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Climbing the Wall of Worry

S&P 500 was in a precarious position, but my key area of 5,265 to low 5,270s held Thursday, and I preferred long bias going into Friday. The key goods orders data came in above expectations, but not as hot as feared, therefore stocks ran with it – and I consider it essential that Nasdaq did lead, it bounced above the pre-NVDA earnings level while S&P 500 did not (yet). So, we have the bull upleg ingredient in place as much as a steep Nasdaq reversal that‘s not a function of just NVDA (or DELL).

Communications and consumer discretionaries did well while bonds do their best to climb the wall of worry of incoming data painting resilient economy ahead together with sticky inflation that‘s not going away. In this light, Friday‘s revision to consumer confidence and inflation expectations has been mostly positive for risk taking, therefore I say that the right sectors are leading (tech, tben all eyes on financials recovering from two Dimon cold water pronouncements (yeah, Friday too), and consumer discretionaries as such (it‘s not about AMZN just – see LULU, ANF, AEO, ELF, RL and even TGT having trouble declining).

The sectoral mix was right in that financial and industrials rose as well while defensives didn‘t crater – and once again, the lower volume or inside bar Friday isn‘t an issue – I‘m counting on tech, and of course NVDA and beyond to lead.

And what do I expect from next week‘s economic data?

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As promised, I am sharing what all clients had at their disposal during European trading hours Friday – the reasoning as to why I was bullish to the point of doubting the slide still Thursday before the close.

S&P 500 and Nasdaq

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Let‘s move right into the charts (all courtesy of www.stockcharts.com) – today‘s full scale article contains 5 more of them, with commentaries.

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Credit Markets

S&P 500 and Nasdaq

The best things about this chart, is HYG relative outperformance. Break above Thursday‘s highs would be a gift to the stock market bulls who can then do the same.

S&P 500 and Nasdaq

Yields overall flash amber light, not red. For as long as rate hike(s) don‘t get factored in much into expectations, for as long as the Sep cut remains in the game (it‘s merely a coin toss now) and perceptions of inflation as getting off the ground while the economy doesn‘t slow down below soft landing expectations getting upset, stocks are fine – that‘s all the more true till Thursday.

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All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice.

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