To The Moon

Summary The broad market has completely recovered from the July and early August losses and registered a fresh all-time high, as measured by the S&P 500 Equal Weight Index. The market-cap-based S&P 500 Index is not at an all-time high as we see signs of another rotation into value stocks. The big event is Nvidia’s earnings, released tomorrow, which are widely expected to be good. The stock is up quite a bit from its August lows. BING-JHEN HONG The stock market has now risen three weeks in a row, which came after being down three weeks in a row. The broad market has completely recovered from the July and early August losses and registered a fresh all-time high, as measured by the S&P 500 Equal Weight Index (charted below). However, the market-cap-based S&P 500 Index is not a

Summary Upward sloping 200-day moving averages typically become buying opportunities. Market may see sideways consolidation with potential retest in September based on negative seasonality. Recent rebound in market has been fierce, potential events like earnings reports or geopolitical developments may impact future movements. Raylipscombe/iStock via Getty Images When a correction gets going, investors often ask me how far this correction will go. To be honest, I may have a good guess, but I never know for sure and neither does anybody else. I did think the 200-day moving average on the Nasdaq 100 index would likely provide good support (the updated chart is below).

Summary The S&P 500 Index registered a fresh all-time high on Tuesday and proceeded to sell off by 179 points (-3%), high to low, by Friday. The NASDAQ 100 index has also exceeded the magnitude of the sell-off we saw post-Nvidia earnings. What bothers me in this scenario is the lack of any sideways trading before the market headed lower. TERADAT SANTIVIVUT That was quick. The S&P 500 Index registered a fresh all-time high on Tuesday and proceeded to sell off by 179 points (-3%), high to low, by Friday. Meanwhile, the S&P 500 Volatility Index made a higher high compared to what it did after the Nvidia (NVDA) sell-off in May, and the NASDAQ 100 index has also exceeded the magnitude of the sell-off we saw post-Nvidia earnings. Tha

Summary The legendary baseball catcher Yogi Berra could sure help us out in understanding the current investing environment. Having a 'bearish engulfing pattern' is no guarantee of seeing a bearish reversal. I think that if we rise above 4.74% on the 10-year rate in June, stocks will flirt with the April lows and if we head towards 5%, the April lows in the stock market may not hold. champpixs The legendary baseball catcher Yogi Berra could sure help us out in understanding the current investing environment. He famously said, when giving directions, “When you come to a fork in the road, take it.” The problem is, he didn’t elaborate which fork to take. I think the stock market reached a fork in the road last Thursday, and I am not sure which fork it will take from here, but we’ve seen this

Summary Nvidia reports earnings tomorrow, May 22, after the close. It doesn’t take a genius to figure out that May 23 will see huge swings in the stock market, but the question is: Which way? If China ever opens up for advanced Nvidia products, the present surge in sales may continue for quite a while. The stock is not expensive, based on 2025 EPS, and many commentators have noted that as the stock surges it gets cheaper, as EPS advances faster than the stock price. BING-JHEN HONG Nvidia (NASDAQ:NVDA) reports earnings tomorrow, May 22, after the close. It doesn’t take a genius to figure out that May 23 will see huge swings in the stock market, but the question is: Which way? Other than the “black and white” answer that “weak or in-line” ea

Summary It is normal to see huge swings in bonds and stocks on a day when the Fed Chairman releases his FOMC statement and holds a press conference. What is far from normal, however – although we have seen it occasionally – is to see a sharp selloff in bond prices, pushing the 10-year yield up 17 basis points in one day, on Friday. Investors are selling first and asking questions later, and I believe that if more banks deliver news of rising loan loss provisions due to CRE issues, the pressure on the regional banking sector would increase. tadamichi It is normal to see huge swings in bonds and stocks on a day when the Fed Chairman releases his FOMC statement and holds a press conference, as he has earned a reputation for spicing things up during the presser. He did not disappoint us last w

Summary While I have seen the VIX fall under 10 in more normal times, I don’t believe the present times could be considered normal. Why do I think this correction would be small? Because investors have been looking for dips to buy and dips have not been coming this month. The market will likely make further gains by the end of the year, if the present situation does not escalate past its elevated status and we don’t see truly bad economic data. zoom-zoom The VIX (market volatility index) closed on Friday at 12.46, one tick above its annual low for 2023. While I have seen the VIX fall under 10 in more normal times, I don’t believe the present times could be considered normal. We have a war in the Middle East, another war in Europe, and an economy that has endured the fastest rate-hiking cyc

Summary Stock markets can go up a lot without a correction, but then when a correction comes, it tends to be a lot bigger than most people would like it to be. From a seasonal perspective, Thanksgiving week tends to be one of the most positive weeks of the year, so it should be an up week. In October 1999, when the NASDAQ began to rally, it did not top out until March 2000. It tagged its lower Bollinger band only once before topping out and had very shallow corrections. Torsten Asmus If we look at the whole year, as of last Friday, the S&P 500 is in an extreme position, based on its standard deviations away from a 20-day moving average – an indicator called Bollinger Bands, developed by John Bollinger. As of Friday, that measure is the widest (as a Bollinger Bandwidth low indicator) th

Summary By themselves, Treasury yields spiking out of control can cause a recession, and October delivered both a 5% yield on 10-year Treasury bonds and 8% fixed-rate mortgages. We have gotten into a situation where the avalanche of Treasury issuance (due to a last minute debt ceiling deal) is overwhelming investors. The U.S. Treasury had to issue more debt because they could not issue any debt before the debt ceiling deal. Ralf Hahn By themselves, Treasury yields spiking out of control can cause a recession, and October delivered both a 5% yield on 10-year Treasury bonds and 8% fixed-rate mortgages. We have gotten into a situation where the avalanche of Treasury issuance (due to a last minute debt ceiling deal) is overwhelming investors. The U.S. Treasury had to issue more debt because th

Summary I think this war is as big of a problem as the bond market, as we don’t know yet if it will go regional. Until we know that, the stock market will remain volatile, as such big risks tend to pressure equities. Last October 25, 2022, the S&P 500 Equal Weight Index (SPXEW) stood at 5562.84. Last Friday, it closed at 5562.71 – no change. The Russell 2000 ETF (IWM) has actually fallen somewhat in the last 12 months. A big part of this sideways action is due to rising interest rates, but we have to wonder about the heavy correlation between the Russell 2000 ETF and the S&P 500 Equal Weight Index. Vladimir Zakharov As the S&P 500 sits on its 200-day moving average – in the vicinity of which it closed on Friday – I went back to reread some of my thinking on the way to this targ