EB Daily Market Report - Brief Update - Wednesday, May 22, 2024

For the most part, it was a very quiet day until the FOMC minutes were released at 2pm ET. Now, the BIG news is that the Fed remains worried about inflation. Really? That's a shocker. The Fed has been waffling so much in 2024 that I'm beginning to think they're holding their meetings at Waffle House. But these headlines today really make no sense, because the last meeting was superseded was a tame CPI report and more indications of a potentially slowing economy. Personally, I believe this is nothing more than another piece of news that Wall Street can use to manipulate the retail trader. Just my opinion, but it's getting old.

Have you noticed the bond market's reaction to this "news?" Yawn. The 10-year treasury yield ($TNX) jumped exactly 2 basis points. There was very little selling of bonds. In another words, the bond market doesn't seem to have the same worries as the Fed.

In my opinion, this is old news and will die off quickly, but I'm sure it's encouraging a knee-jerk reaction for many retail traders to sell - playing right into the hands of institutions looking to buy into this secular bull market at cheaper prices.

Perhaps I'm wrong. Maybe this is the start of a big selloff, but I don't think so. Watching rising 20-day EMAs as key initial support.

From a sector perspective it's also worth mentioning that 3 of our 5 aggressive sectors are in the top 4 sectors today. That's yet another signal that, while the stock market has sold off since 2pm ET, we're not exactly seeing a massive rotation away from growth stocks. To further drive home this point, the IWF (large cap growth ETF) is up 0.28%, while the IWD (large cap value ETF) is down 0.60%. If you're worried about inflation, you don't rotate into growth. Something to think about.

NVDA Earnings

The market is very likely to turn its attention to NVDA, because NVDA is reporting its quarterly results after the bell. The market reaction to this earnings report will likely dictate the short-term stock market direction. If we see another blowout report and the price jumps, I'd expect to see a breakout in semiconductors ($DJUSSC) and the NASDAQ 100 ($NDX), and possibly other key indices as well.

Happy trading!

Tom