Gordon T Long Research exclusively located at MATASII.com

RESEARCH MAILING CONTROLCHANGES / SIGNUP

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TAX SEASONALITY PATTERNS LIKELY IN PLAY

STOCK BUYBACK ACTIVITY IS CLOSED FOR EARNINGS

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US TAX DAY April 15th: Seasonality will likely come into play here as the retail community tends to sell stocks into 4/15 to raise cash for these payments. Post payments we have historically seen a bullish trend develop.

Seasonality Says: LONG until April 9th - Then SELL - LONG Again After April 15th

1 - SITUATIONAL ANALYSIS

TAX SEASON IS AT HAND

There are a lot of Capital Gains Tax that must now be paid!

CHART TOP RIGHT

An alternative sentiment indicator for Fear is the Levkovich Index which has reached the "Euphoria" Stage that has always been followed by a major sell-off. This however, doesn't suggest any timing but only it has proven to warn that a major market adjustment is ahead!

CHART BOTTOM RIGHT

The Market Fear-Greed Index now stands at 88.18 which is an extreme level of greed!

CHART BELOW

First two weeks and the last two weeks of April have historically been seasonality quite strong

STRONG EQUITY FLOWS

The 6 Monthly Average of flows into US Equity ETF's & Mutual Funds is quite strong as the public continues to load up on stocks.

2 - FUNDAMENTAL ANALYSIS

MARKET RIDING A WAVE OF OPTIMISTIC EARNING & GROWTH EXPECTATIONS

EARINGS

Earnings estimates for both 2024 and 2025 paint a very attractive picture. This is a big change from 8 months ago?

What actually changed other than $20T in global government deficit spending to achieve $20T in GDP Growth.

GROWTH

Yield has again been following the fact that Yield continues to follow Growth as estimated by the Atlanta Fed GDPNow forecast. (chart below)

CREDIT MARKETS

Since Credit always leads markets, we are watching it closely. This includes:

1. Inverted yield curves,
2. Negative swap spreads,
3. Collateral shortages,
4. Tightening of credit standards by banks and
5. Reduced commercial lending.
6. The High Yield Corporate "JNK" Market.(BELOW)

THE HIGH YIELD CORPORATE "JNK" MARKET

It appears that the Credit Markets are approaching the conclusion of their major corrective consolidation. Appears likely to be complete over the next 90 days.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

3 - TECHNICAL ANALYSIS

THE HEADLINE MARKET: MAGNIFICENT 7

• We have reached the vertical lift part of the parabolic (geometric) lift shown by the dashed red line.
• We have Divergence with momentum (bottom pane),
• Momentum appears to be rolling over (bottom pane)

MATASII CROSS: WEEKLY - CONTINUES TO SIGNAL A MAG-7 BUY

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

"CURRENCY" MARKET (Currency, Gold, Black Gold (Oil) & Bitcoin)

CONTROL PACKAGE

There have EIGHT charts we have outlined in prior chart packages that we will continue to watch closely as a "control set".

1. US DOLLAR -DXY - MONTHLY (CHART LINK)
2. US DOLLAR - DXY - DAILY (CHART LINK)
3. GOLD - DAILY (CHART LINK)
4. GOLD cfd's - DAILY (CHART LINK)
5. GOLD - Integrated - Barrick Gold (CHART LINK)
6. OIL - XLE - MONTHLY (CHART LINK)
7. OIL - WTIC - MONTHLY - (CHART LINK)
8. BITCOIN - BTCUSD -WEEKLY (CHART LINK)

As gold pushes to higher & higher record highs (in USD terms),

Real yields refuse to play along??

GOLD

It has been a spectacular lift but it likely time for a corrective consolidation before heading higher (looking for ~ 2500)

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

US EQUITY MARKETS

CONTROL PACKAGE

There have FIVE charts we have outlined in prior chart packages that we will continue to watch closely as a "control set".

1. The S&P 500 (CHART LINK)
2. The DJIA (CHART LINK)
3. The Russell 2000 through the IWM ETF (CHART LINK),
4. The MAGNIFICENT SEVEN (CHART ABOVE WITH MATASII CROSS - LINK)
5. Nvidia (NVDA) (CHART LINK)

S&P 500 CFD

A break of the 21 DMA and we likely get a quick move to the 50 DMA. Don't forget that Friday will be the release of the monthly Labor Report. Expect volatility.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

S&P 500 - Daily - Our Thought Experiment

Our Though Experiment, which we have discussed previously, suggests we have put in a near term top (or very close to it) and will now consolidate before possibly completing one final small impulse higher or put in a 1-2 Wave of a much higher degree.

First support is at 5240 and then the huge 5200 must hold area. So far the trend channel remains intact, as well as the 21 da (in grey below). A break below the channel and things would get much more "dynamic". If we don't then the red down leg (below)is underway. (See Chart Right for a better representation of the control channel & chart below for break of Momentum support in the lower pane)

NOTE: To reiterate what I previously wrote - "the black labeled activity shown below, between now and July, looks like a "Killing Field" where the algos take Day Traders, "Dip Buyers", "Gamma Guys" and FOMO's all out on stretchers!"

