Wednesday, February 9, 2022

Morning Note: S&P Technicals Improving -- And -- Oh My!!

While the major US equity averages are still minus on the year, they're notably less so versus just a couple weeks ago. And while, perhaps at the margin, concerns around Russia/Ukraine influenced January's early trading, suffice to say that the prospects for the Fed pulling what for quite some time seemed like a perpetually-full punchbowl largely explains the angst.

As for the moment, a stellar earnings reporting season (76% of S&P 500 members have bested estimates, with a third left to report) along with some calming words from European central bankers -- and, I'd say, attempts to still the market waters a bit via the words of US monetary policymakers as well -- has traders staying with the buy-the-dip playbook. Or, let's say, willing to squeeze every ounce of juice out of a market that's facing a number of real-world headwinds without that obviosity of the Fed coming to its immediate (other than perhaps a bit of jawboning) rescue. The latter being a major headwind in and of itself.

As for the technicals, with regard to the SP500, they're definitely improving.

Zeroing in on the one-year daily chart, recapturing the 200-day moving average (blue line) is no small deal:

The 50-dma (green line) I suspect will provide a bit of resistance. A sustained break above that level would be notably bullish right here.

Under the surface, SP500 breadth definitely looks encouraging.

Note how the Advance/Decline line (blue in panel 2) shapes up vs price (top panel):

Now, if you really want to feel good about the latest action, you want that kind of look for the hugely important right here Nasdaq Composite Index as well.

Well, not so much -- not yet anyway:

And zeroing in on price, relative to those moving averages, there remains a bit of technical damage to repair before remotely sounding the "technical" all clear:

Tomorrow's US CPI report could certainly move markets, in either direction.

Stay tuned, and stay hedged!

Asian equities rallied overnight, with all 16 markets we track closing higher.

Europe's feeling it as well this morning, with all 19 bourses we follow in the green as I type.

Same for the US.; literally every major sector is in the green this morning (great breadth!): Dow up 0.79%, SP500 up 1.04%, SP500 Equal Weight up 1.43%, Nasdaq 100 up 1.01%, Nasdaq Comp up 1.11%, Russell 2000 up 1.38%.

The VIX sits at 20.60, down 3.92%.

Oil futures are up 0.47%, gold's up 0.13%, silver's down 0.14%, copper futures are up 1.86% and the ag complex (DBA) is up 1.13%.

The 10-year treasury is up (yield down) and the dollar is down 0.19%.

All but 2 (silver and carbon credits) of our 39 core positions are in the green to start the session. The leaders being Uranium miners, ALB (lithium miner), solar stocks, wind stocks, MP (rare earth miner), Sweden equities, AT&T, oil services and materials stocks.

Sorry, can't help it below... But I must add that it's been my observation over my 37 years in markets that central bankers are just different -- far more thoughtful, pragmatic, intellectually honest, etc. -- individuals when they're not central bankers:
"Working with heavy industry gave me a profound appreciation of the central dynamic of capitalism. “Creative destruction” is an idea that was articulated by the Harvard economist Joseph Schumpeter in 1942. Like many powerful ideas, his is simple:
A market economy will incessantly revitalize itself from within by scrapping old and failing businesses and then reallocating resources to newer, more productive ones.
I read Schumpeter in my twenties and always thought he was right, and I’ve watched the process at work through my entire career."
--Greenspan, Alan. The Age of Turbulence
And I've definitely benefited (learned) from reading Chairman Greenspan's post-fed books, but... well... oh my!!

Have a great day!

No comments:

Post a Comment