/ May 15
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Thursday:
PPI MoM (0.2% exp.)
Retail Sales MoM (0.1% exp.)
Initial Jobless Claims (230K exp.)
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Friday:
Building Permits Prel (1.45M exp.)Michigan Consumer Sentiment Prel
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Thursday:
Walmart
Deere
Take-Two Interactive Software
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Friday:
N/A
Daily Briefing
*The stock market settled in mixed fashion; the Dow Jones Industrial Average closed fractionally lower, the Nasdaq Composite logged a +0.7% gain, and the S&P 500 settled little changed from the day before, while the Russell 2000 declined -0.88%;
*The outperformance of the Nasdaq was driven by ongoing buying in mega caps, chipmakers, and growth stocks; NVIDIA (NVDA, +4.2%) was an influential winner in that regard;
*SPY traded mixed throughout the day, vacillating between gains and losses, but settled little changed; the overall technical disposition remains the same; support stands at $568, with buyers expected to step in on any significant downturn; as far as resistance goes, the benchmark ETF is now in a position to challenge all time highs, especially once support is confirmed;
*The MACD signal remains widely extended, as the rally did not show any signs of stopping; in previous similar setups, the market eventually pulled back, allowing this and several other momentum measures to reset before continuing higher;
*Dark Pools traders certainly feel like a pullback is the next progression, with the average buying index for the top 20 S&P 500 stocks sitting at a lowly 42% and many Mag 7 stocks and high-risk plays being distributed rather than accumulated;
*There was some good news regarding NVDA and TSLA, both of which saw a lot of institutional buying yesterday, supporting our belief that dips will be bought;
*On the same note, GEX continued to be positive, on average for these stocks;
*Momentum is turning for many important Sectors, with Communications (XLC), Tech (XLK), Consumer Discretionary (XLY), Financials (XLF) and Industrials (XLI) being overbought; Healthcare (XLV) has been absolutely hammered recently and did not participate in the “everything rally” at all;
*Growth stocks did well, with the Vanguard Mega Cap Growth ETF (MGK) gaining +0.8%, the PHLX Semiconductor Index (SOXX) logging a +0.6% gain, and the Russell 3000 Growth Index closing +0.6% higher;
*There was less enthusiasm for other areas of the equity market; the equal-weighted S&P 500 registered a -0.6% decline; participants were lacking conviction on either side of the tape due to an emerging view that stocks are overbought in the short-term;
*Aside from the foreign ETFs (EEM and EFA, which are heavily overbought, especially on a relative to SPY basis) we’re seeing Momentum and Nasdaq (QQQ) hold up very well, while traditional Value Stocks (IVE) and Small Caps (IWM) failing to play catch-up;
Sector ETFs relative-to-SPY returns for yesterday
*Market participants are also closely watching the Treasury market; the 10-yr yield settled three basis points higher at 4.53% and the 2-yr yield settled three basis points higher at 4.05%, contributing to some selling pressure for equities;
*Outsized moves in either direction were limited to stocks with specific catalysts; Super Micro Computer (SMCI, +15.7%) is sharply higher following a $20 billion deal with Saudi Arabia's DataVolt to expedite delivery of GPU platforms;
*Shares of American Eagle Outfitters (AEO, -6.5%) declined after retracting financial guidance due to economic uncertainty;
*Dow component Boeing (BA, +0.6%) was another individual standout after Qatar Airways announced that the carrier will purchase up to 210 widebody jets, which sets new records as the largest widebody order for Boeing;
*Momentum for the whole market appears to be waning at this juncture a bit, with the extremely high number of stocks trading above their 20-DMA starting to taper off extremely high values; we would expect a retracement in this measure at least to the middle of the range;
*TLT continued the losing streak, by posting a -0.66% decline, and this is about where we would expect losses to stop, as higher yields become untenable past this point; we would again point to the idea that the Trump admin’s main task is to lower yields, not pump the stock market;