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LOTS OF MIXED SIGNALS THIS WEEK

A LIKELY LATE CYCLE SPX TRADING RANGE 4800 - 5200

Click All Charts to Enlarge

LATE CYCLE: Bidenomics (Bubble-nomics) has inserted ~$6.7T in government spending into the economy which has extended the current late business cycle positioning through the presidential period. Equities can continue to perform well in late cycle backdrops, especially if there is no recession which the market has recently reduced the probability of this occurring (to "no-landing").

1 - SITUATIONAL ANALYSIS

There were plenty of signals this week from the FOMC to the Labor Report resulting in big moves down in Yields. However, the markets are left with no clear direction.

Barring new date or a triggering event, the expectations are for the markets to be range bound in the near term.

Panic Out (temporarily) - Trading Range In!

Sentiment as represented by the Fear:Greed Index is as close to neutral as it gets. This is also suggestive of a trading range until the market gives a stronger trend direction or a triggering event occurs.(CHART RIGHT)

CHART BELOW: SPX futures closed right on the 50 day moving average and the short term negative trend line. The Trading Range is likely between 5200 on the upside and possibly as low as 4800 on the downside.

The crowd managed to load up on puts just in time for the bounce in equities. They have now decided to "puke puts". There is a reason the crowd is the crowd (CHART RIGHT)

CHART BELOW

5k is the line in sand level from a gamma point of view. For now 5k is "sticky", but this could change abruptly. Spotgamma's assessment is: "...we think that a full short signal is only a break of 4,980, which may then lead to a test of 4,800".

AS GO THE BANKS, SO GO THE MARKETS - AS GO THE FINANCIALS, SO GO THE BANKS!

1- BANKING STOCKS

• Bank stocks, though initially weak on earnings release, have been trending up ever since.
• Presently testing underside of rising trend line.
• The pattern presently appears unfinished until a potential "Double Top" is completed.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

2- FINANCIAL STOCKS

• The Financial stocks appear to have already put in an intermediate double top.
• Momentum (lower pane) may act as near term support.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

CHART BELOW

• Note the Critical Support Trend line (in black) below.
• This support is likely to need to be test before further upside gets underway. If decisively broken the markets with test the lower end of the trading range.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

2 - FUNDAMENTAL ANALYSIS

RISING FORWARD EPS Y-O-Y CHANGE CHART RIGHT

When forward earnings are rising, it is generally viewed as a positive signal for higher equity prices and can help minimize the risk of a potential deeper market correction (chart right)

However ....

EQUITY MARKETS ARE EXPENSIVE

Equity markets are expensive, particularly in the US. The Chart Below highlights forward P/E multiple by MSCI Regions with data for the last 20 years.

CREDIT MARKETS LEAD

As you are well aware, we are strong believers that Credit Markets LEAD while Equity & Bond Markets FOLLOW. As such Credit Spreads have been highly skeptical the equity was going to selloff significantly.

CHART RIGHT: Credit spreads have been anchored alongside equity volatility

CHART BELOW: The CDX IG popped higher when VIX went crazy a few weeks ago, but the credit move was very controlled. Note things are back to "normal" in credit protection land. CDX IG closed at the lowest levels in a few weeks.

THE SPDR BLOOMBERG BARCLAYS HIGH YIELD BOND ETF - Daily

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

3 - TECHNICAL ANALYSIS

MAGNIFICENT 7

• We were reaching the vertical lift part of the parabolic (geometric) lift shown by the dashed red line before falling off and then lifting after the release of the Labor Report on Friday.
• In the short term, Momentum (bottom pane) is testing the overhead Momentum trend line resistance level (dotted orange line).

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

NVDA - Daily

• NVDA again broke through the overhead 50 DMA on a retest to reach a 61.8% Fibonacci Retracement level..
• NVDA Momentum (lower pane) has also broken through its overhead resistance trend line (dotted orange trend line).
• This counter rally has been noticeably strong for NVDA but appears to exhibit corrective characteristics (overlapping price movement), whereas the downward pattern from NVDA's highs appears "Impulsive" (less overlapping price movement & a "five" wave count).
• The pattern is currently suggesting we are in a corrective wave 2 of what will be a downward 5 count.
• With earnings release fast approaching(marked by the red "E" box) this potentially could be a set-up for NVDA to move towards its 200 DMA for support. Even strong earnings could be found to "disappoint" on any newly appearing concerns?

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

"CURRENCY" MARKET (Currency, Gold, Black Gold (Oil) & Bitcoin)

CHART RIGHT: Real Rates reached our initial overhead resistance level of 2.25% before falling off hard with Friday's Labor Report.

TRADING RANGE: Equity markets reacted to labor market pressures associated with a weakening Jobs Report (Friday). Yields & Rates will likely test the lower trend line (chart above right) as it waits on the next CPI report scheduled for release on May 15th.

