It seems every asset class had had a major reversal recently, USD, commodities and even TSY’s are on the cusp of saying something is wrong in the economy with yields at recent lows. You can throw in weaker Global equity markets w/ China recently, Russia down 10% =correction territory and even today as example, Europe was comparatively weak vs. US markets. Still, US equities clings range bound since early last week.
Take into account the 'red flags'...the poor GDP, more GDP downgrades, Jobless claims, non-manufacturing data for the US economy recently and you seriously have to wonder how the equity market is hanging in Q2!. It’s hard to sit by idle at this point as it looks like the market will show it’s resiliency once more as we’ve pointed out month after month since ‘09. But note, every correction since the rally began has been a one-time event and/or natural disaster that you know the market will reverse soon as history proves. This is why shorts have been gun shy to press as they’ve been burnt time and time again. This time may prove otherwise as a greater question mark lurks and that’s the ‘economy’, transitory or not. Market is literally hanging on a thread (our health 20MA benchmark) and one more ominous headline and it could be a slippery slope due to all things already coming up as ‘red flags’.
In all, as far as today, it was bounce day for commodities off a USD decline post 99bln market value beating last week. It wasn’t much of a surprise as all major players pumped commodities to recoup some of the huge losses. The strength in the market was ‘narrow’ as the majority SPX top gainers were all commodity linked. (Transports/Financials/SOX) all underperformed the tape showing how narrow the strength was.
Nice to see RUT outperform for Shadowlist as some went after real beaten down ones like CRR WTW and others in our retail composite ie LULU ACOM GTLS QLIK AZPN look decent overall.