Monday was a very good session. All the major equity indices moved higher, but midcaps enjoyed the most decisive move, continuing a stealth rally.

Large-cap value brought up the rear, adding salt to the wounds of traditionalists, who are reluctantly ‘long’ stocks via names considered ‘high quality.’ However, I would have liked to have seen more volume.

Strength in semiconductors masked weakness in Technology (XLK) hardware. The malaise in Real Estate (XLRE) is becoming increasingly problematic.

Heat Map

Lots of green in the most giant blocks translates into a strong session for the market.

All Industries Enjoyed the Day

When the ten-year bond yield drifts lower, all is well for stocks. I suspect it will take news to move the yield to 4.3%.

This morning, all eyes were on Disney’s (DIS) financial results.

Today’s Session

The market may open higher, but there are pockets of pressure.

Earnings

I have been commenting and writing about weakness in revenue this financial earnings season.  Most times, the street yawns. But this earning season, there has been hell to pay for missing on the top line.s

Disney (DIS) Red Flags

• Revenue $22.08 billion consensus $22.11 billion
• Disney + Subs 153.6 million consensus 155.7 million
• Entertainment Revenue $9.08 billion estimate $10.3 billion

AI (picks and shovels)

WSJ reports that Apple (APPL) is developing AI chips for data centers. That’s putting pressure on Nvidia (NVDA) and Super Micro Computer (SMCI).  This kind of news and reaction generally create easy trading opportunities because it would take years to compete even if successful.  Remember the Apple car?

Ironically, there is also scuttlebutt of Apple doing an EV joint venture (see shares of Rivian).

It’s hard to believe the market just enjoyed the best three-day since November. That alone would be a reason (or excuse) for a pullback today.

Comments

Seems like being nibble is still in play at this point. Have to see how the Fed-R and the data points they reference plays out. One month around the initial employment is not a trend. Be careful out there. Terry Dowler on 5/7/2024 11:58:43 AM

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