Morning Notes — Sentiment and SPX Levels
The rally from oversold has the S&P 500 (SPX) set up for a period of base building under the 4500-4600 breakdown area.
Morning Notes — What to Expect
The focus was on MSFT/AAPL earnings and the Fed coming into the week. The two large Tech names reported solid Q4 results/better guidance, while the Fed’s neutral statement and hawkish press conference resulted in net-hawkish takeaways.
Morning Notes — Outlook
The ~11% correction in the SPX mostly matches the scale of recent past episodes when monetary accommodation was initially removed.
Morning Notes — Oversold
The stability seen over the past two sessions comes after the S&P 500 (SPX) reached oversold conditions after an ~11% decline from peak.
Morning Notes — Fed Preview
Markets will be focused on four items from tomorrow’s Fed meeting: a signal on liftoff beginning in March, guidance on tapering, balance sheet plans and language used the press conference.
Morning Notes — Extreme Bearish Sentiment
The near-term path of least resistance is still aimed lower, but important to watch for a developing bullish narrative with sentiment readings now in extreme bearish territory.
Morning Notes — Levels
The main driver of the sell-off has been sharply higher bond yields at the start of the year. The yield backup has been driven by expectations for a more aggressive tightening cycle based on Fed rhetoric.
Morning Notes — SPX, NDX and SVX
Yesterday’s afternoon fade in the S&P 500 (SPX) looked like CTA selling and it’s important to see if the SPX can hold early gains without incremental drivers to shift the narrative.
Morning Notes — Most Likely Scenario
The most likely scenario from here still looks like a resumption in the cyclical recovery based on an end to the pandemic.
Morning Notes — Technical Levels and Near-Term Narrative
Bond yields will drive the near-term narrative as the 10-year approaches its 2020 high of 1.877%. We keep a Q1 target of ~1.90%, but see the 10-year tracking toward ~2.20% in the near-term, with the potential to extend toward the cycle high near ~2.50% sometime