The band is playing, risky business, keep your eyes peeled, memory down

Almost relentless

The S&P 500 closed just below the daily high on Thursday, which was an all-time high. As per usual. The equity markets had shown some weakness at the start. The first jobless claims had contracted for a third week in a row after the ugly slap in the face in mid-July. Continuing complaints had also printed in a welcome contraction. Positive. On the other side of the coin, producer prices jumped in July, a day after consumer prices had, if not at the aggregate year-over-year level, at least month-to-month. the other and after being divided into categories, been more calming. It’s negative. Negative for the margin.

Yields soared as soon as stocks opened in that hole. The two asset classes would find their place and create a progressive dynamic until their close. Trade volume, which was a missing component for weeks, continued to decline. Investors should be fully aware that while the previously mentioned S&P 500, Dow Industrials, Dow Transports, Nasdaq Composite and Nasdaq 100 all closed in the green (albeit small) that the losers beat the winners by around 250 names at the New York Stock Exchange and by more than 600 on the Nasdaq Marketplace website. The drop in volume decisively beat the volume advance at 11 Wall Street despite steadily declining total trading volume for names listed on the NYSE. The increase in volume slightly exceeded the decrease in volume in Times Square.

Dare I mention that small and mid-cap stocks weighed on the markets Thursday as defensive and growth sectors moved equity market leadership away from the cyclical sectors that had dominated earlier in the week. Among SPDR Sector Select ETFs. Energy (XLE), Materials (XLB) and Industrials (XLI) all closed in the red.

Thinking out loud

The risk has continued to accumulate despite what appears to this observer as less and less conviction. There have been risk-free days, if not weeks, but for the most part any profit-taking or correction has been done in an organized and rotational fashion. In other words, the created capital was almost simultaneously reallocated elsewhere.

Do I see a reason for a pause, or even a drop? You know I do. Can I go all out on this intuition? Despite my instincts, which have tended to be pretty good over a period of 30 or 40 years, I can’t. Have I thinned my herd? Yes, I am thinner than I was. Did I raise any money? Yes, but again, I was almost fully invested until the end of July. I have doubled cash levels, but compared to what was for me a low in the era of the pandemic.

I remain resolutely clean for a long time, even if it is with a flagrant lack of enthusiasm. My bet is just less well distributed on the market. Earning money has been a breeze for the past year and a half. Despite this wall of liquidity that had been created by a federal government that has always been inexpensively funded by a compliant central bank, the game (hardly a game) becomes more difficult to play at this point.

We all see the Delta variant of the SARS-CoV-2 virus spreading. We all see that there are infections among the vaccinated as the virus spreads like wildfire among the unvaccinated. We all fear a potential pandemic for children after previous variants of this virus allowed many of us to sleep at night when this threat was in question.

Team

“Given the accelerating speed of history, we should start deliberately charting the next phase in its trajectory.”

– Former National Security Advisor Zbigniew Brzezinski

“Success depends on prior preparation, and without such preparation there will certainly be failure.”

– Confucius

The liquidity created at this point allowed an S&P 500 trading at 22x expected earnings to become the norm. That’s an appropriate assessment with this level of liquidity floating around many nights and in this interest rate environment. The stock markets have incorporated at least part of the president’s economic agenda. There is a good chance that what passes eventually will contract in size from what has been established. The equity markets have already bet on a Fed that will not easily withdraw its accommodative policy.

That’s probably a good guess, unless they (and I) are mistaken about the transitory nature of much of our current pace of consumer inflation. Then the central bank would be forced to be more aggressive than anything most “experts” have projected. The stock markets have also more or less bet on the evolution of the economy just enough to mitigate the continued negative or oppressive impacts created by the reduction in human interactions in response to the evolving virus as well.

This is where the greatest risk lies. I am too uncertain to predict an angry market correction. I am, however, smart enough having been burned from time to time over the course of a long career not to be surprised by such an event – especially, at this time of year. Prepare for what I hope will never happen? Because at some point I know it will happen? Something like that. Open eyes.

And that ?

Did anyone else notice that the Philadelphia Semiconductor Index fell 1.1% on Thursday? Or the 0.9% hiccup of the Dow Jones US Semiconductor index? While the Sector Select Technology SPDR ETF (XLK) actually gained 0.6%? Yes, on that subject: Morgan Stanley analysts wrote a cautious memo predicting the end of the current memory cycle while downgrading Micron (MU). I think the term “winter is coming” may have been used. As we saw earlier this week, when memory is impaired, Lam Research (LRCX), KLA Corp (KLAC), and Applied Materials (AMAT) go hand in hand. Trading Note: KLAC has yet to drop to $ 320 to close the gap created at the end of July.

Brain of the trader

Hey moron … great job selling half of your Disney (DIS) that goes into the numbers ….

That means I was hanging on half that time, right? Disney gets their own real silver coin within hours.

Hey Genius … looks like the Airbnb (ABNB) sell spread of $ 148 / $ 142 to the bear that you prepared for the “Sargemaniacs” on Liz Claman’s show may have worked. ..

What time is it? Options markets don’t open for hours.

Holy Moly .. are you going to add to this SoFi (SOFI) long or just take this one on the chin?

The revenue growth is still there. The forecast for the third quarter is rotting. The orientations of the exercise are held. I will buy SOFI up to $ 14. Don’t bet against Anthony Noto.

To note: A Centers for Disease Control (CDC) advisory group meets today (Friday) to discuss COVID vaccine booster injections considerations beyond Food and Drug Administration action taken Thursday to protect people whose immune system is weakened. Expect another crazy day for Moderna (MRNA) as well as the other vaccine names, but especially Moderna.

Economy (All Eastern hours)

8:30 a.m. – Import price (July): Waiting 0.4% m / m, last 0.4% m / m.

8:30 a.m. – Export price (July): Wait 0.2% m / m, Last 0.2% m / m.

10:00 am – Consumer sentiment in the U de M (August-adv): Waiting 81.3, last 81.2

1:00 p.m. – Baker Hughes oil rig count (weekly): Last 387.

The Fed (All Eastern hours)

No public appearance planned.

Highlights of today’s earnings (Consensual BPA expectations)

Before opening: (DSEY) (.12)

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