The Morning Call
4/9/26
The
Market
Technical
Wednesday in the
charts.
https://www.zerohedge.com/markets/fog-ceasefire-markets-fade-initial-euphoria-reality-sets
Summary:
A game of two halves... ICYMI, we got a 'ceasefire'
last night, triggering volcanic moves across every market - oil down
bigly, stocks up yuuge (to pre-war levels for Nasdaq); bonds rallied
hard overnight; bitcoin and bullion aggressively bid, dollar dumped as
rate-hike expectations plummeted. BUT - and it's a big
but - markets could not extend their initial kneejerk moves as
the fog of war fades into the uncertainty of a ceasefire with yields
trending higher during US day (to end unch), stocks well off their
highs (oil off its lows) and gold tumbling back to unch...V for Victory... or
Vacillation? the S&P 500 triggered a rare technical event today, gapping
above both its 50D and 200D moving averages simultaneously. This looked
weird to me, so I did some digging. Since 1950, this specific signal has
occurred only four times. In every instance, the index faced significant
pullbacks shortly after. The average three month drawdown following the
signal is -9.51%, with the worst three month drawdown reaching -12.92%
during 2018. Historically this has always been an exhaustion gap rather
than a sustainable rally. Maybe this time is different.
Note: the good
news is that the S&P soared through both is 200 DMA (if it remains there
through the close on Monday, it will revert to support) and the 50 DMA (if remains
there through the close today, if will revert to support). The bad news is that
it did so on mediocre volume and it made a huge gap up open which will almost
surely be filled. This pin action clearly reflects investor euphoria over the
cease fire.
On the one hand, I
have a hard time believing that things will return to normal: (1) the US spent
$40 billion+ and Trump wants a $1.5 trillion more for military spending---a
negative for fiscal policy, (2) the US accomplished none of its goals in Iran [administration
comments notwithstanding], (3) according to every oil experts that I have
read/heard, oil is not going back to pre-war lows, (4) in the meantime, the
gulf nations have to be shitting bricks over the value of US commitment to area
stability, i.e. tempered Iranian hostility and (5) the risk of higher inflation
got a big boost---a negative for monetary policy.
Price Inflation
and the Price of Oil - by Quoth the Raven
On the other hand,
the economy is unlikely to fall into recession. And as I have observed
previously, earnings estimates keep going up. So I don’t see the Market falling
out of bed.
Bottom line: wait
for the inevitable consolidation and watch for the low. If it is a higher low,
then nibble. But don’t get aggressive until we know that upside momentum has
been restored.
Wednesday in the technical stats.
https://www.barchart.com/stocks/momentum
https://www.barchart.com/stocks/market-performance
https://www.barchart.com/stocks/sectors/rankings
https://www.barchart.com/stocks/signals/new-recommendations
The latest from
Citadel.
Summary:
Positioning is light, sentiment is washed out, and flows are stabilizing
after absorbing significant supply. While the technical backdrop is not
fully healed, the setup is asymmetric to the upside, particularly as volatility
resets lower and markets start to transition back to fundamentals into Q2
earnings.
The latest from
Goldman.
https://www.zerohedge.com/markets/im-not-chasing-goldmans-delta-one-desk-head-selling-few-longs-pop
Summary:
I struggle to see new highs for Equities, but positioning still argues for
forced buying to run its course first. Europe in particular feels extended…
a “fair” move might have been +2–3%, not +5%. From here, it’s all about
triangulation… rates, credit, and oil. Rates matter most and are function of
not just where oil goes, but where it settles. Credit will likely see
aggressive covering as tail hedges decay… so less signal there in the near term.
Vol compression ties it all together in determining fair spot. Near term all
three point supportive, but if oil is structurally higher than before,
this feels more like a mechanical rally than something to chase.
Privorotsky’s conclusion amid all these moving parts (and euphoria): I'm
not chasing and selling a few longs into the pop.
From TraderFeed: With
the overnight ceasefire, we see estimates of inflation (especially as reflected
in oil prices) coming down and stocks rallying significantly. I went back to
2006 (over 4900 market days) and looked at all occasions when we closed with
over 80% of all stocks above their 3- and 5-day moving averages, but less than
50% of stocks above their 50-day averages. That represented only 157 of the
days. Near-term returns in SPY (next five days) underperformed and were barely
positive, but over 20 days, the upthrust days significantly outperformed
(+1.69% vs +.78% for the rest of the sample; 105 days up, 52 down). That
outperformance continued to out 50 days.
This is a great example of how many of the
directional edges in the stock market play out overtime frames longer than most
traders are looking. In the current market, it may well be that the
oil market will be a sensitive gauge of whether peace or conflict will prevail
in the Middle East. What market history is telling us is that near-term
pullbacks are often valuable entries for medium-term upside momentum following
bullish breadth thrusts.
