Umm…Say What Now? – The Nasdaq is now in positive territory for the year. The more concentrated NDX100 went above the ‘high-water’ mark on Monday and has only added to it since. Of course, FAAN(M)G along with Tesla make up nearly 50% of the QQQs and their runs has been well-documented. Where has this money been coming from? Value names have yet to grab the conch, with large-cap and more notably small-cap value names still deep in the red YTD. Companies that have been neatly placed for this sort of event, Peloton (+16.7%), Paypal (+13%), and Fortinet (+20%) will only have investors more in need to chase performance. Meanwhile, Apple and Microsoft are bigger than the EuroStoxx 50.

Midweek Mixed Bag… The S&P continues to crawl along nearly flat on the day as investors remain in a wait-and-see mode with regards to how re-opening plans will pan out. The sector tables also present a muddled picture with big Tech once again leading the way but trailed closely by more-cyclically focused Autos (thanks to GM +4.8% on earnings). The laggards are also a blend of defensives / cyclicals with Utilities, Banks, and Energy all underperforming.

Curious Case of Mixed Signals…We are stuck in the land of in-between currently, though given the moves up today, sentiment isn’t faring too badly.

Don’t Make it a Habit… The S&P is trying to avoid its first 3-day losing streak since early March but there hasn’t been much enthusiasm to start the week. The tone is risk-off as Value names take another beating, but quiet volumes and a less “sexy” slate of earnings indicate the market is in a bit of a no-man’s land, unsure where to get next after surviving the initial plunge and subsequent furious rebound.

Bulls vs Bears – Earnings season has proven to be a series of moving the goal posts. With more than ¾ of the S&P500 having reported by now, 70% have beat EPS forecasts. Great! But hold the phone – the bars have been lowered drastically. Concentration risk in the FANGs persists (see below – Breadth troubling?) but they all reported this week and did quite well, although Amazon’s “reinvestment” being taken poorly today – it’s coming off all-time highs YESTERDAY so lets not fret. And these companies have nearly become as defensive as the traditional consumer staples names. Positive linearity has been a oft-cited phrase; are things stabilizing to getting better? That’s the bar right now. At some point the Street will need to see actual growth but we’re not there yet.

Take a Break… We get arguably the best set of Q1 earnings so far this season and this is how the market reacts?? Profit taking and a bit of month-end rebalancing seem to be the favorite culprits behind today’s well-deserved step back: the S&P is still on track for its best month since 1987, after all. Along with the pause has come a reversal in the underlying trends that carried indices higher through the week: Value sectors like Banks / Energy / Autos are taking a back seat while  Momentum plays are back on top, and Small Caps are cooling off (IWM -3.5%) after near-record streak of outperformance the last few sessions.

A Wing and a Prayer….US markets thrive on hope and also CB stimulus. But, today has been mostly the former (until the FOMC at 2:30p, of course). Despite US GDP seeing its worse quarter since 2008 (first economic contraction since the first quarter of 2014), pending home sales being down 21% in March and Boeing announcing it would cut 16,000 jobs, markets have forged ahead on the hope that Gilead’s remdesivir really would be the answer COVID-19 patients and doctors have been looking for. The experimental drug met its primary endpoint and the biotech company’s shares soared 7%. Two caveats to note:  The study did not compare the use of remdesivir to a placebo, making it difficult to reach conclusions based on the data. Also, a separate study published in The Lancet today (and leaked by WHO last  week) showed that the drug did not have significant health benefits for critically ill COVID patients.

Welcome to the Grand Re-Opening! US markets continue to embrace the “light at the end of the tunnel” as States slowly re-open their economies.  While the V, U or Nike swoosh rebound remains to be seen, any economic re-start is a short term positive.  Ford, GM and Fiat Chrysler all look to get their plants going, as Simon Property will open 49 sites in early May.  The shift has helped the economic sensitive SmallCaps outperform once again.  The Russel 2000 has gained 5% this week, and is once again above its 50 day moving average.  As a harbinger of the economy, this index will be the one to watch for any future economic disruption. 

Remember When… the S&P didn’t close up or down more than 1% for 70 consecutive sessions between October and January? Feels like ancient history, but even still it’s uncanny that despite the SPX trading up as much as +1.5% today, it still feels like a “boring” start to a busy week for US markets. Cyclicals / Value are leading the way as Tech takes a relative breather, and Small Caps are enjoying a much needed outperformance day (IWM +4.4%). Still certain measures of Growth vs. Value show that on a technical basis, Growth’s relative outperformance doesn’t appear to be ending anytime soon (JPM chart below)

It’s a Friday! Fridays have not been kind to equities this year, with indexes closing in the green only 26% of the time (tough to take risk during the virus outbreak).  Currently though, stocks are trying to beat those odds.  Led by Tech/ Semis, the S&P is hovering near its 50 day moving average (2807). Underperforming? Energy names are giving up some of their 15% gains seen this week (even in the wake of the Oil implosion).  US Treasuries are also stable today, with the 10-year yield currently sitting at 0.60%  Next week is busy for the Central Banks, and the Fed meets Tuesday and Wednesday. Plus, earnings will be in full swing (especially from the FANG gang).