Craving Fed Pause

S&P 500 was driven lower by a very quick tech reversal that took communications with discritionaries along. That utilities upswing wasn‘t a good sign, and the divergence to staples and financials was stark. No matter how well formerly lagging sectors did, first the low 4,280s and then 4,271 gave.

More overnight downside followed, yet when I‘d see communications with discretionaries starting to hold up, that would be as good an omen of relenting Fed as the rising unemployment claims bets indicate. Let‘s forget now hard macro data of declining same store sales, rising credit card balances, tightening lending standards wtih fresh Treasuries issuance – and keep focused on still very, very expansive fiscal policy, stock market greed and VIX complacency.

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

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The shape of rotations shows that mostly Big Tech suffered yesterday, while Russell 2000 and RSP improvements give some mileage to the argument that poor breadth would catch up and even out. Not so fast, but the case for cautious optimism returning, is here.

Credit Markets

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As bad HYG selling was, it could have been worse, on higher volume. Still looking for a risk-off day posture in bonds, but it‘ll start improving – the bets on Jun pause are irresistible.

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