Bears Still Haven't Hit the Jugular
It's been a busy couple of days for the market, but for the most part not much has changed from a week ago. To an extent, that is somewhat of a victory for the bulls.
The 50-day simple moving average in the S&P 500 is under siege, but bears have been unable to pierce the armor protecting the heart of the bull market: big tech and the AI trade. Nvidia (NVDA) is still trading above $850, the Vaneck Semiconductor ETF (SMH) above $215, and Alphabet (GOOGL) and Meta Platforms (META) are technically still trending higher. Bears are certainly shredding the bond market apart, but they haven't hit the jugular for equities.
That's not to say there isn't some pain out there. Small caps appear to have broken down again, and the great rotation trade everyone was looking for is mostly falling flat, or just winding up in gold. Interest rate-sensitive sectors are getting pummeled, and frothy SPACs and speculative trades like Trump Media and Tech Group (DJT) are getting a reality-check.
Despite taking some body blows -- including a near-outright admission by Federal Reserve Chair Jerome Powell on Tuesday that recent data prevent near-term rate-cuts -- the S&P and NASDAQ are still holding March lows. This will be the test for earning season, with Netflix (NFLX) providing an early look. Can the mega-cap cohort maintain momentum in the face of surging interest-rates and the dollar? It's a simple truth but still the most important one: until those giants buckle, bears are still fighting an uphill battle.
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