It was an ugly finish yesterday to a market that began with hopes of piercing that pivotal 4,200 threshold, but instead, there was a major slump into the close. The S&P 500 is trading in a very tight range, but this is a temporary condition. A breakout happens soon. The big question is in what direction.

There was only one ‘winning’ sector (Energy, XLE) as the rest of the market sold off in unison.

Not A Gusher…Yet

Crude oil is intriguing. West Texas Intermediate (WTI) is coming off a double bottom and bumping against up a huge resistance point.

I’m not a huge Price-to-Earnings (P/E) ratio valuation guy. But it plays a major role in the distribution of billions of dollars (paint by numbers). So, the fact Energy is a long way from its 10-year average makes it attractive.

Heat Map

It was ugly. I suspect some of the angst out there is finally triggering some profit-taking.

As stocks wobbled, the odds of a rate hike at the next Federal Open Market Committee (FOMC) gathering edged higher.

Two Economies

Flash PMI is a tale of two economies:

• Manufacturing: 48.5 against the consensus of 50.0, from 50.2 in the prior month
• Service: 55.1 against the consensus of 52.5, from 53.6 in the prior month

It’s a complicated situation that sees folks living in the moment, which is great for airlines and restaurants, but it means finding workers and hiking prices. By the same token, goods are in freefall.

Portfolio Approach

We closed a position this morning in Technology in our Hotline Model Portfolio.

Today’s Session

Watching the market for the mood of investors especially as we pullback from 4,200.  But the action in T-Bills is more telling about the debt ceiling debate.

Comments

Keep the faith, the pullback yesterday was what we should have expected. Energy will be ultimately strong. People need it, want it and will chase it. That will be the decider for the coming election. People know what strong energy meant for them. Marleen Perret on 5/24/2023 9:17:58 AM

Tweet

 

Home | Products & Services | Education | In The Media | Help | About Us | Disclaimer | Privacy Policy | Terms of Use | All Rights Reserved.