/ February 14
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Friday:
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Friday:
AMC Networks AMCX
Daily Briefing
*The S&P 500 tested its record all-time-high yesterday, following the release of the January Producer Price Index; in contrast to the inflation shockwaves which rocked the market on Wednesday, yesterday’s release created a sense among market participants that there might not be an inflation scare in the PCE Price Index when it is released on February 28;
*Month-over-month declines in various components, like airfare and physician care, resonated in the Treasury market, which provided clearance for the stock market to continue with dip-buying efforts;
*SPY climbed +1.06% and closed just shy of its all-time-high; the positive action doesn’t change the overall consolidation vibe, with resistance standing at $617 (M-Trend) and support at $598 (50-DMA); a break in either direction would provide more meaningful volatility potential; as it stands, dealers hold positive gamma exposure on SPY, meaning they act to buy dips and hedge rallies;
*The MACD signal has barely turned positive, but its direction is less meaningful in a low volatility environment;
*Buy the dip efforts were further energized in the afternoon session by the recognition that President Trump's reciprocal tariff plan might not be as economically provocative as feared; tariffs won't be applied until April 1 at the earliest, and at that time will be applied on a case-by-case basis;
*The president also injected a pleasant geopolitical thought with the announcement that he will be seeking a discussion with Xi Jinping and Vladimir Putin in which he will suggest they all cut their defense spending in half and pursue denuclearization;
*The materials (XLB,+1.7%), consumer discretionary (XLY, +1.5%), information technology (XLK, +1.42%), and communication services (XLC, +1.15%) sectors were the day’s biggest winners while the utilities (XLU, +0.1%) and industrials (XLI, +0.1%) sectors brought up the rear;
*Individually, MGM Grand (MGM, +17.5%) and Molson Coors (TAP, +9.5%) were the biggest gainers among S&P 500 components, rallying in the wake of their earnings results, yet other big moves were registered outside the S&P 500; stocks like AppLovin (APP, +24.0%), Crocs (CROX, +23.9%), and Robinhood Markets (HOOD, +14.1%) were standouts in that regard;
*The Producer Price Index for final demand increased 0.4% month-over-month (vs. consensus of 0.2%) following an upwardly revised 0.5% increase (from 0.2%) in December; excluding food and energy, the index for final demand increased 0.3% month-over-month (as expected); on a year-over-year basis, the index for final demand was up 3.5%;
*The month-over-month readings were less upsetting than the month-over-month readings seen in the CPI report; also, the year-over-year readings look improved at first blush, yet the revisions moved the December year-over-year readings for PPI and core PPI higher;
*Initial jobless claims for the week ending February 8 decreased by 7K to 213K; the low level of initial jobless claims, continues to connote an otherwise positive demand outlook on the part of employers who are reluctant to cut staff;
*In response, the 2-yr yield fell 6 basis points to 4.31% and the 10-yr yield dropped 11 basis points, completing a round-trip to 4.53% where it stood just before the release of the January Consumer Price Index;
*TLT gained +1.66% in a violent bounce-back rally; the benchmark treasury ETF did not manage to re-capture the $89 M-Trend technical level, which also acts as the Combined Gamma Flip; TLT trading above $89 again should be bullish for bonds going forward;