Window Dressing Begins!

Market continue to Chop

KR Opinion

Announcement: there will not be a YouTube video on Wednesday. The next video will be a live trading session on Thursday at 2:00 PM Eastern Time.

The market initially showed positive signs in yesterday's trading session, hinting at a possible turnaround that could last a few days. However, as the day progressed, the momentum began to wane, leading to a significant sell-off in the final hour. This downward movement brought the market to its session lows by the close.

Despite this, I predicted in a late-session tweet that we might see a recovery in the overnight markets. This prediction came true as the markets experienced a notable rally, gaining 20 points and approaching the 5285 level, right at the R3 resistance level on the S&P.

This volatility is somewhat typical towards the end of a quarter, characterized by erratic market movements. As we approach the US market opening, we may encounter resistance again near the 5293 level, extending up to 5300.

Interestingly, yesterday’s market decline was not triggered by any significant factors. Economic reports, including those on housing prices and market sentiment, were largely in line with expectations. Going forward, we'll monitor for any major liquidity issues.

As the quarter ends, we anticipate continuing to receive lackluster economic news, which is unlikely to significantly influence market direction. Market sentiment is more likely to be affected by portfolio adjustments and strategic positioning for the second quarter.

It's worth noting that Jerome Powell is scheduled to speak on Friday after the markets close, which is expected to significantly influence the market's opening on Sunday night. Historically, Powell's speeches tend to incite a bullish market response.

Looking Back on Tuesday’s Action

The major stock market indices concluded the trading session at or near their lowest points, diverging further from their recently achieved record highs. Throughout most of the day, the market demonstrated positive momentum until a wave of selling emerged in the late afternoon.

Specifically, the S&P 500 finished slightly above the 5,200 mark, marking a 0.3% decline from the previous day.

This downturn in the afternoon was notably influenced by significant losses or declines into the negative territory among major companies and semiconductor manufacturers.

Key companies experiencing declines included Meta Platforms, NVIDIA, and Broadcom, with respective decreases of 1.4%, 2.6%, and 1.5%. Furthermore, the Vanguard Mega Cap Growth ETF and the PHLX Semiconductor Index experienced declines of 0.4% and 0.8%, respectively.

However, these downward movements were relatively moderate, indicative of a typical consolidation phase following a recent period of significant gains. The Invesco S&P 500 Equal Weight ETF saw a marginal decline of 0.1%.

In the sectoral breakdown of the S&P 500, only the utilities sector experienced a decline exceeding 1.0%, while sectors like health care, financials, and consumer staples recorded gains. The energy and information technology sectors, excluding utilities, posted the most significant decreases.

Treasury yields initially increased in response to the morning's economic data, but they eventually retreated to lower levels. The yield on the 10-year Treasury note, for instance, began at 4.23% just before 8:30 a.m. ET, peaked at 4.27%, and ultimately returned to 4.23%.

The market's reaction was partly due to the release of economic data, including a February Durable Orders report that exceeded expectations and a March Consumer Confidence Index that was weaker than anticipated and largely unchanged from February's revised figures.

Yesterday's Economic reports

- February Durable Orders increased by 1.4%, slightly higher than the KR Forecast prediction of 1.3%. The previous value was revised downward from -6.1% to -6.9%. For February, Durable Goods, excluding transportation, rose by 0.5%, which is above the KR Forecast prediction of 0.4%, with the prior value adjusted from -0.3%.

- The key insight from these figures is a rebound in business spending after a disappointing January, marked by a 4.4% increase in nondefense capital goods orders.

- The January FHFA Housing Price Index registered a slight decline of -0.1%, reversing from the prior increase of 0.1%.

The January S&P Case-Shiller Home Price Index reported a growth of 6.6%, marginally below the KR Forecast expectation of 6.7%. The prior value was revised upward from 6.1% to 6.2%.

- March's Consumer Confidence stood at 104.7, below the KR Forecast prediction of 106.7, with the previous value adjusted from 106.7 to 104.8.

- This report highlights minimal overall changes in consumer sentiment, consistent with trends observed in the University of Michigan's Consumer Sentiment survey.

- At 7:00 ET, the Weekly MBA Mortgage Index was previously at -1.6%.

- At 10:30 ET, the Weekly Crude Oil Inventories, with the last report showing a decrease of -1.95 million.

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