Dow: -112.18…
Nasdaq: -125.58… S&P: -18.36…
The S&P 500 declined 0.4% on Thursday, although it was down as much as 1.6% intraday amid concerns surrounding the macro environment. The Dow Jones Industrial Average (-0.3%) and Russell 2000 (-0.2%) also fell modestly while the Nasdaq Composite (-1.0%) underperformed.
Yesterday’s optimism was pressured by a breakdown in ceasefire talks between Russia and Ukraine, CPI data for February that was as hot as feared/expected, a 10-yr yield that reached 2.01% (+6 bps today), and a short rebound in oil prices after the UAE clarified that it wasn’t going to unilaterally raise oil production.
We are at the stage now where if oil pulls back the market will get a bump.
$115 to $107 on oil today.
Oil may have gone red today, but energy “stocks” (XLE) still popped 3.0%.
I mentioned two names last night.
MDRX showed great relative strength all day and LAC still looks poised for a breakout.
BTU still looks good after the pullback and I have no problem being long that one for a move to $27-30 as long as coal stays hot.
MPC-watch for a breakout at 78.30 level.
BTG is a gold name. Watch for a breakout through 4.60-4.65.
Uranium names like URA, CCJ, and URNM still look very bullish. Windmills ain’t working and mothballs may start getting removed from nuclear facilities. Germany said this yesterday.
Performance has been very challenging for equity long/short hedge funds…they are down 6% MTD as of Tuesday and down 12% YTD. They need to play catch up soon and it’s harder to short here.
The potential re-balancing flow for the end of March is around $230bn out of bonds and into equities.
Investors have become the most overweight cash since March 2020.
I expect a rally that could run for a couple of weeks soon, but wary of Fridays going into a Putin weekend.
If we were to rally tomorrow and close on the highs I would confidently feel that a short-term bottom is in.
See you in the morning.