Insiders slightly
increased their buying in latest selloff.
Summary:
The latest insider ratio would need to be even higher before the Seyhuns would
classify it as solidly bullish. In the meantime, they consider it neutral. The
positive angle is how bearish it would have been for the insiders to have
instead sold aggressively in March. In an email, Nejat Seyhun said the latest
insider data suggest “they do not expect the Middle East war to last too long
and predict that some of the price effects that occurred in March will
reverse.”
Thursday morning
setup: Stocks resumed their drop and oil erased about a third of its Wednesday
drop as traders watched the fragile US-Iran ceasefire shatter by the hour, with
both sides accusing the other of breaches while the Strait of Hormuz is still
effectively closed and Israel intensified strikes on Lebanon. As of 8:00am ET,
S&P futures fell 0.4% after Bloomberg strategists said a best-case
scenario has already been priced in; Nasdaq futures dropped 0.3% with Mag7
stocks mostly lower. Europe’s Stoxx 600 index fell
0.7%. Emerging-market stocks slid almost
1%. The dollar ticked higher even as 10Y US YST yields dropped
about 1bp; equivalent UK yields rose six basis points after tumbling almost 20
basis points on Wednesday. Brent crude jumped back to $98 a barrel on signs the
Strait of Hormuz is still effectively closed. US economic data calendar
includes February personal income/spending (with PCE price index), weekly
jobless claims and third estimate of 4Q GDP (8:30am) and February wholesale
trade sales and inventories (10am). Fed speaker slate is blank until April 14.
Fundamental
Headlines
The
Economy
US
Weekly initial jobless
claims totaled 219,000 versus projections of 210,000.
Q4 GDP grew 0.5%
versus consensus of +0.7%. Q4 real consumer spending advanced 1.9% versus +2.0%;
Q4 core PCE was 2.7%, in line.
The February PCE price index was up 0.4%, in
line.
February
personal income fell 0.1% versus estimates of +0.3%; February
personal spending was up 0.5%, in line.
International
The February
German trade balance was +E19.8 billion versus predictions of +E18.5 billion.
The March
Japanese consumer confidence index came in at 33.3 versus forecasts of 38.0.
Other
US/China trade falls despite the renewed
export of soybeans.
https://politicalcalculations.blogspot.com/2026/04/us-china-trade-falls-despite-being.html
Overnight
News
Even as the U.S.
and Iran seek to cement a ceasefire, Israel is seizing more territory from its
neighbors in preparation for a long, drawn-out conflict across the Middle East.
Israel's creation of "buffer zones" in Gaza, Syria and now Lebanon reflects
a strategic shift after the attacks of October 7, 2023, one that puts the
country in a semi-permanent state of war.
EU will still be
hit by a “stagflationary shock” of low growth and rising inflation despite the
US and Iran agreeing a two-week ceasefire, the bloc’s top economic official has
warned.
Wealthy investors
attempted to pull more than $20bn from private credit funds in the first
quarter, underscoring the growing strain on the asset class. Please use the
sharing tools found via the share button at the top or side of articles. The
funds tracked by the FT, which collectively manage investment portfolios worth
about $300bn, have honored just over half of the redemption requests they
received. Many investors have been forced to wait until a redemption window
opens up later this quarter to exit.
Iran--The
botched war against Iran
From Israeli news.
From US news.
It will take months to get oil and gas
flowing out of the Middle East.
https://www.nytimes.com/2026/04/08/business/energy-environment/iran-war-oil-gas-prices-energy.html
Inflation
Used vehicle wholesale prices increased in
March.
What
the ceasefire means (or doesn’t mean) for inflation.
https://www.capitalspectator.com/us-iran-ceasefire-takes-hold-as-fragile-peace-looms/
Cleveland
Fed projects highest month over month inflation level since June 2022.
Investing
‘Buy and hold’ is
overrated.
For all the hand
wringing, the markets were not that nervous.
http://scottgrannis.blogspot.com/2026/04/the-market-is-not-very-nervous.html
Update on
valuations.
https://www.advisorperspectives.com/dshort/updates/2026/04/07/buffett-valuation-indicator-march-2026
The consequences
of the big, beautiful bill and the huge increase in military spending.
https://bonddad.blogspot.com/2026/04/the-consequences-of-mafia-style-bust.html
News on Stocks in Our Portfolios
What
I am reading today
Meteorologists
warn of super El Nino event.
https://www.zerohedge.com/weather/meteorologists-warn-about-super-el-nino-event
The
death of sincerity.
https://dariusforoux.com/the-death-of-sincerity/
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for Survival’s website (http://investingforsurvival.com/home)
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