$61.00  0.29%  
$14.35  2.45%  
$54.00  1.22%  
$36.29  1.65%  
$94.04  0.94%  
$61.16  2.50%  
$5.45  1.27%  
$69.24  1.28%  
$66.06  0.99%  
$122.11  0.80%  
$72.46  0.60%  
$100.36  0.07%  
$102.34  0.71%  
$63.21  0.94%  
$29.20  0.31%  
$22.04  0.41%  
$27.98  0.96%  
$5.76  0.17%  
$19.56  1.24%  
$192.01  1.73%  

Morning Market Update

John Caruso

John Caruso

Senior Market Strategist



Market Risk:  


*Royal Bank of Australia:  raised 25bps to 3.35% (10yr high) – The board also mentioned it anticipates future rate hikes

*Fed Bostic: “If necessary, the FOMC could return to a 50 bps hike”

*Fed: Jay Powell set to speak at 11:40 CST


Stock:  The SP500 finished -0.2% yesterday.  The near-term set-up is positive for equities (carrying positive momentum and immediate-term Bullish trade set-up).   Our 3-6 month view of the SP500 still remains skewed to the Bears – and we’re still of the view Feb thru April will carry plenty of risk as we begin to see more of the growth (GDP) story unfold.  Currently carrying a forecast of -2.3% for headline GDP growth for Q1 2023.  Jay Powell will be the headliner today, and we’re interesting in hearing his thoughts and comments on the “red-hot” jobs data we received on Friday subsequently following his “luke-warm” speech on Wednesday.  Something I’ve thought about recently….is the Fed wising up to market cycles and becoming more “proactive” vs “reactive”?  We’re going to learn more about that later today.  I remain a cycle BEAR in stocks, while we think Volatility is in a period where it will likely bottom – VIX signaling a higher-range low is a good start today.


Yields:  Did you know that the 2yr yield has risen 30bps since Feb 2?  That’s a big move in a short period – while many have been busy attempting to price out the Fed since the Nov highs of 4.70% – they’ve done a good job having knocked the 2yr back to 4.09 (-61bps) – the 2yr seems to be kicking back now, back at 4.43% this morning.  The 2s and 10s spread remain deeply inverted at -79bps.  I am considering making an allocation to bond futures at present levels with the 10yr yield  now back at the top of the range and signaling immediate OB.


Commodities:  We’re beginning to see some breakdowns across the commodity complex.  We saw Crude Oil and RBOB get lit up last week for -8% and -11% respectively, and now we’re beginning to see some breakdowns in metals – Platinum and Silver are teetering on trend reversals.  Gold also signaling a key reversal last week (having declined -5%).  Copper also showing some signs of weakness.  A lot of this is likely a function of a rising USD and yields.  The one thing we’ll note is the USD and interest rates are now signaling immediate overbought at present levels – so we did make an allocation to Gold and Copper (bc they look the best of the bunch still) – but I may have to stay “nimble” here.


Daily Chart of the USD – signaling range high and immediate OB status here – but remains BULLISH trend on 3-6 month outlook (that never changed despite falling price action into the end of 2022)





















Daily look at the 10yr Yield – signaling both range high and immediate OB – trend has moved back to “Neutral”



















Plenty of “extremes” beginning to trigger in the OB/OS – Powell must be talking today.

Market Trend > 6 mo Range Low Range High Momentum OB/OS
SP500 Bearish 3984 4079 Positive 17
Nasdaq 100 Bearish 11,952 12,815 Positive 20
Russell 2000 Bearish 1903 2002 Positive 20
10yr Yield Neutral 3.32% 3.66% Neutral 98
VIX Bullish 17.72 21.05 Negative 84
Oil Bearish 73.37 78.46 Negative 57
Gold Bullish 1865 1951 Positive 11





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