Will the S&P 500 continue to rise following its April slump? Retail sales and the CPI The direction of stocks on Wednesday may be determined by CPI data and retail sales.
This year, the SPDR S&P 500 ETF Trust SPY, which tracks the large index, has returned a 10% gain to investors who have stayed with it. Rewarding holders since the S&P 500’s late-October low of 4,117.37 would have received a 27% increase.
Adam Kobeissi of The Kobeissi Letter gives us the call of the day: don’t give up on stocks just yet. Since that October low, he has urged investors to purchase the S&P 500 SPX/SPY.
In his weekly letter to clients dated October 30, for instance, Kobeissi stated that rather than a “major crash,” investors were witnessing “a simple healthy technical correction,” with the index reaching 4,220 in early November.
He stated to MarketWatch earlier this week, “We turned bullish in late November or early December and basically bought every dip.”
Kobeissi has been a consistent bull on the S&P 500 since January, despite the April correction, which he saw as a “much needed technical correction.” Earlier in the year, he was forced to reduce a 5,300 target; he has since resumed.
“Our rationale was basically that AI-hype is too strong to fight, risk appetite is returning, and even though markets got too dovish in January, it was likely to drive equities higher over the short to medium term,” he said.
While Kobeissi believes the market will continue pushing into record high territory, he says investors need to brace for “larger swings to the downside this time around,” though he expects those dips will be snapped up.
“Mainly, because it’s too soon for the Fed to cut rates. But Big Tech survived this earnings season and has actually done quite well and that’s not a force that we want to fight,” he said.
“It’s a market where you are much better playing the trend and waiting for that trend to break, rather than attempting to call an exact top,” he said.
“I think if you follow the technicals, it’s easy to see. If we see higher highs, followed by higher lows, then the trend is alive. The minute lower lows are followed by lower highs, we will likely flip short,” he said.
The so-called higher highs reflect bullish optimism in the market, an uptrend, whereas lower lows and lower highs work the opposite — a downtrend.
And what will trip the bigger dips to come? “I think once the market finally accepts that rate cuts are not coming as soon as they would like, and if/when tech loses momentum,” he said. “Right now, markets are almost in a state of denial.”
Expect those bigger dips to be bought into summer, though data could change that. “The reality is that the market has had every reason to fall this year, and it simply just keeps on rising. That is not strength you want to fade,” he said.
Weighing on the recent resurgence for meme stocks, he doesn’t see that having a “huge impact” on the S&P 500 in either direction, but it does reassert his “view that risk on-investment appetite is stronger than ever.”
The markets
Bond yields BX:TMUBMUSD10Y are unchanged while stock futures ES00, 0.04% YM00, 0.02% NQ00, and 0.00% are all flat. Ahead of data, BX:TMUBMUSD02Y holds at five-week lows. Gold prices are up GC00, 0.38%, but the dollar is declining DXY.
The buzz
Analysts predict that April’s headline and core consumer price increases of 0.4% and 0.3%, respectively, have not significantly worsened the outlook for inflation.
That is scheduled for 8:30 a.m., along with the Empire State manufacturing survey and retail sales, which are anticipated to increase by 0.4% in April. At 10:00 a.m., a home builder confidence index is scheduled.
At 10 a.m., Richmond Fed President Tom Barkin will speak; at noon, Minneapolis Fed President Neel Kashkari; and at 3:20 p.m., Federal Reserve Governor Michelle Bowman.
GameStop GME, +60.10%, and AMC Entertainment AMC, +31.98%, had pushed higher after two solid days of gains, but they are now both down, with AMC revealing it will issue 23.3 million shares. Investor memes? The “responsible move is to sell, sell, sell,” according to Jim Cramer of CNBC.
Ilya Sutskever, the chief scientist and co-founder of OpenAI, is departing the company a few months after losing his position on the board.
After the market closes, Cisco CSCO, +0.55% releases its earnings.
The International Energy Agency revised down its oil demand prediction for 2024.
Top tickers
These were the top-searched tickers on MarketWatch as of 6 a.m.:
| Ticker | Security name |
| GME, +60.10% | GameStop |
| AMC, +31.98% | AMC Entertainment |
| TSLA, +3.29% | Tesla |
| NVDA, +1.06% | Nvidia |
| FFIE, +367.54% | Faraday Future Intelligent Electric |
| NIO, +7.02% | Nio |
| HOLO, +61.50% | MicroCloud Hologram |
| PLUG, +19.03% | Plug Power |
| AAPL, +0.62% | Apple |
| BB, +11.94% | BlackBerry |
The chart
Copper HG00, 1.74% has been having another big run, hitting fresh highs on Wednesday. Here’s some technical insight from Saxo Bank’s head of commodity strategy Ole Hansen:
