Market Insights

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Sizing Up the S&P 500

• Attention now turns to debt ceiling
• Potential double-top versus February high
• False breakout on weekly chart versus last week
• Tight range has potential for increased volatility
• Fewer SPX members above 20-day MA than 50-day MA since April 25
• MACD falling
• Regional banks still under pressure

Key Economic News

• Fed hikes 25bp as expected. Forward-looking guidance has been getting more dovish:
  • February: “The Committee anticipates that ongoing increases in the target range will be appropriate…”
  • March: “The Committee anticipates that some additional policy firming may be appropriate…”
  • May: “In determining the extent to which additional policy firming may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy.”

Inflation easing in a potential “soft landing”:

• ADP jobs surprise to upside as pay growth slows (5/3)
• Redfin: Rents -0.4% in March, first drop since March 2020.
• Census Bureau: Rental vacancy rate 6.4% in Q1 vs 5.8% in Q4 (5/3)

China slowing as U.S. rebuilds:

• U.S. construction spending on factories +62% y-o-y in March
• Chinese industrial production & profits weaken. South Korean exports weaken.
  • Bloomberg opinion (5/2): China rebound is already starting to look tired
• The result could be lower inflation and stronger growth in the U.S.

Company News

• Advanced Micro Devices (AMD) falls on weak guidance.
  • Long-term view is potentially positive, but semiconductors have lost relative strength as recession worries increase.
• Qualcomm (QCOM): Falls on weak guidance.
  • China smart-phone outlook weighs on Apple (AAPL)
• Uber Technologies (UBER): Earnings, revenue beat as usage grows
• Eli Lilly (LLY): Breaks out on hopes for Alzheimer’s treatment
• Molson Coors (TAP): Earnings, revenue beat.
  • Improved product mix.
  • Follows strong report in February
  • Potential turnaround/margin story

Leaders & Laggards

• Homebuilders leading year to date
• Weak dollar trades outperform: Gold miners & Europe
• Healthcare & biotechs gaining in the past month
• Consumer staples strong
• Banks lead to the downside
• Energy, semiconductors weakening
• China weak

Signals Scan

• SPDR S&P Regional Bank ETF (KRE): Broken descending triangle broken
• Russell 2000 ETF (IWM): Failed at 38.2% retracement of February 2-March 24 drop
• Costco (COST): Hitting resistance at 200-day MA after “death cross”
• Goldman Sachs (GS): Failed at 200-day MA after “death cross”
• Exxon Mobil (XOM): Double top around $120
• Wells Fargo (WFC) stuck under 50-day MA
• Van Eck Semiconductors ETF (SMH) stuck below 50-day MA and early-April low around $249

Mover of the Week: Builders Firstsource

• Earnings, revenue beat
• Revenue -32% but free cash flow +320%
• BLDR +57% in the last year amid business transformation and margin expansion

Upcoming Events

• Tonight: Apple (AAPL) earnings
• Friday, May 5: Payrolls, unemployment
• Tuesday, May 9: Biden/Congressional debt ceiling talks
• Wednesday May 10: CPI
• Thursday May 11: PPI

Using the Platform

Find “death crosses” with “MA X Days Since”

• RadarScreen
• Scanner

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