The 'Fog of War' predominates; and no, I suspect the Fed will not take the rest of the year off. Meanwhile instead of the monetary authorities, it's the Iranians we hope will 'chill' as the year evolves. However, one never knows; and thus far even the Gaza conflict hasn't been sorted into a ceasefire; though a sort of stagnation exists there, not just from the Israeli withdrawals; but perhaps as it came close to home with the kids of Hamas political leader killed (not targeted but were present).

So maybe the conflicts, like the stocks market, essentially treads water now in the wake of the S&P filling the underlying gap we've been talking about (from February; not the one far lower from November of 2023; and that's unlikely as so much of the market is already creamed; but if the mega-caps we warned of for a couple months crumble, then sure, it would come into potential view).

However, in a 'bear trend', supports exist to be broken, but can be variable as war or earnings can create surges followed by purges; or inverse. PCE might be the key next week, and Oscillators distort because of the bifurcation which totally differentiates the biggest stocks from the average stocks. So we'll see if the likes of RTX, GE Aerospace or Chevron can help; but Tesla won't. Nor a Boeing or META at the moment. You see mixed prospects just in those few.

Although our warning of a 'mega-cap' decline amid absurd upside extension goals without improvement in earnings projections was correct for March/April or even into May (pending), it's not a very comfortable or easy-going market for most sectors (aside Oil and Energy). Plus Oil is totally geopolitical now. It has deteriorated to the point that everyone is shifting around and probably will find insufficient strength in Caterpillar, Microsoft or Alphabet to help much. I don't know if (our) Chevron or Exxon can do a lot; they're already advanced.

I won't call this an 'ABT' market, as some are suggesting (Anything But Tech); because not all tech earnings will be as soft (or with withdrawal of references of new business in the future, which for sure spooked Netflix holders), and as we get past the start of Passover and into more mega-cap earnings reports, it is fairly likely that we get an S&P rebound amid that, even if unsustainable. If anything summarizes this, it might be the idea of tech bounce that's sold into.

So if you hedged and agreed over a month ago; this likely has more to go but be prepared for rebound within downtrend context; as I guess summarizes it. I suppose 'slightly' positive breadth going into a military weekend is a plus; with diverging Indexes (DJ up and S&P down). There's a fight coming-up; and I'm it's not one that required the (unnecessary?) 'elephant walk' of B-2 bombers at an Arkansas Airbase where more than have our entire force was paraded. It's not encouraging that one has to remind adversaries of our power; but so be it.

The 'geopolitical' drawdown is not just about petroleum inventories, but about sentiment towards investing; even as some accumulative small-cap disruptive stocks seemingly have little room to erode further after already bitten very hard. But patience is required absent individual corporate surprises.

Market X-ray: Heavy market with most mega-caps’ under significant selling; that’s no surprise (warning for 2 months on those). Hence the FOMO crowd that chased them are really suffering; not to say anyone is happy in this market.

Low momentum is outperforming so-called high momentum; notice that as the beaten-down seem to stabilize, big techs cascading lower. While this all is for sure frustrating; the 'collapse' of big-cap Semiconductors and other mega-cap stocks has been something anticipated and the market needs to get through.

At the same time the already-smeared small-caps actually seem to erode but if one looks closely, signs of a shift from the overpriced to the under-priced sort of is evident. But even a 20% drop in the mega-caps isn't that much for those in them with 'core' holdings from a year or more ago; just not anyone chasing in the FOMO rally we strenuously warned was overdone in recent months.

Of course that's not to say several won't rally on 'earnings' as those come out in the weeks ahead; and if such stocks spike and fade to lower; expect lower. I still think this is primarily a geopolitically-influenced market; and still worried.

It seems that both Iran and Israel have sent 'messages' (I still think Tehran in fact hoped to destroy some part of Israel last weekend, and it was not mere theater) so .. 'if' .. that's the case as many believe, then perhaps things stabilize. We'd be remiss not mentioning that almost every war (including with Germany as well as Japan) had both side thinking certain 'tactical' moves would dissuade a possible wider conflict. And Japan got away with it for years in China; while Germany thought the U.K. would back it fighting the Soviet Union; rather than honor their 'Treaty' with Poland. Not to mention WW1 where again both sides did not want, nor expect, that early hostilities would lead to conflagration... so.

Technicals are worth updating again; even if nothing on a chart negates what can happen if wider war occurs. Or (hah!) if the Fed decides to move early to cut 'soon', rather than wait until it's obviously necessary (economic slowing or funding for a grander war effort). Hard to say but here's some S&P levels:

SPX - 5.9%

NDX - 8.0%

RUT - 9.5%

Irrelevant minor Index corrections (thus from recent highs to recent low), so might bounce 'if' on-track for an earnings-related bounce; but trending down.

Support Levels (also, in a bear market or geopolitical crisis; cutting through so-called supports is common as I mentioned before about the S&P gap; of course NDX or QQQ is well below 100-day and RUT working on it):

SPX: 4935, 100 day

NDX: 16,266, 200 day; already well below 100 day)

RUT: 1911, 200 day

Also aside the Netflix-assisted decline; contemplate what happens 'if' China's fight with Apple goes to the point of 'blocking' Apple's 'App Store' completely in China. Not saying it could or would happen; but given Apple's market-cap, any chatter like that would impact considerably on the S&P. I note that META has similar threats from China regarding 'WhatsApp', Threads, or so on; so I think it's China version of countering the threat to yank TikTok from the U.S. Just pondering; a gnarly social-media tech war (beats fighting over Taiwan).

I would not make too much of both the NY & Nasdaq Oscillators stabilizing a bit. I mentioned this before as the whole enchilada depends on the mega-cap stocks. I also suggested we 'should' make a little washout and short-term low, but again depends on both geopolitics and the nature of 'reception' to results from the primadonna stocks, which I should rename 'Auntie Mame' stocks, as they were great but overstayed the party, at least remains so for awhile.

Bottom line: frustration for those who chased 'magnificent seven' overpriced stocks persists (no surprise, warning targets were raised into the top over a month ago); along with indecision for the rest of the market, which is mostly pummeled or moving narrowly. This pattern should not vary much yet.

That's not exciting, but is realistic as bifurcation or lethargy reflects both these key variants of the moment: monetary policy and above all, geopolitics. With the Passover holiday coming now; it's debatable but probable (unless Iran or its surrogates get too bloodthirsty again) that things stay quiet a bit; while the Fed-heads clearly state they're in 'no hurry' to ease interest rates, as of yet. Of course Oil remains the clearest simplest way to view this; stay tune for PCE.

For this weekend we're asking at least 4 questions about where the world stands. The first will be whether good earnings can rescue stocks hit hard like Apple; or do they sell results (I suspect); and maybe even hit Microsoft and others (Microsoft might try to bounce off a rising trend-line, but capitulate after that). I suspect it might be the same for a number of stocks ... overdue for mega-cap pain, and I can't say glad to see it, but thought a worthy drop was inevitable.

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