Financial News vs. Noise

Another ugly day for anything not NVDA. SPY now back below the 10 day and red this morning. Will be watching the gap up low of $525.18 and Thursday’s low of $524.72 for support. Currently below both areas.

For the QQQs will be watching the 10 day, around 455.08, then Thursday’s low of $451.85, and the gap up low of $446.90.

I talked about the Dow yesterday as a possible long if it could break above the 50 day. That didn’t happen, and this morning it is the weakest because of CRM earnings. Nothing to do there at the moment.

Small caps are green this morning and could be buyable if they break over the 50 day. Not sure I would ahead of PCE tomorrow though.

I’ve been talking about watching semi’s and rates for direction. Because of NVDA the semi’s are kind of skewed. Still important because if NVDA cracks it probably brings the entire market with it, but rates now more important. Rates have been spiking, hence market weakness.

Watch 4.737%, which is the April high. Don’t want to see that taken out. Figure there ought to be some resistance at 4.7% also.

Rising Bond Yields Weigh on Stocks-WSJ

Minneapolis Fed President Neel Kashkari said this week that the central bank could hold rates higher for longer to gain clarity on inflation, and warned that a hike isn’t off the table. Investors now see a 54% chance the Fed keeps rates unchanged through its next three meetings, according to the CME FedWatch tool, up from 42% a week ago.

The Fed Thinks It’s Fighting Inflation. Think Again. Even at more than 5.25%, the central bank’s short-term interest-rate target might not be high enough to cool the economy.-Bloomberg

If so, the neutral short-term rate currently would be about 5% (a 2% r* plus 3% inflation), meaning that the current fed funds rate of 5.25% to 5.50% is exerting negligible restraint on growth and inflation.

Also figure PCE will go a long way towards deciding direction. From Mike O’Rourke…

The continuation of the Treasury Bond selloff means that the 10Yr Treasury yield continues to rise above the S&P 500 earnings yield and the negative spread is testing the two decade lows registered in April.

I’m a dip buyer, but with NVDA the only thing going up and rates spiking I am keeping my position sizes smaller. Again, PCE going to be important tomorrow. Can’t ignore this either…

And this…

This Record Stock Market Is Riding on Questionable AI Assumptions Just four giant technology stocks added more market value than the rest of the S&P 500 put together this month. More than half of the gain came from Nvidia.-WSJ

But you also have this. We should be launching an ETF soon that trades the next generation AI names.

C3.ai rides ‘intensifying’ wave of AI demand as revenue jumps 20%-MarketWatch

Another area of strength has been the Argentine stocks, which bounced after a tough couple of days. Going to take some profits in my GGAL position, but going to keep some as well.

In the law and order stocks going to look to get back into GEO as long as it doesn’t spike. It had a nice rally at the lows but failed at the 50 day. Holding support at the 10 day. The Trump trial ought to have some impact on this, just not sure exactly what people would want as you could see any outcome as bullish for Trump.

AXON is my largest position in the law and order stocks. Trying to find support at $280.

I also own SWBI, which is going no where.

Continue to try to buy the dips in China. PDD was worked out well.

KWEB has not.

Watching BABA this morning. I like it if it can hold the 200 day.

On the short side I have puts on ARKK and Cathie never ceases to amaze. She bought PATH prior to earnings and it’s currently down over 30% pre market.

Another issue in regional banks yesterday. At some point you are going to have to stop calling these one off’s.

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Matthew Tuttle is the Chief Executive Officer and Chief Investment Officer of Tuttle Capital Management, LLC.

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