Investorideas.com

Call 800 665 0411 to learn about our services for your stock

Search   Follow Investorideas on Twitter   Investorideas is on Facebook   Investorideas is on Youtube   Investorideas is on Pinterest  Investorideas is on stocktwits   Investorideas is on tumblr   Investorideas is on LinkedIn   Investorideas Instagram   Investorideas Telegram   Investorideas Gettr   Investorideas RSS




Share on StockTwits

Grinding Up, Grinding Still

 

April 4, 2023 (Investorideas.com Newswire) S&P 500 proved key point of yesterday's extensive analysis - the buyers still have higher to go but the key resistance is approaching. After quite a couple of days, tech stocks took a breather as rotation into value led by oil stocks, materials and industrials (so as to confirm decent market breadth) took the spotlight. Financials continued doing relatively well - while XLF is moving up, KRE keeps lagging, which only reflects the precarious position of smaller banks, and concentration within the sector that I told you about in mid Mar already.

No matter how poor ISM manufacturing PMI came (46.3), it'll take some time still for the Fed to relent from tightening, or alternatively for the bond market to get convinced that the Fed would still do one more 25bp hike, and then keep rates there (probably only until a truly catastrophic event strikes, but I'm not looking for one to hit us really soon, no.

Don't forget the big picture:

(...) The rally is of course heavily dependent on the sectors I talked often recently - tech, semiconductors and communications. The dependance on heavyweights is all too palpable, and the flagging broader participation would come to bite, but not yet. Let NVDA, META, AMD and TSLA do the job for now. They are the generals that would be left standing while the troops at a future point refuse to participate in the upswing (not immediately on the horizon).

At the same time, financials continue limping as deposits are still leaving the banking system. Given the state of the long end of the curve and unyielding Fed attitude towards tightening, that's a watchout for the days ahead. Merely a watchout, because the relief that no other bank is in immediate trouble (hitting headlines), can and is winning the day.

The greatest conflict though persists - in bonds forcing the Fed to pivot, and Fed refusing to indicate so. Consider that 100bp rate cuts in 2023 are already priced in, but the Fed keeps ruling them out. Justifiably so I say - it can continue keeping rates restrictive (letting disinflation continue as best as it can) while providing liquidity through the back door so as to prop up the banking system that suffers through having taken the only route left in the quest for returns in the low rates era, which is going out on the long end (and is predictably hit when the Fed has no other choice but to keep raising thanks to inflation).

The Fed monetary policy uncertainty thus created in the markets, is obvious - the Fed has to shield the banking system from rate raising (keeping rates restrictive) consequences. At the same time, the central bank has to keep a close eye on corporate credit markets so that these don't seize the way they did in Dec 2018 - and fresh debt issuance and rollover ever since SVB went under, are not at all encouraging. Note that 25% of investment grade corporate debt has to be rolled over this year, and the activity review of junk corporate bonds and leveraged loan markets (private equity) doesn't look more optimistic.

There you go with one explanation of why financials are lagging this badly. The retreat in inflation continues, but expect goods inflation to kick in, and not only because of the rising oil prices, while services inflation would remain quite stubborn. Earnings recession is to be getting more often mentioned in the weeks ahead, while the continued Fed restrictive stance keeps carrying the risk of something new breaking somewhere else. I'm not vocally calling for a credit event, but for a sufficiently bearish catalyst slash risk in the nearest say 2 months before either the Fed starts doing market's bidding, or the other way round.

Keep enjoying the lively Twitter feed via keeping my tab open at all times - on top of getting the key daily analytics right into your mailbox. Combine with Telegram that never misses sending you notification whenever I tweet anything substantial, but the analyses (whether short or long format, depending on market action) over email are the bedrock.
So, make sure you're signed up for the free newsletter and that you have my Twitter profile open in a separate tab with notifications on so as to benefit from extra intraday calls.

Let's move right into the charts (all courtesy of www.stockcharts.com).

S&P 500 and Nasdaq Outlook


Even 4,115 is too far for today (let alone 4,078, and 4,039 won't come this week either) As said yesterday, the short-term outlook remains undeniably bullish, but it'll be of backing a filling first as the rally is short-term quite overstretched.

Credit Markets


Bonds are taking a breather, and unless they start really weakening, I wouldn't be reading too much into their today's (upcoming) performance.

Thank you for having read today's free analysis, which is a small part of the premium Monica's Trading Signals covering all the markets you're used to (stocks, bonds, gold, silver, oil, copper, cryptos), and of the premium Monica's Stock Signals presenting stocks and bonds only. Both publications feature real-time trade calls and intraday updates. While at my homesite, you can subscribe to the free Monica's Insider Club for instant publishing notifications and other content useful for making your own trade moves on top of my extra Twitter feed tips. Thanks for subscribing & all your support that makes this great ride possible!

Thank you,

Monica Kingsley
Stock Trading Signals
Gold Trading Signals
Oil Trading Signals
Copper Trading Signals
Bitcoin Trading Signals
www.monicakingsley.co
mk@monicakingsley.co

All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice.

More Info:


Investorideas.com Newswire

This news is published on the Investorideas.com Newswire - a global digital news source for investors and business leaders


Disclaimer/Disclosure: Investorideas.com is a digital publisher of third party sourced news, articles and equity research as well as creates original content, including video, interviews and articles. Original content created by investorideas is protected by copyright laws other than syndication rights. Our site does not make recommendations for purchases or sale of stocks, services or products. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. All investing involves risk and possible losses. This site is currently compensated for news publication and distribution, social media and marketing, content creation and more. Disclosure is posted for each compensated news release, content published /created if required but otherwise the news was not compensated for and was published for the sole interest of our readers and followers. Contact management and IR of each company directly regarding specific questions.

More disclaimer info: https://www.investorideas.com/About/Disclaimer.asp Learn more about publishing your news release and our other news services on the Investorideas.com newswire https://www.investorideas.com/News-Upload/

Global investors must adhere to regulations of each country. Please read Investorideas.com privacy policy: https://www.investorideas.com/About/Private_Policy.asp


That's all it takes to get an article published on Investor Ideas - Learn More