Author: jsc

Strong overnight results from META and MSFT push the Q1 blended earnings growth rate on the SPX to +12.3% from 7.2% at the end of the quarter.

The ‘soft’ survey data may be overstating the magnitude of an eventual tariff-induced slowdown.

The Fed is widely expected to leave rates unchanged next week with markets more interested in a potential dovish change to forward guidance.

A combination of light positioning, low liquidity and extreme bearish equity sentiment has kept the pain trade skewed to the upside as the major indices pushed into technical resistance levels.

The recent de-escalation in trade tensions has narrowed downside tail risk but won’t immediately change the probability of a recession, which seems to be around 50% for most economists.

The pain trade is clearly skewed to the upside with sidelined cash at all-time highs, equity sentiment at bearish extremes and hedge fund net equity exposure in the eighth percentile.

Extreme bearish equity sentiment, light positioning and low liquidity keep the pain trade biased higher in the near-term.

Yesterday’s sell-off stayed contained within the April 9 bullish outside day with the SPX opening low ~4950 serving as our near-term retest level.

Slowing growth data and resilient labor should be enough to keep the SPX on track to retest lows.

The reflex rally off last week’s low has carried the SPX into strong technical resistance in the 5396-5650 range.