/ March 27
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Thursday:
Initial Jobless Claims (225K exp.)
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Friday:
Core PCE Price Index MoM (0.3% exp.)
Personal Income MoM (0.4% exp.)
Personal Spending MoM (0.5% exp.) -
Thursday:
Lululemon Athletica
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Friday:
N/A
Daily Briefing
*The equity market closed with losses in the major indices; the Dow Jones Industrial Average declined -0.3%, the S&P 500 dropped -1.1%, and the Nasdaq Composite fell -2.0%;
*Yesterday’s price action led the S&P 500 back below its 200-day moving average, and led the Dow Jones Industrial Average, which turned positive on the year in yesterday's advance, back into the red for 2025;
*SPY did manage to hold a more relevant support level at $565 (S1 regression), despite slipping past the 200-DMA; for bulls, this is a positive development, as it was always implied that support will be re-tested and confirmed (or not); this is that confirmation point, where a bounce or a break can inform us on the pivot level’s direction and implication for future positioning; we see 3 possible scenarios, where we either get a bounce and breakout (A), breakdown (C), or more consolidation (B - most likely);
*The MACD signal has now tapered off a bit, with the rebound stalling; it has now become slightly extended, similar to other points in the past where the velocity of an advance had slowed;
*Most sector ETFs and SPY have flipped to a Gamma Negative regime, as market makers and dealers have sold more calls and bought puts, especially in the short term;
*On the options money flow chart below, note the discrepancy between the short and medium term positioning in a couple key ETFs; short term volume has been very bullish for the safe-haven Staples (XLP) - but extremely bearish in the medium term;
*The more risky Consumer Discretionary (XLY) and SPY itself have seen bearish flows in the short term, but comparatively stronger positioning for the medium term; in any case, sectors like Energy (XLE), Communications (XLC) and Financials (XLF) appear to be well bid, when accounting for both GEX and options volume;
*There were some indications of buying interest in the early going, but losses in the mega cap space kept a cap on index performance; selling increased in the space, and the broader equity market, following news that President Trump is expected to announce tariffs on auto imports;
*All 10 Factor ETFs declined on the day, with losses concentrated in the high growth areas of the market; Nasdaq (QQQ, -1.84%), Momentum Factor ETF (MTUM, -1.9%) and Growth Stocks (IVW, -2.2%) lost an average -1.98%; losses were limited in Value Stocks (IVE, -0.05%) and the Equally Weighted S&P500 (RSP, -0.17%);
New Home Sales MoM %
*Tesla (TSLA, -5.6%) was an influential loser, giving up some ground after a solid recovery in response to a weak start to 2025; shares are still +15.35% higher in the past week, yet show a -32.6% decline since the start of the year;
*In contrast, other major losers on the year (NVDA and AVGO) failed to rally yesterday; NVIDIA (NVDA, -5.7%) as well as other chipmakers registered outsized losses on reports that the U.S. placed more than 50 Chinese companies on a blacklist of export restrictions for advanced computing capabilities; meanwhile, FT reported that Chinese environmental regulations could hurt NVIDIA's sales in the country;
*The PHLX Semiconductor Index (SOXX) closed -3.3% lower; the selling interest contributed to the underperformance of the S&P 500 information technology (XLK, -2.23%) sector, which was the worst performer by a wide margin; the communication services (XLC, -0.85%) and consumer discretionary (XLY, -1.33%) sectors were the next worst performers;
*The defensive-oriented consumer staples (XLP +1.5%) and utilities (XLU, +0.7%) sectors were the top gainers, reflecting a more risk-off tone in the tape;
*February Durable Orders came in at 0.9%; durable goods orders were stronger than expected; however, that understanding was clouded by the added realization that there was a downturn in business spending, evidenced by the 0.3% decline in nondefense capital goods orders, excluding aircraft;
*In an intriguing bit of news, the Atlanta Fed GDPNow has released an alternate model to account for imports and exports of gold; this new model now forecasts an above 0% growth rate (no recession), but it’s also worth noting that the blue chip economists consensus has moved lower;
*Treasuries settled with modest losses; the 10-yr yield settled three basis points higher at 4.34% and the 2-yr yield settled one basis point higher at 4.01%; on a related note, a $70 billion 5-yr note auction met weaker demand than the 2-yr note offering, but the market reaction was limited;
*TLT settled -0.66% lower on the day and is now at levels we would consider attractive (the mid-point of its more broader technical range); normally, $89 should provide support, but given that equities still have room to run (and involve a bonds -> stocks rotation), we could see treasuries move lower in the short term;