Yesterday was a good day for equities ahead of a consequential week, including the Federal Open Market Committee (FOMC) on Wednesday and the jobs report on Friday.

Nine of eleven sectors were higher, led by Consumer Discretionary (XLY), which was led by Tesla (TSLA).

Direction & Breadth

Market breadth was awe-inspiring across the board.

Market Breadth	NYSE	NASDAQ
Advancers	1,997	2,648
Decliners	811	1,594
New Highs	77	80
New Lows	9	70
Up Volume	2.40 billion	3.23 billion
Down Volume	1.02 billion	1.70 billion

The market was melting two weeks ago as new lows overwhelmed new highs. The tide has turned.

Now, all arrows are pointing north as the bulls have regained control.

Still Fearful

Eleven straight sessions in the ‘fear zone’ have some becoming fearful.

I’m less concerned about stocks than bonds. The 10-year bond can and has lost money in the past. Right now, it's crushing investors who thought it was a layup over the past year.

Investors are bracing for a move to a 5.00% yield. The good news is that it would be a double top, but the bad news is that such a move would happen partly because of record issuance.

A move to 5.0% will probably happen after the FOMC press conference.

Chips Ahoy

All eyes are on VanEck Vectors Semiconductor ETF (SMH), with Super Micro Computer Inc (SMCI) and Advanced Micro Devices (AMD) ready to post quarterly financial results.

The SMH has edged higher, but the move is running out of steam (see volume and rate of change), and the Adams Diversified Equity Fund (ADX) line keeps moving lower. Individual names are especially struggling and looking for the behemoths to pick up the pace.

The SMH needs to close above 220 on a rebound in volume.

There is still a huge downside gap (see arrow) that needs to be filled.  It seems farfetched right now, but the upside test is more important than many realize or are prepared for.

 

Today’s Session

The ECI vaulted to 1.2% in the first quarter from 0.90% in December 2023.

.

Caveat to Employment Cost Index News

ECI came in hotter than expected, sending bond yields higher and equity futures lower.  However, this is all about the government driving the narrative as private sector wages and benefits declined significantly.

The tone is set for the session, but we could see buying into the close. 

We will analyze big time earnings scheduled for after the close on the Afternoon Note.

Tweet

 

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