Morning Reads


  • Tesla (TSLA) expects reduced tax credits for Model 3. Reuters
  • White House expected to ask Fed to strengthen rules for midsized banks (XLF, BPOP, CFG, CFR, EWBC, FITB, MTB, PNC, RF, USB, WBS, WFC, WTFC, WAL, CMA, FRC)WSJ
  • Air Force aiming to end hypersonic missile program (LMTRTX). Bloomberg
  • Disney (DIS) eliminated 300 jobs in China. WSJ
  • UK will classify nuclear energy as green energy (CCJNLR). FT
  • Meta (META) considers ban of political advertising in Europe. FT
  • JetBlue (JBLU) will lower NYC flights this summer. NY Post
  • Analysis shows that Tesla (TSLA) missed solar roof installation targets. Reuters
  • Alibaba (BABA) mulling yielding control of some units. Reuters

Todays Open Interest Change




Bull riding

Another bull is awakening from its 2022 slumber as investors continue to pile back into tech stocks that have been shunned for much of the past year. It's an interesting turn for the market, with worries over interest rates and a looming recession, but perhaps that is what is getting cash off the sidelines. Rates will soon peak - as telegraphed by the Fed's dot plot - or easing may even ensue, while a lower growth environment can see a premium return to the old beloved tech names. Many are also nervous about missing out on the market ride-up, especially when weighing alternatives like high-yielding money market funds and inflation-linked bonds.

The latest: The Nasdaq 100 Index (NDX) has surged into a new bull market for the first time in nearly three years, with the tech-heavy benchmark now up more than 20% from its closing low on Dec. 28. The latest leg was powered by earnings from Micron Technology (MU), which stressed confidence in industry fundamentals, as well as broader rallies for megacaps Amazon (AMZN), Apple (AAPL) and Microsoft (MSFT). Speaking of chips and tech, Nvidia (NVDA) has exploded with an advance of more than 80% so far this year, taking these ETFs higher.

"Some stocks, especially the severely oversold high-quality technology names I discussed in many articles around their lows last fall, probably made long-term bottoms but should continue providing buying opportunities on pullbacks and dips," wrote Victor Dergunov, SA Investing Group author of The Financial Prophet. Check out the article, The 'Fed Pivot' Is Coming - The Bottom Is Close. His "All-Weather Portfolio" is up by 17% YTD, with its technology segment boosting returns, advancing about 25% since the beginning of the year.

Go deeper: With no fresh news about a banking contagion, market participants have appeared to have regained a risk-on mood. The tech bull market also hasn't been limited to growth stocks, with recent gains over the past week in financials and energy. Meanwhile, bigger concerns for the housing sector haven't materialized, with pending home sales rising for a third straight month in February and mortgage applications increasing over the past week. (5 comments)

AI development

Is it possible that there could be too much going on too quickly and too soon with artificial intelligence right now? That seems to be the opinion of Tesla (TSLA) and Twitter CEO Elon Musk, Apple (AAPL) co-founder and computer-industry legend Steve Wozniak, as well as a handful of other tech officials. They have penned an open letter to call for a six-month pause in the development of many AI tools in order to develop new safety standards for the technology. AI has become one of the hottest topics in the tech sector, with OpenAI claiming earlier this month that its GPT-4 could do better on the SAT exam than 90% of all test takers. (121 comments)

More transparency?

In hindsight, it's clear that the overall regulatory system, supervisors and bank management all failed with respect to overseeing Silicon Valley Bank (OTC:SIVBQ), Fed Vice Chair Michael Barr said before the House Financial Services panel. In the summer of 2022, Barr noted that SVB had a composite rating of three (i.e., not well-managed), though its liquidity rating was a two, which is satisfactory. Now the Fed is "looking at whether those standards were sufficiently stringent, whether the firm should've been downgraded further and whether further supervisory steps should've been taken." His opening statement was identical to that of Tuesday's Senate hearing, where he blamed the downfall of SVB on the lender's poor management of interest rate and liquidity risk and inadequate internal controls. (11 comments)

Hypersonic trouble

The Pentagon had hoped to declare the first combat-capable U.S. hypersonic weapon by mid-2022, but its test programs are running into trouble. Reports suggest that the Air Force isn't going to pursue a follow-on procurement of Lockheed Martin's (LMT) Air-launched Rapid Response Weapon, also known as ARRW, after the transmission failure and loss of data in a recent exercise (this defense company might gain from the development). The objective of hypersonics, like boost-glide missiles and air-breathing missiles, is to evade defense systems while flying at speeds higher than Mach 5, while they can maneuver in-flight compared to the fixed sub-orbital trajectories of ballistic missiles. The U.S. has sought to rush their development after Russia claimed the use of its Kinzhal in Ukraine last year, which marked the first time hypersonic missiles were used in combat. (30 comments)

Today's Markets

In Asia, Japan -0.4%. Hong Kong +0.6%. China +0.7%. India closed.
In Europe, at midday, London +0.9%. Paris +1.4%. Frankfurt +1.3%.
Futures at 6:30, Dow +0.5%. S&P +0.4%. Nasdaq +0.4%. Crude +1% to $73.70. Gold +1.1% to $1987.60. Bitcoin +0.8% to $28,585.
Ten-year Treasury Yield unchanged at 3.57%

Today's Economic Calendar

8:30 GDP Q4
8:30 Initial Jobless Claims
8:30 Corporate profits
10:30 EIA Natural Gas Inventory
12:45 PM Fed's Barkin Speech
4:30 PM Fed Balance Sheet

Companies reporting earnings today »

What else is happening...

Shadows of Peltz controversy? Disney (DIS) fires Marvel chair.

More layoffs: Warner Music (WMG) and Electronic Arts (EAare next.

World's largest ESG ETF saw $5B exit in March, leading all ETFs.

Electric stuff: EV makers may jolt sector with deliveries report.

Bowing out of race, J&J (JNJ) drops RSV vaccine program.

UnitedHealthcare (UNH) to cut use of prior authorizations by 20%.

Apple (AAPL) sets date for its annual developer conference.

China threatens countermeasures if McCarthy meets Taiwan leader.

Did crypto exchange Binance just suffer $2B in outflows?

Best long-term stocks: Morgan Stanley picks 30 for 2025.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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