May 8, 2023
Good morning,
The S&P 500 (SPX) saw a sizeable jump on Friday (+1.84%). The employment numbers were mixed and were viewed positively and negatively by bulls and bears, respectively – more noise than anything else. Pressure came off the regional banks on Friday, and while by itself that would not be enough to cause an almost 2% spike in the SPX, it did seem to be enough to get short-sellers to cover at least some of their positions. On the week, SPX ended down -.80%.
Futures are pointing up modestly higher this morning and bulls may be able to seize that positive momentum as fears of an imminent banking crisis receded further over the weekend. Regional banks are up again pre-market this morning, and as a result, we may see some buying follow-through today.
No change in view from this perch. We may see some market strength in the days/weeks ahead for reasons that are more technical than fundamental, but it is the second half of the year that is more disconcerting with a looming recession coming up against a market that seems to carry high valuations, high earnings estimates, and a complacent psychological outlook.
Be well,
Mike