Say what you will about Technology (XLK) and whether Artificial Intelligence (AI) is overhyped or not; when investors need a place to hide out, they continue seeking large-cap growth, especially Technology.

Yesterday, the Tech Sector enjoyed the greatest gains, followed by Energy (XLE) and Utilities (XLU), the traditional safe haven sector.

Derivative AI Plays

An electricity crisis is coming, and the fallout will spread wide and far because the U.S. is not prepared.

The powers that be will blame Technology companies and, depending on who is in office, craft legislation for a pound of flesh. Utilities should be huge winners.

Market Breadth & Heat Map

Market breadth was decidedly bearish, but the giant red flag was up volume matching down the volume on the NASDAQ Composite. Buyers are losing their edge.

Market Breadth	NYSE	NASDAQ
Advancers	974	1,690
Decliners	1,832	2,529
New Highs	50	67
New Lows	73	190
Up Volume	1.12 billion	2.10 billion
Down Volume	1.71 billion	2.40 billion

Nvidia (NVDA) crushed it, although it's still down a bunch from its all-time high.

Not Quite Olympic Breakdancing

Only 41% of the NASDAQ-100 (NDX) components are changing hands above their 50-day moving average.

The NDX is in no-man land between the 50-day and 200-day moving averages.

Fed Cuts

The Street is looking for more than 200 basis points (bps) in Federal Open Market Committee (FOMC) rate cuts over the next 12 months. Is this madness?

I continue to believe the Fed is behind the curve, so a 200 bps over the course of a year may be a drop in the bucket.

Today’s Session

The market was moving higher into the PPI report which came in slightly better than consensus, save for the read excluding food, energy and trade of +0.3% versus consensus of +0.2%.

Corporations Continue to Warn on Consumers

I think the nudge in futures came from news out of Home Depot (HD) which underscores the fact consumers are hurting and most in my opinion are tapped out.

Guidance sent shares of the stock lower but helps the Fed with rate cuts.

Fund Managers Want Rate Cuts

Lots of news this morning, including surveys from fund managers and small business sentiment.  Fund managers see recession as the biggest tail risk to 39% from 18% but have greater conviction in a soft landing. That’s contradictory.

News of the Day

I believe your core stock positions should be based first and foremost on management. News from Starbucks (SBUX) makes the stock an automatic buy for investors willing to put it on the shelf for a couple of years and never look at the share price.

Comments

Charles, to answer your question. It is madness. The Fed-R is behind the curve, but that is what happens when one is only looking in the rear-view mirror. The other point made around AI and the energy demand associated with it is spot on as well. However, no one seems to be connecting the dots between it and the continued push to go Green and the bogus idea of being completely emissions free by some point in the future years out. Solar, wind and EVs have their place in the mix, but they also come with their own issues around reliability. No one is talking about the infrastructure around the electrical grids' ability to handle the increased demand and what that will cost to upgrade, along with who will end up paying for that? Isn't it also kind of ironic that new development around nuclear power is never mentioned as a green alternative? Yet, we give tax credits to people who want and can afford to buy an EV and then at the same time, the same politicians that passed the bill, claim the wealthy don't pay their fair share in taxes. Can't have it both ways, but more times than not, they both continue to get away with it. Terry Dowler on 8/13/2024 9:35:19 AM

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