Boomerang market is actually what we looked for at mid-week. How so? S&P aborted a rally and was declining anew. Looked pretty bleak; but looked at a couple key earnings reports, recognized it would be a challenge back up to the ‘pivot zone’ (that’s the 50-Day Moving Average) around S&P 5100.So we thought Thursday would approach the pivot area but not surmount it (a tougher challenge); but that we would work through it if Apple came through. Well, not only did Apple’s huge buyback decision (not products forthcoming) enable that, but Amgen (our only followed major pharmaceutical as Moderna is not major and not well liked but we watch it).. well Amgen reported ‘clinical trial’ progress of their ‘obesity’ drug, and shot it straight up. It’s in the S&P.Combine the slightly softer Jobs data Friday morning, and easier Oil prices by a tiny degree, and it’s not ‘goldilocks’ but close enough to get a move over the pivot zone; though sustainability clearly has many variables, especially in May as we’ve alluded to before. Nevertheless it does imply a slightly friendlier Fed; perhaps visibility for a rate cute sooner than year-end; and dovetails with what has been our idea all along, of corrections but sort of ‘bad news = good news’ with regard to monetary policy prospects along with ‘back-filling’ in overall NY breadth. Much is still dependent on Oil prices; which relate to geopolitics.In the economic data, the Services were pretty strong (not just Apple or for a couple similar stocks like Microsoft or Google); while Manufacturing slipped in lots of areas as we’d noted, including Apple too. We showed those charts in the earlier part of the week, and all this conforms with the slower ‘stagflation’. I might mention that Apple will have a Monday event; probably just new iPads, and it itself not a particular influence on their business; barring some surprise.Market X-ray: So prospects for a Fed rate-cut are enhanced by ‘mediocre or bad’ news on Jobs and Manufacturing fronts. Not a lot; but helps as at least it’s not particularly more inflationary; and not a bad backdrop.Presuming no war expansion, we should have a brief consolidation and some sort of effort to hold together or even have an intraweek rally ensuing, and of course then we’ll see if this already-extended S&P can edge a bit higher. Look at Nasdaq on the Oscillator chart, and envision proximity to new highs; well, ‘if’ this wasn’t May and so many variables. But that could scramble shorts too.I would be more skeptical about this market ‘if not’ for the better breadth. As it improves you can sustain an overall higher trading range for the Indexes with less reliance on the handful of mega-cap leaders. Yes, buybacks became sort of a ‘preferred way’ to return money to investors. Of course Meta, Alphabet Microsoft or even Home Depot, besides Apple, have reduced share counts.To a degree that’s extra compensation to insiders, though not framed thusly in most instances…they tend to be the largest shareholders, aside institutions. I think Apple is speaking volumes by putting so much into buybacks not merely into more dividends, and I realize financial media says that’s good; but omits a key element about ‘who’ is mostly enriched by such moves. It also is material to the forward Quarters, and in that regard will benefit shareholders while sort of obscuring the decline in iPhone sales or any sluggish markets (like China).Bottom line: Technicals did a lateral move in neutral territory; and then as we suspected for a couple days, instead of resuming in-decline (which the charts basically were suggesting)… I suspected S&P would do something else: rise rapidly to challenge the S&P 5100 ‘pivot’ area, from which it had descended.So it falls upon S&P to digest these rapid gains in reasonable form, attempt a bit of extension, although it may not all happen Monday, which actually should see an effort to calm down, before much intraweek rally. But it’s May; so risky. More By This Author:Market Briefing For Thursday, May 2
Market Briefing For Wednesday, May 1, 2024
Market Briefing For Tuesday, April 30