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5/24/2024 10:47:37 AM Eastern Time

INFLATION'S SHADOW INVOKES FEAR
By Charles Payne, CEO & Principal Analyst

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And just like that, it's back to ‘neutral.’  From ‘greed’ on Wednesday, last week, and a year ago, the gravitational pull of fear dominates. 

Yesterday, all major equity indices finished in the red, as the “fear gauge” (Volatility Index (VIX)) surged 3.9%.

All eleven sectors were down for the count. 

In Greek mythology, Atlas was tasked with holding the world afloat, but that was a punishment. For a split second, Nvidia (NVDA) looked like it could pull off a similar act.

Market Breadth was decidedly ugly, although there were more new highs than lows on the New York Stock Exchange (NYSE), especially decliners versus advancers. The ‘NVDA Effect’ was seen in more up volume than down volume on NASDAQ Composite.

Momentum arrows are still mostly pointed higher.

However, higher yields significantly affected mid-caps and small-caps. 

Still A Great Year

It's still been a great year but ignoring the persistence of inflationary pressures is harder. 

Tide Goes Back Out

It has been the dream call for most on the Street - the broadening of the rally. The problem is the bounce from April’s low never had the kind of participation the market enjoyed earlier in the year. This time, the market hitting new highs with fewer names in the mix catching a bid was a red flag. 

Portfolio Approach

We closed MAS (Industrial) and added ML (Tech) this morning in our Hotline Model Portfolio.

Today’s Session

Between yesterday’s shellacking and the three-day weekend, today's session has that summer vibe.  Lots of folks have already taken the day off and those sticking around have mentally checked out. Still, it's an important session.

The real story of the market continues to be NVDA and the magnificence of America’s tech sector.  Global the United States has outpaced the world in profit growth.

Drilling down on this has been profits in information technology that have led the way – dwarfing everything including the S&P 500.

There has never been a period like this before where one nation had the most dominant companies in the world.  The second industrial revolution began in the UK with the rails and quickly spread to the United States which took the baton to surpass England.

It should be reflected in the stock market, but it skews investing opportunities as well.  Those opportunities may take longer to materialize with respect to share prices – but they will at some point.   

Long Idea: MoneyLion Inc. (ML) @ $80.82
Industry: Technology; Software Infrastructure
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BACKGROUND: MoneyLion Inc., a financial technology company, provides personalized products and financial content for American consumers. The company's platform offers access to banking, borrowing, and investing solutions for customers. Its principal products include RoarMoney, an insured digital demand deposit account; Instacash, a cash advance product that gives customers early access to their recurring income deposits; Credit Builder Plus membership program; MoneyLion Investing, an online investment account that offers access to separately managed accounts invested based on model exchange-traded fund portfolios; Roundups, which provides features designed to encourage customers to establish good saving and investing habits; and MoneyLion Crypto, an online cryptocurrency account. It also provides marketplace solutions, such as valuable distribution, acquisition, growth, and monetization channels; and creative media and brand content services. MoneyLion Inc. was founded in 2013 and is headquartered in New York, New York.

SKINNY: ML provides banking, personal loans, cash advances and cryptocurrency products to middle-income Americans. The latest quarterly report shows strong performance and growth prospects accelerating. The stock is on the cusp of a major breakout point and above its main moving averages. Shares are breaking out this morning, we are adjusting it to $110 from original target $97.