Monday, April 4, 2022

Morning Note: "Out of Step"

Looking at present trends/setups, and what they portend with regard to US equities, for --

The dollar: Neutral
Interest rates: Negative
Fed Policy: Negative
Fiscal Policy: Neutral
SP500 Valuation: Negative
Sector Leadership: Neutral
Macro Conditions: Positive
Geopolitics: Negative
SP500 Technical Trend: Positive
Equity Market Breadth: Positive
Equity Market Sentiment: Positive (rising fear)
Credit Market Conditions: Neutral

-- our proprietary equity market conditions index scores 0 this month. Which is a 16.7-point improvement over last month's reading.

Our very simple "5-Point Model", however, scores a -40 for the second consecutive month.

The difference between the two is that the latter has far fewer inputs and we do no further  (technical or otherwise) analysis (as we do for our broader index) on its inputs. It's simply an on-the-ground snapshot of its components

So what's that all say? Well, it says that the US equity market is, let's say, nothing to write home about presently. Or, in other words, while showing some improvement over last month, conditions remain less than ideal... 

Asian equities (China shuttered) leaned green overnight, with 9 of the markets we track closing higher.

Europe's mostly higher so far this morning, with 15 of the 19 bourses we follow in the green as I type.

US stocks are somewhat mixed to start the session: Dow down 42 points (0.12%), SP500 up 0.32%, SP500 Equal Weight down 0.13%, Nasdaq 100 up 1.16%, Nasdaq Comp up 1.06%, Russell 2000 down 0.20%.

The VIX sits at 19.64, up 0.05%.

Oil futures are up 4.15%, gold's up 0.07%, silver's down 1.12%, copper futures are up 2.00% and the ag complex (DBA) is up 0.89%.

The 10-year treasury is down (yield up) and the dollar is up 0.28%.

Among our 37 core positions (excluding cash and short-term bond ETF), 20 -- led by MP (rare earth miner), solar stocks, emerging market equities, tech (overall) and semiconductor stocks -- are in the green so far this morning. The losers are being led lower by PARA, utilities stocks, bank stocks, ALB and AT&T.

Here's living legend investor Stan Druckenmiller on the present setup (HT Michal Kao):
“I can’t find any period in history where monetary and fiscal policy were this out of step with the economic circumstances, not one.”

Have a great day!

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