Market Briefing For Wednesday, July 12

Shrugging-off rate concerns - at least for this moment, stocks generally were on the firm side ahead of CPI in the morning. More analysts have joined what may be more than wishful thinking, in suspecting CPI comes in soft, if not for 'core', at least the 'headline number'.
 

Freepik

If it's around .2 or .3 for the headline number stocks will jump, probably then experience a profit-taking wave, before heading higher, which would logically be an expectation for the Fed to be restrained at their upcoming FOMC meet. That would be a 2-3% (as prices are drifting slightly lower by some measures) annualized, which would be enough leeway for the Fed to stay calmed, even if they persist (of course) referencing 'data-dependencies' in their statement.

For the most part the run-up in the last hour was an absence-of-sellers and a bit of short-covering ahead of the number. Not all stocks participated, while it's notable that breadth was better again, reflecting the 'redistribution' to negate a degree of concentration in super mega-caps, as we discussed last night.

 

Most money managers are waiting for a pullback to add to holdings. Makes a lot of sense 'normally' this time of year, but this may not be a normal year. The 'money flows' are there, the Fed may be done (or nearly so), and clearly, it's a time to be looking to buy pullbacks, as it was back in earlier June too.

July is an exhaustion of that particularl phase (yes I called it a 'Mom's B'day' rally which correlated with seasonals), but now we have the 'redistribution' the Nasdaq is requiring of the 'magnificent seven' big-cap leaders, and that's the factor that's 'smoothing' the market just a bit, hence better breadth. And that's a condition that is the broadening-out that is needed for S&P to merely hold.

So now it depends on when the Fed starts cutting rates, but many companies we're interested in (and most money managers should be or are) tend to hold some growth potential, as that crowd wants to make up for poor performance in the year's first half. So this could be a little irregular and has too many 'still' too bearish, provided we get stabilizing inflation pace, a calm Fed, and China or North Korea aren't contemplated something sneaky.. well they contemplate but must not execute on any devious plans.

Meanwhile, stocks like AEHR drifted lower in-sync with Semiconductors, at the same time it's really an equipment (testing) product company, but lately has had some simpatico moves with the Semi sector. Wednesday features its CEO speaking (live not virtual) at the prominent St. Regis CEO San Francisco conference, and if you're attending any heads-up would be welcomed. What I understand is that Presentation material will be posted later. I don't know if it will reiterate what we already know or have seen, but will be interested. More notably the Fiscal Year summary (and presumed new guidance) is Thursday.

SoundHound (SOUN) remains neutral, in a pattern of consolidation but could go either way. The manner in which they have neglected updating shareholders on structure is bothersome, hopefully they will take a moment to explain what we surmise, but of course the Company needs to clarify the 'skin in the game' insiders do have with regard to the future, and the disconnect from their 'legacy' holders.

 

Bottom-line: 

Constructive behavior, better breadth, but all depends on CPI in the morning, and even if there's ensuing profit-taking (presuming soft number) that the S&P regroups and revives as the session evolves.

I'll reflect on CPI early on Twitter (follow me @stockseer )  and then later as usual.

 


More By This Author:

Market Briefing For Tuesday, July 11
Market Briefing For Monday, July 10 '23
Market Briefing For Thursday, July 6

This is an excerpt from Gene Inger's Daily Briefing, which typically includes one or two videos as well as more charts and analyses. You can follow Gene on Twitter  more

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