Morning Reads


Todays Open Interest Change




The Nasdaq Composite (COMP.IND) has officially exited a bear market as investors continue to pile back into tech stocks that have been shunned for much of the past year. A slight gain of 0.2% on Monday saw the popular index end the session at 12,256.92, up 20% from its closing low of 10,213.29 on Dec. 28. It took just 89 trading days for the index to record the new milestone, and follows a similar path of the related Nasdaq 100 Index (NDX), which surged into a new bull market back in March.

Bigger picture: Investors are taking note as the Nasdaq Composite (COMP.IND) is the first major market benchmark to regain its bull stature. Elsewhere, the S&P 500 (SP500) is up 16% since its last lows seen in October 2022, while the Dow Jones Industrial Average (DJI) is up 17% since this past September. Only another 3%-4% move will see the two indices restore their bull market status, but some are debating the technicals and what the near future may hold.

"After this powerful earnings season and a more favorable environment from the Fed, the Nasdaq looks poised for a breakout," writes SA Investing Group leader Bill Gunderson, after calling a bottom back in January. Others, like contributor Fountainhead, are more cautious, citing a need to conserve cash as creeping complacency calls for a correction. Recall that the Nasdaq last exited a bear market in August 2022, and only two months later, it entered a bear market again, slumping 20% from its high by October. It's taken seven months since then for the Nasdaq to become a bull, which could make the rally more durable, or possibly lend credence to those calling the recent bullish trends a trap.

Nas...what? When analysts, journalists and reporters refer to the Nasdaq, they mean the Nasdaq Composite (COMP.IND), and not the Nasdaq 100 (NDX). The difference between the two is that the Nasdaq Composite measures the change in more than 2,500 stocks listed on Nasdaq Stock Exchange (NDAQ), while the Nasdaq 100 is a market cap-weighted index made up of the 100 largest non-financial companies traded on the exchange. However, both track domestic and international firms, compared to popular indices like the Dow Jones Industrial Average, which only measures the largest American companies. (4 comments)

Debt ceiling

President Biden today is scheduled to meet with House Speaker Kevin McCarthy and other top congressional leaders for high-stakes talks on the nation's debt limit. While an immediate breakthrough is unlikely, it will set the tone for fiscal negotiations that'll be the talk of financial markets in the coming weeks. Ahead of the action, Treasury Secretary Janet Yellen is reportedly lobbying for help, reaching out to U.S. business and financial leaders to explain the "catastrophic" impact a default would have on the economy. Sources told Reuters that she's having one-on-one conversations with individual CEOs to warn them about the "dangerous consequences of the current brinkmanship," just a day after describing what would happen if an agreement failed to materialize on Capitol Hill. (6 comments)

Critical materials

No automaker in North America currently refines its own lithium, but Tesla (NASDAQ:TSLA) is looking to change that by breaking ground on a $375M refining facility in Corpus Christi, Texas. The move will help the EV pioneer ease its supply chain and meet ambitious EV sales targets, as it expands outside its core focus of car manufacturing and into raw materials. Elon Musk, who previously likened lithium refining to "printing money," expects the new Tesla plant to produce enough battery-grade lithium to build 1M electric vehicles by 2025. "Texas wants to be able to be self-reliant, not dependent upon any foreign hostile nation for what we need," Texas Governor Greg Abbott added at the ceremony. "We need lithium." (5 comments)

The pause that refreshes

Fed funds futures are pricing in a Fed pause and stocks may have to make hay while the sun shines as rates stay steady. Once the cuts start, equities tend to struggle, according to BTIG, with history showing that the S&P (SP500) (SPY) slumps when the FOMC starts loosening (see the full breakdown and chart here). On a more bullish note, Stifel boosted its price target on the S&P for year-end, with its strategists expecting inflation to “drop sharply.” Meanwhile, AI is still the big buzz in earnings calls. BofA looks at what this means for capex spending in tech, noting that Healthcare (XLV) tops all S&P sectors for both top-and-bottom-line beats this season (sell how the other 10 sectors did as well). (70 comments)

Today's Markets

In Asia, Japan +1%. Hong Kong -2.1%. China -1.1%. India flat.
In Europe, at midday, London -0.4%. Paris -0.8%. Frankfurt -0.2%.
Futures at 6:30, Dow -0.3%. S&P -0.4%. Nasdaq -0.4%. Crude -1% to $72.46. Gold +0.2% to $2036.40. Bitcoin -1.1% to $27,646.
Ten-year Treasury Yield -3 bps to 3.49%

Today's Economic Calendar

6:00 NFIB Small Business Optimism Index
12:05 PM Fed's Williams Speech
1:00 PM Results of $40B, 3-Year Note Auction

Companies reporting earnings today »

What else is happening...

Fed's SLOOS shows banks are continuing to tighten loan standards.

JPMorgan (JPM) alleges Staley hampered efforts to cut Epstein ties.

PayPal (PYPL) slips as guidance disappoints, while Palantir (PLTRsoars.

Disney (DIS) expands suit against DeSantis after voided land deals.

Tyson Foods (TSNstumbles on trimmed outlook; pulls down peers.

U.S. to propose new rules for airline cancellations and delays.

Occidental Petroleum (OXY) begins buying back Buffett's preferred stock.

Oil watch: Saudi Aramco (ARMCO) posts 20% drop in Q1 profits.

LinkedIn (MSFT) cuts employees, shuts down China-focused app.

Amazon (AMZN) is looking at offering original videos to other outlets.

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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