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Sizing Up the S&P 500

  • S&P 500 stalls under 50-day MA, April 12 (weekly) close
  • Potential bearish flag forming
  • January 31 close of 4845 could become relevant
  • Potential risk into CPI on May 15, with Cleveland Fed Nowcast at 3.5% (headline y/y)

Key News

  • Economic picture potentially darkens: weaker demand and growth but higher inflation
    • March JOLTS job openings hit 3-year low, missing estimates
    • April ISM manufacturing index shows price-index spike despite falling into contraction
    • March construction spending -0.2% vs +0.3% estimate. Private construction shrinks
    • Q1 employment cost index +1.2% vs +0.9% estimate
    • Q1 GDP +1.6% vs +2.5% estimate. Core PCE y-o-y +3.7% vs +3.4% estimate
  • Some corporate earnings show weakening demand: SBUX, NCLH, MCD, MAR, CAT
  • Observation: Much of the recent strength in hiring and construction have been public/government or non-cyclical like healthcare.
  • U.S. Treasury raises Q2 debt issuance estimate from $202bln to $243bln
  • Goldman Sachs, UBS get more positive on China as Beijing takes favorable steps after years of stock-market crackdowns.
    • CVS has biggest 1-day drop since 2009 on medical costs
  • Crude oil inventories +7.4mln vs -2.3mln estimate

Mover of the Week:

  • Chinese online travel agency with 105% revenue growth last quarter
  • Earnings, revenue beat on 2/21
  • Beijing is trying to promote domestic tourism
  • TCOM +35% YTD

Upcoming Events

  • Earnings tonight: AAPL, DKNG, COIN, AMGN
  • Fri 5/3: Employment situation, ISM services
  • Tue 5/7 earnings: DIS ANET
  • Wed 5/8: EIA crude oil inventories
  • Thu 5/9: Initial jobless claims

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Performance data shown reflects past performance and is no guarantee of future performance. The information provided is not meant to predict or project the performance of a specific investment or investment strategy and current performance may be lower or higher than the performance data shown. Accordingly, this information should not be relied upon when making an investment decision.

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David Russell is Global Head of Market Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.