The monster session on Friday must still be ringing in the ears of the experts, as the market rallied on a “strong” jobs report.  These reports have had holes, and the April release had even more, and the market finally figured it out.  Investors took a ‘barbell’ (I hate that saying) buying momentum and bottom fishing at the same time.  For the week, it was the same story – mega-cap growth set the pace.

The Pros Have to Play

There is an interesting correlation between market breadth and exposure by active money managers.  Both peaked in early February, and both are coming in strong into this new week.  I suspect lots of big money will have to abandon failed game plans or decamp from foxholes this week.

Prominent Bears Grasping for Straws

Make no mistake, bears never give up and they are known for going out on their shields. Here are some of their observations.

Druckenmiller: "It's my view that stocks are higher because of the bank failures and the Fed dumped another $400 b into markets. In other words, without the bank failures stocks would be lower."

Morgan Stanley's Mike Wilson: “While earnings are coming in far better than expected and forward EPS breadth has inflected higher, it is coming with worsening macro-data..."

Technical View

S&P 500 close the last four Fridays:

• 4,136
• 4,169
• 4,133
• 4,137

My goodness this has become so frustrating.  Once in the shadow of 4,200; the S&P 500 immediately runs out of steam, and yet, it’s also held at key support and has been quick to find buyers on weakness.

Something is going to break real soon and there should be huge follow-through in either direction. We have zero cash in the model portfolio, so you know where I stand.

Portfolio Approach

There are no changes to our sector weightings in our Hotline Model Portfolio.

Today’s Session

Regional banks are bouncing as there is talk of banning short selling of them.

Comments

No, short selling should not be manipulated by the government. Just another way for the Feds to "cook the books." Charles A Haselberger on 5/8/2023 1:25:08 PM

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