Stairs up, elevator down
|Without serious bid, S&P 500 flushed Friday after great AVGO earnings (that were summarily dumped) – when it could have done so the day before following less than stellar ORCL earnings after Wednesday‘s close.
The first serious intraday rally didn‘t take ES into at 5,860s if not 5,870 – bulls didn‘t have daily initiative. Justified? Was bond market and volatility on fire? Well, USD is duly weakening on rate cutting and those $40bn a month, and rising yields reflect decreasing attractivity of Treasuries, which is summing up an environment where foreign stocks do better than US equities.
Is the bullish case lost, and Santa Claus rally early in the week cancelled (even if BTC doesn‘t rally and is still in that troubled bearish wedge / flag pattern)? I was adamant days ago that the initiative moved over from Nasdaq into financials, cyclicals (it‘s still industrials over defensives), and into Russell 2000 – so much recession fears that when have you last seen, make consumer stocks and retailers rally (ANF Friday is a result of management shakeup rather that industry development to spread like wildfire). Pick yours stocks and sectors as tech headwinds mean environment getting defensive.
Likewise I was clear about us getting differentiation in Mag 7 stocks, where the reassessed AI trade is to pick fresh winners and losers (talked with clients daily), making just not hyperscalers as a group rise.
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