The current state of the market reveals concerning trends, as the Dow struggles to maintain upward momentum, with each rally attempt met by afternoon declines. This pattern, coupled with the VIX’s significantly lower level compared to previous market peaks, suggests a market environment characterized by extreme complacency. Such conditions, reminiscent of periods preceding market crashes, raise alarms about the potential for a looming downturn. Furthermore, the widening spread between US 2-year Treasury yields and the S&P 500 dividend yield adds to apprehensions about economic uncertainties ahead. Powell’s hawkish remarks exacerbate the situation, particularly impacting global currencies like the Canadian dollar. Amidst this backdrop, Cathie Wood’s reiterated support for Tesla over Nvidia raises questions about investment strategies, especially as Tesla faces challenges, including layoffs and anticipated poor earnings. As Netflix prepares to announce its earnings, the Tech rally, which once gained momentum, now appears to be losing steam, signaling potential volatility ahead.
The last time the Dow melted up to an all time high, the VIX hit 40 to stop the decline. Currently, the VIX is less than half that level.
The Dow is stair-stepping lower, with each morning rally attempt failing in the afternoon.
A market that can't rally is going to crash… pic.twitter.com/EiyOA2swyN
— Mac10 (@SuburbanDrone) April 17, 2024
The spread between US 2-year yields and the $SPX dividend yield is at its widest since the Dotcom bubble.@johnauthers pic.twitter.com/pJ4BSKEB6Q
— Daily Chartbook (@dailychartbook) April 16, 2024
The strong $USD is pounding global currencies. Powell's hawkish comments today are making things worse.
The Canadian dollar is reaching pandemonium levels. This level in C$ has previously been reached when the S&P 500 was oversold. pic.twitter.com/LvhOH2ENJI
— Mac10 (@SuburbanDrone) April 17, 2024
This week, Cathie Wood reiterated her love of Tesla and dislike of Nvidia. A lethal pair trade that has destroyed her fund and her credibility.t.co/cU9s4p5ttn
This week Tesla canned senior executives and laid off employees ahead of what is expected to be a disastrous… pic.twitter.com/5iyJ8xYBSl
— Mac10 (@SuburbanDrone) April 16, 2024
Netflix kicks off Big Tech earnings on Thursday. Recall that the Tech rally accelerated when Netflix announced a beat for Q4, back in January.
Now that rally is running on glue fumes.
Soon the stock will be back in change of underwear mode. pic.twitter.com/At8KPqBBEJ
— Mac10 (@SuburbanDrone) April 16, 2024