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

STOCK MONITOR: What We Spotted

MONDAY

• Stocks were largely sold on Monday with the rate-sensitive sectors of the market underperforming after the hot ISM manufacturing survey unwound Fed cut expectations.
• The market is now priced for c. 65bps of Fed cuts this year vs 70bp+ before the data, while the first fully priced cut has been pushed back to September from July.
• Treasuries saw heavy selling (2s +9bps at 4.71%, 10s +13bps at 4.33%) amid the hot ISM data and the passing of month-end buying, with a healthy slew of corporate debt deals adding additional selling pressure.
• The Dollar saw a strong bid amid the hot US data with Euro on watch ahead of the region's return on Tuesday, with German inflation figures due.
• Oil prices continued their breakout to the upside with the hot US and China PMI data providing tailwinds. China stocks surged, with the Yuan flat against the strong Dollar.

INFLATION BREAKEVENS: 5yr BEI +1.4bps at 2.380%, 10yr BEI +2.4bps at 2.356%, 30yr BEI +2.4bps at 2.301%

REAL RATES: 10Y -- 1.9691%

STOCK SPECIFIC

• Micron (MU) +5.5%: DRAM spot prices are now reversing their steady upward trend that was seen since H2 2023, according DigiTimes citing sources. In other news, BofA increased its PT forecasting high-bandwidth memory technology demand will grow to more than USD 20bln by 2027.
• Liberty Media (FWONA) -0.2%: Announced an agreement to acquire commercial rights of MotoGP, for a EUR 4.2bln enterprise value (equity value of EUR 3.5bln). In fitting with FT reports last Wednesday.
• AT&T (T) -0.6%: Investigating a data leak that resulted in excess of 7mln customers’ information being published on the dark web.
• Tesla (TSLA) -0.3%: Raised prices for all Model Y cars in the US by USD 1k.
• UPS (UPS) -0.7%, FedEx (FDX) -3.3%: UPS has replaced FedEx to become the USPS’s primary air cargo provider.
• Disney (DIS) -0.7%: Pension Fund CalPERS (0.36% owner, 28th largest) votes to elect Trian Fund Management's candidates Nelson Peltz and Jay Rasulo to Walt Disney's board, believing fresh perspectives will benefit the Co.
• Meta Platforms (META) +1.2%: Cannot delay the FTC from reopening a probe into alleged privacy failures at Facebook while it pursues a lawsuit challenging the agency's authority.
• Microsoft (MSFT) +0.9%: Will now sell its Teams chat and video app separately from its Office product worldwide.
• 3M (MMM) +6%: Completed its spinoff of health-care company Solventum and announced a USD 10bln settlement with public water suppliers in a chemicals lawsuit had received final approval.
• US Steel (X) +2.5%: Nippon Steel (5401 JT) reportedly makes formal pledge to union in push for US Steel.
• Nuvei (NVEI) +2.5%: Enters into agreement to be taken private by Advent International for USD 34/shr.

TUESDAY

• Stocks saw notable selling on Tuesday, extending the April rot, amid various micro factors in the backdrop of an aggressive Treasury bear-steepener.
• Treasuries saw large bear-steepening on Europe's return, despite soft German inflation figures, as oil prices ripped and Europeans reacted to the long weekend's events.
• However, Fed expectations were little changed for the year-end, with Fed's Daly and Mester both noting today that three rate cuts looks like a good baseline (same as the Fed median SEP view).
• In stocks, Tesla (TSLA) added particular pressure on the Nasdaq after very poor Q1 delivery figures, while semiconductors were another pocket of weakness.
• Elsewhere, there was pressure in the apparel space after PVH's (PVH) awful guidance, citing weakening consumer trends in Europe, especially Germany and the UK.
• Health insurance names were slammed after the final Medicare Advantage rate has ignited margin concerns.
• In FX, the Dollar was lower with some profit taking in Euro shorts after the soft German regional inflation figures, while commodity currencies prospered amid the further rip in oil and metals, including gold. Bitcoin extended its selloff, and is flirting either side of USD 65k.

INFLATION BREAKEVENS:5yr BEI +3.3bps at 2.412%, 10yr BEI +2bps at 2.375%, 30yr BEI +1.9bps at 2.321%.

REAL RATES: 10Y -- 1.9792%

STOCK SPECIFIC

• Tesla (TSLA) -5%: Q1 deliveries way short of expectations (386.8k, exp. 449k), and said decline in volumes during Q1 was partially due to early phase of production ramp of updated Model 3 at the Fremont factory and shutdowns.
• Alphabet (GOOG) -0.5%: Google will destroy billions of data records to settle a lawsuit claiming it secretly tracked the internet use of people who thought they were browsing privately.
• Disney (DIS) +1%: Said to be winning a proxy battle against activist investor Peltz.
• PVH (PVH) -22%: Next quarter and FY guidance very light warning of a tougher macroeconomic setup and particular weakness in Europe.
• Verve Therapeutics (VERV) -35%: Pauses enrollment in Heart-1 trial of VERVE-101.
• SLB (SLB) -1% ChampionX (CHX) +10.5%: SLB to acquire CHX in a USD 7.7bln all-stock transaction.
• Health insurance names (HUM, UNH, ELV, CI) were lower after CMS announced rates for the 2025 calendar year will increase 3.7%, as previously proposed. Some investors had anticipated a larger hike.
• Estee Lauder (EL) +0.5%: Upgraded at Citi.
• Rivian (RIVN) -5%: Missed Q1 production estimates.
• Endeavor (EDR) +2%: Silver Lake is to take Endeavor private for USD 27.50/shr in cash; TKO (TKO) is not party to this transaction and will remain a publicly traded company.

