/ May 09
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Friday:
Various Fed Speakers -
Thursday:
Shopify Inc.
Anheuser-Busch Inbev SA
ConocoPhillips
McKesson Corporation
Brookfield Corporation
Monster Beverage Corporation
Cheniere Energy, Inc.
Sempra
Daily Briefing
*The stock market continued in rally-mode yesterday, propelled by momentum after several positive finishes and pleasing developments related to global trade tensions; the Trump administration announced a trade deal with the UK, fueling optimism that deals will be reached with other countries and the economic impact of global tariffs may be less than feared;
*Commerce Secretary Howard Lutnick said the 10% baseline tariff will remain in place (as expected), adding that the UK will purchase $10 billion worth of Boeing (BA 193.76, +8.27, +4.5%) jets;
*During the Q&A with reporters, President Trump said the US is very close to making additional deals with other countries, specifying that tariffs on China "could be" lowered if this weekend's meeting goes well; Mr. Trump added he may speak with President Xi after the meeting;
*SPY did not quite manage to achieve a breakout that bulls were pushing for; intraday, the price touched $570, but settled below the key resistance level of $567, and below the 200-DMA; if negotiations with China go poorly, we would expect a retracement to support, at $543 (20-DMA), with downside to $511 in the worst case;
*The MACD signal remains highly elevated, even after cooling off from the extremely high readings previously touched; further upside in the short term appears limited from this standpoint;
*Dark Pools buying among the key S&P 500 stocks was a tad weaker than the day before, at an average of 48.7% (vs 49.4% on Wednesday); 3 major Mag 7 companies are being sold by institutions (GOOG, AAPL, TSLA), registering distribution patterns;
*Other high risk names like NVDA and AVGO are seeing strong bids among Dark Pool buyers, with the positive price action stemming from an “exemption workaround” that NVDA announced in regards to H20 chip design for sale in China;
*The market was also enthused that the Trump administration will be revoking the "AI Diffusion" rule that was meant to curtail AI chip exports; semiconductor-related stocks have outperformed the broader market in yesterday’s everything rally; the PHLX Semiconductor Index (SOXX) gained +0.89% on the day;
*Average Gamma Exposure among key sector ETFs has flipped positive, even when accounting for the large downside deviation of Energy (XLE); the average now stands at +0.52%, up from yesterday’s -0.25%;
*With the rally now stoking real FOMO among some investors, it’s important to note that there is a wide discrepancy between retail and institutional traders; according to BofA Global Research, individual investors have been net buyers of equities for 21 consecutive weeks, the longest streak on record; this is more than DOUBLE the previous records set in 2021 and 2022;
*Meanwhile, as we’ve seen from lukework Dark Pools and GEX data recently, hedge funds have sold a record ~$1.5 billion; additionally, BofA’s institutional clients have dumped ~$2.7 billion, the second-largest amount in history;
Sector ETFs relative-to-SPY returns for yesterday
*Although analogues are not a great tool, as there are many differences among environments, the current correction phase tracks well with 2022, as SimpleVisor points out:
*The takeaway for investors is that while the recent rally from the lows was robust, with a sharp improvement in breadth, many were trapped in the selloff; as such, there is a decent probability that they will likely exit the market quickly at the first sign of a risk returning;
*The silver lining here is that if stocks break out above $570 on SPY, professional managers (who are very underweight stocks at the moment) will be forced to catch up, potentially creating a Gamma Squeeze scenario;
*Treasury yields settled higher, but that did not dampen the risk appetite for equities;
*TLT lost -1.11% and is headed to S1 support at $85; while GEX is negative on TLT, Dark Pools have been net buyers, logging 63% bullish volume on yesterday’s decline;