US stocks rebounded mildly on a laborious day after last week’s major sell-off.
VIX shot up to 31 to start the US session and then came back down to 27 as the indices attempted a midday recovery from oversold conditions.
This bounce gives no conviction but it is something we can perhaps work with. It is clear we will not get a major recovery before next week’s FOMC.
The 10-year yield was down to 2.80% on risk aversion. China’s covid lockdown is affecting economic activity. That is why oil is down 5% so are other commodities.
From a macro perspective, a lot of things are worrying.
The USD is relentlessly bid. DXY could attempt to break multi-decade higher above 104. That is higher than the COVID high. Maybe it is overbought as rates are pricing in too many rate hikes that would not materialize as the economy slows down in the back-end of the year. In any case, the chart worries us.
Looks at USDCNH – that is scary as well.
Will oil break down soon? That should cement that inflation has peaked in March
How about copper re-testing its 200 MA It hasn’t broken it since November 2021
Weakness is continuing into Tuesday’s Asian session
In any case, the mild retracement of yields allowed the Russel and Nasdaq to lead today. And we did bet on that in our swing portfolio last week going into this week. We will see how things develop but we should see at least an attempt at recovery in stocks. However, we do not have any notable setups. As far as stocks go- Leisure, Travel, Materials, and Energy are somewhat still showing relative strength. Not my preferred plays.
Here is how past high-growth no earnings tech leaders have repriced:
Let’s see how the Nasdaq does in its attempt to recover from last week. Should be higher tomorrow.
Nasdaq was short-term way oversold this morning with 2% of stocks above the 5-day average.
Today’s major news was that Twitter’s board accepted billionaire Elon Musk’s offer to buy the social media company and take it private.
Crazy right? However not sure the valuation makes sense. I guess he is too rich to care.
Let’s move on to a setup that is working:
Euronet Worldwide, Inc ($EEFT): global and industry-leading payments and financial technology solutions provider. It bounced above its 50 MA.
Good luck !
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