WEDNESDAY

• Stocks and bonds were choppy while the Dollar took a hit on the soft ISM services PMI.
• Stocks started the session on the front foot in wake of the ISM data while T-Notes pared the earlier ADP-induced weakness.
• Fed Chair Powell largely stuck to the script which only pushed stocks and bonds higher and the DXY lower as the hot data seen recently appears to not have phased the Fed Chair.
• Although stocks had jumped throughout the majority of the session, gains pared in the last hour of trade as traders unwound positions.
• Crude prices were bid throughout the morning, albeit settled off best levels, after continued geopolitics, OPEC JMMC and the weekly EIA data.
• The DXY tumbled throughout the session, particularly on the soft ISM Services print which also saw prices paid ease, at odds with the strong/hot manufacturing PMI seen earlier in the week.
• The data and reiterations from Fed Chair Powell saw traders ultimately price in more rate cuts throughout the year.
• The ADP data initially saw traders pare rate cut bets but the soft ISM data and Powell commentary saw money markets lean dovish again with 72bps of easing priced throughout year-end vs. 66bps in wake of the ADP.
• Semiconductors tumbled pre-market after Taiwan's strongest earthquake in 25 years which saw TSMC (TSM) halt some of its operations.
• Nonetheless, the equity upside saw the chip weakness pare with the Semi ETF (SOXX) closing flat.

INFLATION BREAKEVENS:5yr BEI -1.2bps at 2.399%, 10yr BEI -0.9bps at 2.364%, 30yr BEI -0.5bps at 2.313%.

REAL RATES: 10Y -- 1.99%

STOCK SPECIFIC

• Intel (INTC) -8%: Foundry losses have widened, and the unit may not reach a break-even point for several years. Said its foundry business had USD 7bln in operating losses for 2023 vs. USD 5.2bln the year before.
• Paramount Global (PARA) +17%: Co. and Skydance are in advanced discussions for a potential deal, NYT reports. WSJ reported the board has agreed to enter exclusive discussions, and they favour it over a recent USD 26bln all-cash offer from a PE firm.
• Dave & Buster (PLAY) +10.5%: Board increased share repurchase authorization by USD 100mln, bringing the total to 200mln.
• Tesla (TSLA) +1%: In wake of its dismal Q1 delivery numbers, TSLA saw its PT cut at numerous brokerages accompanied by bearish commentary.
• Signet Jewelers (SIG) +10%: Raised 2025 EPS guidance.
• Spotify (SPOT) +8%: To raise prices by USD 1-2 for individual and family plans.
• Retailers (FIVE, COST, DLTR, LOW) are lower after Gordon Haskett downgraded the four names after the recent rally.
• Disney (DIS) -3%: CEO Iger wins proxy vote over Peltz with board’s election; all 12 nominees re-elected to board.
• Phillips 66 (PSX) +2%: Raised quarterly dividend 10% to USD 1.15/shr.
• Ulta (ULTA) -15%: Sees Q1 comp 'on lower end' of H1 guide of low single digits and is forecasting a slowdown in total category in Q1.
• Boeing (BA) -1.7%: 737 MAX production has fallen sharply in recent weeks as FAA steps up factory audits, according to Reuters sources; rate fell as low as a single-digit number of jets per month in late March.

BOND MARKET

CONTROL PACKAGE

There have FIVE charts we have outlined in prior chart packages that we will continue to watch closely as a "control set".

1. The 10Y TREASURY NOTE YIELD - TNX - HOURLY (CHART LINK)
2. The 10Y TREASURY NOTE YIELD - TNX - DAILY (CHART LINK)
3. The 10Y TREASURY NOTE YIELD - TNX - WEEKLY (CHART LINK)
4. The 30Y TREASURY BOND YIELD - TNX - WEEKLY (CHART LINK)
5. REAL RATES (CHART LINK)

FISHER'S EQUATION = 10Y Yield = 10Y INFLATION BE% +REAL % = 2.364% + 1.99% = 4.354%

As rate-cut expectations fell from 6 this year to 3, Treasury yields rose... non-stop... all week with the belly of the curve underperforming (5Y yields up 28bps on the week). Yields all ended back up near their year-to-date highs.

YOUR DESKTOP / TABLET / PHONE ANNOTATED CHART

Macro Analytics Chart Above:  SUBSCRIBER LINK

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