First Call

First Call March 2, 2023

Mar 2, 2023

Thomas Thornton

  • S&P futures down 0.6% and Nasdaq futures are down 1% in Thursday morning trading after US equities ended lower on Wednesday. S&P fell to its lowest level in nearly six weeks. Treasuries are weaker with more curve steepening; 10 year yields holding above 4% after moving above that threshold yesterday for first time since November. I expect the 2, 10, 30 year yields to move higher – see below. Dollar index up 0.45% on broad-based strength. Gold down 0.4%. Bitcoin futures down 0.5%. WTI crude up 0.1%, off best levels.
  • Watch the DeMark buy Setup 9’s – pause or continuation of trend lower. Next few days will be key on this call. Hold TSLA short as investor day was a dud, BBY hold short and hold SNOW short for now. I might cover this with the Mid Morning note and take the win.
  • Jobless claims with another print under 200k, Unit Labor Costs came in at 3.2% vs 1.1% last month. I am on Fox Business today at 2pm ET and will not be posting a late note.
  • There is no change in market narrative as the path of least resistance for stocks remains lower on the meaningful rate repricing seen over the last month or so. Repricing driven by hotter labor market, consumption and inflation data. Other bearish talking points continue to revolve around earnings/margin risk, negative flow and liquidity dynamics and geopolitical risk.
  • Eurozone headlined and core inflation both came in hotter than expected in the February flash reading, though not surprising given the country-level data out earlier this week. Reuters said China is becoming increasingly ambitious with its 2023 growth target and may go as high as 6% when it unveils it on 5-Mar. ECB’s Lagarde said rate hikes may need to continue past the widely expected 50 bp move this month though no surprise there. Bloomberg reported BoJ leaning toward refraining from further policy tweaks at Kuroda’s last meeting next week. Follows dovish leaning comments from incoming leadership. Other notable headlines have focused on signs robust US labor market may be cooling and deteriorating earnings quality.
  • TSLA weak on disappointment surrounding lack of specifics at its investor day. CRM up big on a big beat and raise and positive takeaways surrounding heightened commitment to profitability. SNOW results strong but stock hit by very disappointing 40% product revenue growth guidance. VEEV a post-earnings standout despite a number of moving pieces in the guidance. SPLK beat but FY24 guide mixed with ARR growth light as cloud migrations continue to be pushed out. OKTA beat on all key metrics, including revenue, CRPO, billings and FCF, and guided above. PSTG guided below on macro headwinds facing enterprise. BOX guided below. AEO beat on better revenue, GM and SG&A.  BBY beat and guided lower. SI issued going concern statement and is in a death spiral.
  • Key Upgrades/Downgrades: NIO Inc downgraded to equal weight from overweight at Barclays. Silvergate Capital downgraded to neutral from buy at Compass Point. Silvergate Capital downgraded to underweight from neutral at JPMorgan. Dollar Tree downgraded to neutral from overweight at JPMorgan. NIO Inc downgraded to neutral from overweight at JPMorgan.

market snapshot

economic reports today

premarket trading

US MARKET SENTIMENT

S&P and Nasdaq bullish sentiment continued lower with the 20 day moving average of bullish sentiment decreasing again

Bond bullish sentiment was also weak and could go even lower perhaps under 10% again

Currency bullish sentiment was mixed with the US Dollar down for second day in a row

Commodity bullish sentiment mostly a strong day. Copper bullish sentiment is back to extreme zone

US MARKETS

S&P futures 60-minute time frame has chopped lower

S&P futures daily with some important stuff today. New buy Setup 9 likely qualified today and the downside Propulsion target is now qualified and confirmed with a downside target of 3793. These are counter balanced indicators. I could see a stall with the Setup however if this continues lower a new Sequential Countdown will start.

NDX 60 minute time frame remains in downside wave 3 with a Sequential Countdown in progress

NDX futures daily also has the buy Setup 9 and with the completion of the Setup 9 the pending Sequential which I discounted effectiveness was canceled. It needs to hold the 50 day which is what a lot of people will be watching and hoping for just like they did with the 200 day.

extra Charts we’re watching

US Dollar Index daily up today with potential for reemergence with a move over 105

US Two Year Yield continues higher with a Sequential Countdown in progress

US 10 Year Yield continues higher with a Sequential Countdown in progress

US 30 Year Yield continues higher with a Sequential Countdown in progress

Bitcoin daily has near term support at 22,795 – below this level and 20k level could be the next stop.