/ May 06
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Tuesday:
N/A
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Wednesday:
Fed Interest Rate Decision
Fed Press Conference
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Thursday:
Initial Jobless Claims (232K exp.)
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Friday:
Various Fed Speakers -
Tuesday:
Advanced Micro Devices, Inc.
Arista Networks, Inc.
Ferrari N.V.
Duke Energy Corporation
Brookfield Asset Management
Transdigm Group Incorporated
Constellation Energy Corporation
Zoetis Inc.
Marriott International
American Electric Power Company, Inc.
Daily Briefing
*The stock market settled in negative territory; the S&P 500 broke its extended winning streak (nine sessions) and closed -0.6% below its prior close; the index was approaching positive territory at its best level of the day, and traded down as much as -0.9%;
*Selling activity was indicative of consolidation after the market's solid run off April lows; the S&P 500 exited correction territory, and closed above its 50-day moving average during the strong rally; losses in yesterday’s session were decidedly muted compared to the scope of recent gains;
*SPY appears to have hit the limits to this uninterrupted rally, as the S1 level and the 200-DMA acted as clear resistance; to the downside, support stands at the 20-DMA and lower trendline area, near $537 - $540; given that the benchmark equities ETF remains overbought even after yesterday’s decline, we still view a slight pullback as the most likely scenario for now;
*The MACD signal continues to remain very extended to the upside, mirroring the sharp decline recorded earlier; a normalization of the histogram would be expected at this stage, coinciding with a technical pullback to support;
*Average Dark Pool buying among top S&P 500 stocks stood at 46.6%, just a fraction away from decidedly bearish territory (sub 45% reading); higher risk companies like NVDA and META were bid in dark pools, painting a more constructive picture;
*Many Mag 7 stocks were distributed, not accumulated however; GOOG, TSLA and AAPL stand out in this regard; overall, Dark Pool volumes point to a mixed disposition, with slightly bearish overtones;
*Average Gamma Exposure remains positive across the top stocks and most S&P Sectors (+0.59%), including for both SPY and QQQ ETFs; notably, Energy (XLE) lags dramatically when it come to GEX, dragging the whole average down; if we were to remove it from the mix, the average shoots up to +1.26% for all instruments;
*There is a certain resilience to selling efforts that we can spot, and this has been acting as support for stocks, all things considered; a better-than-expected ISM Services PMI for April also helped temper recession concerns;
*There was also an acknowledgment by Treasury Secretary Bessent that he thinks we're very close to some trade deals, helping with investor morale — by this point we would expect to see actual results, not just rhetoric, though;
ISM Services PMI for April
*Losses in some mega caps had an outsized impact on index performance; the Vanguard Mega Cap Growth ETF (MGK) dropped -0.7%; meanwhile, the Invesco S&P 500 Equal Weight ETF (RSP) logged a -0.3% decline;
*The consumer discretionary (XLY, -1.3%) and technology (XLK, -0.9%) sectors, which house mega cap components, were among the weakest performers, along with energy (XLE, -2.0%); dropping oil prices ($57.16/bbl, -1.20, -2.1%) after OPEC+ announced a 411K bpd increase in production starting in June impacted the energy sector heavily;
*Options money flows (calls bought + puts sold) at the medium term expiration heavily favor sectors like Tech (XLK) and Financials (XLF), with notable bidding in SPY and QQQ as well; in this sense, yesterday’s drop was viewed as a buying opportunity for the next 50-70 trading days, especially in these economically risky sectors;
*The 10-yr note yield settled two basis points higher than Friday's settlement at 4.34%; on a related note, a $58 billion 3-yr note auction was met with decent demand;
*TLT dropped -0.56% and settled well below the pivot level at $89; as the technical set-up for TLT transitions to a range from a previous downtrend, support and resistance levels will become less meaningful; in any case, longer term, this transition is bullish for treasuries;