Market Rally Legitimate or a Dead Cat Bounce?

Was today’s trading session a legitimate rally or a dead cat bounce? There were certainly some notable catalysts supporting its legitimacy: 1) the CDC announcement to lift mask requirements for anyone fully vaccinated; 2) Fed bankers defiantly jawboning for lower interest rates in the face of “transitory inflation” data evident in producer prices; and 3) the ongoing improvement in the US labor market. Does anyone sense a “but” statement forthcoming in this analysis?

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CPI Data Reignites Fears of Inflation and Market Risks

Today’s CPI report reignited inflation fears and the economic ramifications. Truth be told, this market has been overbought and technically overextended and accompanied by decelerating momentum and volume. Now we are witnessing early signs of capitulation. This is healthy and creates the ideal environment for a relief rally.

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Despite Profit Taking, Sentiment Still Favors Value

The preference for value over growth or momentum as a dominant theme may be temporarily succumbing to profit taking. Volume was relatively for the Dow 30 Industrials (DIA), Utilities (XLU), Financials (XLF) and Healthcare (XLV). Also worth mentioning is the 1-month new low on the SP-500 (SPY). Short-term support levels on the SP-500 have deteriorated to less than

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Inflation Fears Drive Shift to Value

In the midst of rising inflation expectations, i.e. 10-year breakeven inflation targets climbing to a new 8-year high @ 2.59%, investors are increasingly shifting their preferences to value. The Dow 30 Industrials escaped today’s selling almost unscathed. As inflation indicators signal rising risks, tangible assets, e.g. commodities and real estate, are likely to benefit, along with stocks representing sectors in energy, materials and financials.

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“FOMO” Trade in Deceleration Mode

US stock markets ended an unimpressive session in positive territory and continue to consolidate their recent uplegs. The wide breadth of positive earnings and a better than expected GDP growth for Q1-2021 had little impact. In fact more signs of distribution selling appeared. Approximately 73% of today’s…

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Sit Tight to Wait and See

Market Moving Event: News and information normally regarded as market drivers had little impact today. The overwhelming majority of companies reporting positive earnings surprises nor the upbeat housing and consumer confidence data were…

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Without Data, What Else Can One Expect?

Market Moving Event: Core Durable Goods Orders were today’s only major data. Since they aligned with expectations, the market lacked a catalyst to drive stock indexes notably higher or lower. Therefore, a flat day and contracting volume were somewhat expected. Yet, there is always tomorrow or the day after, which will be exactly the case as @ 100 SP-500 constituents report earnings over the next two days. If that is not sufficient, then look to this Wednesday’s release of …

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US Stocks Advance Cautiously on Light Volume

Market Moving Event(s): Stronger than expected economic data from the US and Europe, along with stabilizing 10-Year Treasury rates, enabled equity markets to recover losses from earlier in the week to finish relatively unchanged. Meanwhile, investors continue to weigh the prospects of Biden’s proposed capital gains tax targeting high income earners vs what may be compromised during negotiations.

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