Dow pulled out of a small red at the start of session to close 151pts higher just below the 34k mark while S&P500 up 0.4% just below 4300 at 4297 and Nasdaq climbed +0.62% to 13,128. Tech stocks continued to soar, Tesla +3.1%, NVIDIA +1.73%, Apple +0.63%, the Reddit folks are back as Bed Bath & Beyond jumped +23%.
Commodities were laggard, spearheaded by Crude Oil 4.6% fall , Silver -2.29%, Copper -1.8% and Gold -1%. DXY is back to 106.5 and may be the chief reason for commodities underperformance. XLE dropped -1.95% while GDX and GDXJ were off -2.17% and -2.43% respectively. Interesting to see DXY going up despite US 10 yr yields dropping on the day.
Odds rise that new bull market has begun: LPL
Timothy Moore
Jeffrey Buchbinder, chief equity strategist at LPL Financial, is turning more bullish, although he said the rally in US equities also is reflective on how negative sentiment had become.
“To better assess whether a new bull market has begun, we can look at some technical analysis signals that have historically been effective in identifying major market reversals. One is the 50% retracement level. The S&P 500 Index flirted with that level of 4231 on August 11 but ultimately closed above it on Friday.
“In all bear markets since WWII, when the index has risen above that retracement level, it has been the start the next bull market rather than a bear market rally which eventually fell to new lows.”
Buchbinder also wrote another key indicator to watch is the percentage of S&P 500 stocks trading above their 50-day moving averages. “The 90% level has historically signalled the start of new bull markets coming off of major lows such as 2009, 2011, 2018-2019, and 2020. This indicator reached 87% on August 11, very close to that 90% trigger.
“While this is not a necessary condition for the end of the bear market, it would increase our confidence that a rally back to the old highs will come before a return to the June lows.”
Buchbinder said following the latest rally, the risk-reward for stocks has become more balanced. “At the same time, the lack of capitulation, still-high risk of a Fed policy mistake, and tinder box of geopolitical tensions suggest perhaps this rally may be due for a pause or even a bit of a retreat.
“But that doesn’t change our belief that stocks have more room to run through year end and into 2023. We maintain our year-end 2022 fair value S&P 500 target range of 4300-4400 with upside above that range in a soft landing scenario.”
Bonds & Stocks Soar After Dismal Data Dump
BY Zero Hedge
TUESDAY, AUG 16, 2022 - 06:00 AM
After some weakness overnight - after ugly China data (but a PBOC rate-cut) - stocks were met with the now new normal buying-panic of YOLOing at the cash open and never looked back - despite a bloodbath in Empire Manufacturing Sentiment and Homebuilder Confidence. Nasdaq was the day's winner, Small Caps lagged (but ended green on the day)...
Call volumes continue to rise as retail chased ahead of OpEx...
Source: Bloomberg
Energy stocks puked at the open and lifted back but was the only sector to end the day red... Source: Bloomberg
Bonds were also bid on the day with the belly outperforming (and the long-end managing modest gains on the day, -1.5bps)... Source: Bloomberg
The dollar index retraced all of its post-CPI losses... Source: Bloomberg
Bitcoin ended barely changed on the day after a pump and dump... Source: Bloomberg
Oil tumbled today with WTI back below $90...
Gold broke below the $1800 level as the dollar rallied...
