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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.
- 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
- 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
- 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”
Standardized Performances for ETF mentioned above
|ETF||1 Year||5 Years||10 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%|
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