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Morning Commentary

BY ITS FINGERNAILS

By Charles Payne, CEO & Principal Analyst
5/9/2022 9:59 AM

It was another rough week and another rough Friday, although major indices didn’t slip through a trapdoor. Lost in the post Federal Open Market Committee (FOMC) sell-off, and race for the exit by expert market watchers and former bulls that told the public to buy with both hands a few months ago, was the biggest spike in consumer credit since December 2010. Some claim this is a sign of confidence and strength. I think people want to spend now ahead of further deterioration of their money.

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I do not know if the news affected the outcome of the session (released at 3:00 PM),, but it was another bloodbath.

Market Breadth

NYSE

NASDAQ

Advancers

996

1,149

Decliners

2,306

3,542

New Highs

27

24

New Lows

610

1,086

Up Volume

1.44 billion

1.26 billion

Down Volume

3.03 billion

3.59 billion

More Red

The session wasn’t a total disaster, as Energy (XLE) stocks gained, and some investors opted for the safety of Utilities (XLU) rather than head back into cash.

Chart, sunburst chartDescription automatically generated

The smattering of green beyond XLE, including drug stocks and Consumer Staples (XLP), but most noticeably Apple (AAPL), which has become the focal point of bears – they say this is the last name to crash.

S&P 500 Map

Technical View

It’s really amazing to see the S&P 500 hold on the way it has, considering how quickly it fades after failed rally attempts.

If 4,100 doesn’t hold, most observers see 3,800. It’s hard to argue that, and I would rather see it happen in flash rather than a water-torture approach.

Chart

The market is due for a massive bear market/oversold rally. It will be tradable, but the bigger money comes if the bears can tilt the market much lower from here, and investors begin to build positions with intentions of holding one to ten years.

Portfolio Approach

We added a new position in Energy on Friday afternoon in our Hotline Model Portfolio. 

TableDescription automatically generated

Today’s Session

I want to clear up the “one to ten years” comment, which refers to stocks that could bounce huge this year, remain volatile, but over time be life-changers.  Apple (AAPL) and Microsoft (MSFT) are still those kinds of stocks.  We are still looking for stocks that will move in short burst, but the backdrop of volatility is tough, so let’s make mental adjustments.

HEDGE FUND ASSETS FALL AS MARKET VOLATILITY SURGES ON PANDEMIC UNCERTAINTY

Outflows highest since post-Financial Crisis;  Assets fall below $3 trillion for first time since 2016

Right now, the market is under huge pressure, and I think a fund has blown up somewhere – not just Tiger.  Meanwhile, there are pivot support points with all eyes on NASDAQ 100.

NDX 100

The NASDAQ 100 breaking down and continues to pull back from a head and shoulders formation.  There could be some support around 12,693.  But the big test on the downside will probably be 11,939. 

Pain Threshold

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Oversold points have coincided with only 10% of NASDAQ names trading above their 200 day moving averages.  We are getting close.

There is a lot of great information in this week’s Payne’s Perspective.  Click here to read the full report. If you are not a current subscriber, speak to your representative or email Info@wstreet.com to join our weekly Perspective and our premium Hotline service.


Comments
My Man: Love "Everyone has plan, until they get punched in the mouth" quote. I'll read the full report later. (Thank You very much!) RE: Consumer credit spike....For those who think it's a vote of confidence and strength in the economy, Really....What are they smokin? Myself, I think it's more of a sign consumers are getting "tapped out." (No pun intended) Maybe some buying forward as you suggest. I think more likely trying desperately to maintain their standard of living before the realization that deeper cuts will have to be made really sinks in. I agree we are due for a bounce. But after that, lower. How much and how long is the million dollar ?.

Charles Haselberger on 5/9/2022 11:00:59 AM
Believe your right. Near bottom with rolling capitulation. Do not feel we will see ‘Classic Capitulation. W/B surprised if SP500 breaks below 3800.
Believe it holds near current levels. Never have seen this kind of volatility.
Bought 3/9/09; 12/28/18; 3/23/20; 3/14/22 and nibbling since. Mostly CEFs.






Tom Holcomb on 5/9/2022 1:51:00 PM
 

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