CONTROL PACKAGE

There are TEN charts we have outlined in prior chart packages, which we will continue to watch closely as a CURRENT "control set".

1. US DOLLAR -DXY - MONTHLY (CHART LINK)
2. US DOLLAR - DXY - DAILY (CHART LINK)
3. GOLD - DAILY (CHART LINK)
4. GOLD cfd's - DAILY (CHART LINK)
5. GOLD - Integrated - Barrick Gold (CHART LINK)
6. SILVER - DAILY (CHART LINK)
7. OIL - XLE - MONTHLY (CHART LINK)
8. OIL - WTIC - MONTHLY - (CHART LINK)
9. BITCOIN - BTCUSD -WEEKLY (CHART LINK)
10. 10y TIPS - Real Rates - Daily (CHART LINK)

GOLD - DAILY

• Gold pulled back on Monday finding initial support at the 23.6% Fibonacci Retracement level.
• Gold Momentum (lower pane) is likely looking for support slightly lower at the dotted orange trend line,
• It appears that this initial corrective leg is an "A" wave of an ABC corrective pattern before heading higher when completed. The "C" down leg of the ABC is likely to find firm support at the 38.2% Fibonacci Retracement level (orange red box).

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

INTEGRATED GOLD MINERS

BARRICK GOLD - Daily

We continue to have a close eye on Gold and the INTEGRATED GOLD MINERS as represented by Barrick Gold.

• Barrick has broken out of its long term declining overhead resistance trend.
• Barrick has pulled back with Gold Bullion finding support at its long term 200 DMA.
• This may potentially be a good opportunity to add to your Integrated Miners positions.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

US EQUITY MARKETS

If this is a mild 5-10% correction, investor sentiment should bottom soon around neutral. (Chart Right)

CORPORATE BUYBACKS

Corporate share buybacks will resume in the next couple of weeks, and with more than $1 trillion slated for 2024, many buybacks remain to complete. Such is particularly the case with Google adding another $70 billion to that total.

CONTROL PACKAGE

There have FIVE charts we have outlined in prior chart packages that we will continue to watch closely as a CURRENT "control set".

1. The S&P 500 (CHART LINK)
2. The DJIA (CHART LINK)
3. The Russell 2000 through the IWM ETF (CHART LINK),
4. The MAGNIFICENT SEVEN (CHART ABOVE WITH MATASII CROSS - LINK)
5. Nvidia (NVDA) (CHART LINK)

S&P 500 CFD

• The S&P 500 cfd bounced off its 100 DMA once again to only subsequently retrace to test its 50 DMA a second time.
• Momentum (lower pane) also bounced off its lower support to a more neutral level.
• Expect the Moving Averages (50/100/200 DMA) to narrow and tighten.
• We have a trading range set-up as the market looks for more guidance and corporate buybacks to resume.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

S&P 500 - Daily - Our Though Experiment

Our Though Experiment, which we have discussed many times previously in the way of a projection, suggests we have put in a near term top and will now consolidate before possibly completing one final small impulse higher OR put in a final Wave 5 of a higher degree.

NOTE: To reiterate what I previously wrote - "the black labeled activity shown below, between now and July, looks like a "Killing Field" where the algos take Day Traders, "Dip Buyers", the "Gamma Guys" and FOMO's all out on stretchers!"

• The S&P 500 bounced off its 100 DMA once again to only subsequently retrace to test its 50 DMA a second time.
• Momentum (lower pane) also found support at its lower trend support line before beginning to retrace towards its upper trend momentum. From a momentum perspective it appears to still have further upside to go.
• We appear to be in a short term trading range as the market looks for more guidance and corporate buybacks to resume..

OUR CURRENT ASSESSEMNT IS THAT THE INTERMEDIATE TERM IS LIKELY TO LOOK LIKE THE FOLLOWING.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

STOCK MONITOR: What We Spotted

BOND MARKET

CONTROL PACKAGE

There have FIVE charts we have outlined in prior chart packages that we will continue to watch closely as a CURRENT "control set".

1. The 10Y TREASURY NOTE YIELD - TNX - HOURLY (CHART LINK)
2. The 10Y TREASURY NOTE YIELD - TNX - DAILY (CHART LINK)
3. The 10Y TREASURY NOTE YIELD - TNX - WEEKLY (CHART LINK)
4. The 30Y TREASURY BOND YIELD - TNX - WEEKLY (CHART LINK)
5. REAL RATES (CHART LINK)

FISHER'S EQUATION = 10Y Yield = 10Y INFLATION BE% +REAL % = 2.359% + 2.147% = 4.506%

• The TNX broke through support at its 144 EMA (solid black moving average) on Friday's Labor Report. It appears to have found near term support which it bounced off of.
• The TNX appears to have Momentum support (lower pane) at a long term support trend line.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

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