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Sizing Up the S&P 500

  • Attention now turns to debt ceiling
  • Potential double-top versus February high
  • False breakout on weekly chart versus last week
  • Tight range has potential for increased volatility
  • Fewer SPX members above 20-day MA than 50-day MA since April 25
  • MACD falling
  • Regional banks still under pressure

Key Economic News

  • Fed hikes 25bp as expected. Forward-looking guidance has been getting more dovish:
    • February: “The Committee anticipates that ongoing increases in the target range will be appropriate…”
    • March: “The Committee anticipates that some additional policy firming may be appropriate…”
    • May: “In determining the extent to which additional policy firming may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy.”

Inflation easing in a potential “soft landing”:

  • ADP jobs surprise to upside as pay growth slows (5/3)
  • Redfin: Rents -0.4% in March, first drop since March 2020.
  • Census Bureau: Rental vacancy rate 6.4% in Q1 vs 5.8% in Q4 (5/3)

China slowing as U.S. rebuilds:

  • U.S. construction spending on factories +62% y-o-y in March
  • Chinese industrial production & profits weaken. South Korean exports weaken.
    • Bloomberg opinion (5/2): China rebound is already starting to look tired
  • The result could be lower inflation and stronger growth in the U.S.
SPDR S&P 500 ETF (SPY), daily chart, with select indicators.

Company News

  • Advanced Micro Devices (AMD) falls on weak guidance.
    • Long-term view is potentially positive, but semiconductors have lost relative strength as recession worries increase.
  • Qualcomm (QCOM): Falls on weak guidance.
    • China smart-phone outlook weighs on Apple (AAPL)
  • Uber Technologies (UBER): Earnings, revenue beat as usage grows
  • Eli Lilly (LLY): Breaks out on hopes for Alzheimer’s treatment
  • Molson Coors (TAP): Earnings, revenue beat.
    • Improved product mix.
    • Follows strong report in February
    • Potential turnaround/margin story

Leaders & Laggards

  • Homebuilders leading year to date
  • Weak dollar trades outperform: Gold miners & Europe
  • Healthcare & biotechs gaining in the past month
  • Consumer staples strong
  • Banks lead to the downside
  • Energy, semiconductors weakening
  • China weak

Signals Scan

  • SPDR S&P Regional Bank ETF (KRE): Broken descending triangle broken
  • Russell 2000 ETF (IWM): Failed at 38.2% retracement of February 2-March 24 drop
  • Costco (COST): Hitting resistance at 200-day MA after “death cross”
  • Goldman Sachs (GS): Failed at 200-day MA after “death cross”
  • Exxon Mobil (XOM): Double top around $120
  • Wells Fargo (WFC) stuck under 50-day MA
  • Van Eck Semiconductors ETF (SMH) stuck below 50-day MA and early-April low around $249

Mover of the Week: Builders Firstsource

  • Earnings, revenue beat
  • Revenue -32% but free cash flow +320%
  • BLDR +57% in the last year amid business transformation and margin expansion

Upcoming Events

  • Tonight: Apple (AAPL) earnings
  • Friday, May 5: Payrolls, unemployment
  • Tuesday, May 9: Biden/Congressional debt ceiling talks
  • Wednesday May 10: CPI
  • Thursday May 11: PPI

Using the Platform

Find “death crosses” with “MA X Days Since”

  • RadarScreen
  • Scanner

Standardized Performances for ETF mentioned above

ETF1 Year5 Years10 Years
SPDR S&P 500 ETF (SPY)0.95%+57.25%+160.48%
SPDR S&P Regional Bank ETF (KRE)-31.02%-30.79%+37.39%
Van Eck Semiconductors ETF (SMH)+7.57%+154.48%+567.34%
As of April 28, 2023. Based on TradeStation Data.

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