A slow but revealing session; major indices held on to slim gains until late selling into the close.  It wasn’t a disaster, but the script flipped in tech, with software eking out gains as chip names were pressured from the open.  There was no panic, but frustration as many investors dove into these names as havens.

Consumer discretionary stocks continued to be pressured, matching sentiment that has been circling the drain.  For all the talk of the stock market’s resilience, the American “consumer” is unbeatable.  It's come at the expense of lower savings, but the stock market wealth effect has offset that.

Eight sectors finished higher as buyers moved off the sidelines and sought bargains, though energy and staples aren't cheap on a relative basis.

Lots of names that have cowered in the shadow of the SI buildout are springing to life.  Meta remains super hot and just released the latest version of Muse, “Watermelon,” after the close.

Banks are on deck, and we may get insight into consumer health from their vantage point.

Themes

On the four-year anniversary of the rally, the major questions are:

• How much longer?
• Can tech still lead?
• Can the rest of the market make up for subpar tech returns?

I think this is early innings for the Fourth Industrial Revolution, and I also think there will be a productivity-led transition that makes consumers of “intelligence” more attractive  - we aren’t there yet.

Broad Market

When Low Volatility leads, you know it was a cautious session. Still, it's better than cash looking for the nearest exit.  Value and revenue caught bids, while growth and momentum were the biggest decliners.  Large cap continues to draw the most action as investors want names that need less debt.

Market Breadth

My goodness, breadth is still ugly.

• Decliners > Advancers
• New Lows > New Highs
• Down Volume > Up Volume (NASDAQ)

There is a clear trading opportunity in the S&P 500 ex-tech (SPXT), which is trending higher overall and coming off a double bottom against the S&P 500 (SPY).

Banks In Batter’s Box

If Wall Street is right, banks are a coiled spring.

Today’s Session

Major indices are mixed this morning, with the Dow Jones and S&P 500 modestly higher while the Nasdaq and Russell 2000 are slightly lower. This comes as the 10-year yield and crude oil edge lower.

South Korea’s Kospi fell 5.46%, after being down as much as 7.4% intraday, as Samsung Electronics and SK Hynix (SKHY) slid on reports of advances at China’s ChangXin Memory Technologies (CXMT).

The big banks kicked off earnings season with mostly solid results, as equities trading was a standout at Goldman Sachs (GS) and JPMorgan (JPM). Investment banking fees continued to recover, while fixed income was more mixed. The early reaction is split, with Goldman Sachs (GS) and JPMorgan (JPM) trading higher while Citigroup (C) and Wells Fargo (WFC) are lagging.

According to Bank of America’s (BAC) latest fund manager survey, global fund managers are the most overweight Technology (XLK) since August 2020, with the share overweight the sector rising to 37% from 30% last month. Respondents were split on whether there will be an AI bubble in 2027, with 45% saying yes and 42% saying no.

Tweet

 

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