May 19, 2021
Chartist: At the moment, we see none of the internal and/or cross-market signals that usually precede meaningful equity correction. Last Wednesday, the S&P 500 (SPX) successfully tested its rising 50-day moving average and 38.2% retracement at ~4055. The SPX tested the same technical levels this morning before rebounding. As we noted last Thursday, we see stronger support at ~4020 (April 5 gap) and even stronger support at the early-April pattern breakout around ~3980.
Minutes: Just-released FOMC minutes contain two incremental statements that have bond yields slightly higher: 1) “a number of participants suggested that if the economy continued to make rapid progress toward the Committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases”; 2) “a number of participants remarked that supply chain bottlenecks and input shortages may not be resolved quickly and, if so, these factors could put upward pressure on prices beyond this year.” At this point, incrementally hawkish Fed comments shouldn’t be considered bearish for equities.