe inflation, it was a few days after the March CPI release came in at 2.6%.

Now, CPI is 8.50% and maybe edging a little higher.

Personal income and spending came in above consensus but savings slipped again.

The Employment Costs Index soared to a three decade high coming in at +1.4% consensus +1.1%.

The ECI news sent bond yield scurrying higher.

Lots to chew on still. I do like the action in futures – stocks should have been lower.

Comments

CP; Mostly "Dead Cat Bounces," I agree. Buy List: Should have already had it ready....better late than never. Raise Cash?...Really late to the game if you have not already done so! "Transitory" inflation??? I was on record in Sept. 21 saying the Fed was way behind the curve and inflation was sure to accelerate. GDP -1.4%; A preliminary read, but a really bad one. Just about everything I read points to a significant GLOBAL slowdown. How do we escape recession? Pray!!!! That's the only thing left! Charles Haselberger on 4/29/2022 11:23:58 AM

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