In the after hours, as choreographed (!), I am starting to short  (SPY)  and  (QQQ)  common at $520.01 and $442.98, respectively.

Very small-sized at first.

- NYSE volume 370M shares, 13% below its one-month average

- Nasdaq volume 4.03B shares, flat to its one-month average

- VIX down 0.99% to 15.04

Breadth

Nasdaq 100 Heat Map, here

Biggest Movers, here

S&P 500 Index Sectors

With S&P cash turning positive, I am back reshorting the SPY and QQQ calls that I had previously covered.

As I suspected we have rallied vigorously from the lows.

I am poised to reshort strength. I will probably wait until after the close - giving the market a wider berth.

I obviously did not have my internet connection on the plane, and I made no trades since noon!

From Charlie! See here.

* At 10:35 am:.

- NYSE volume 121M shares, 18% below its one-month average

- Nasdaq volume 1.42B shares, 2% above its one-month average

Breadth

Nasdaq 100 Heat Map

Percentage Movers

S&P cash is now -42 handles, having dropped by -65 handles from the morning highs.

I covered my medium-sized trading short rental in  (XLF)  at $41.20 and covered yesterday's additional short SPY and QQQ calls for a profit.

Now down to small-sized SPY calls short.

I am prepared to reshort on strength.

Going to the airport.

Yesterday I questioned Nvidia's  (NVDA)  chart and got some Bronx cheers from the peanut gallery:

Are Nvidia's Shares Rolling Over?

Inquiring minds want to know!

(NVDA) is now -$100 off of its yearly high.

Position: None

BY DOUG KASS

APR 8, 2024 3:02 PM EDT

Today NVDA shares are -$31/share.

I'm hoping you didn't stare too much at the sun yesterday and can read this today.

Well, in this so called 'strong' economy, small business still ain't feeling it. The NFIB small business optimism index for March fell to 88.5 from 89.4 and that's the softest read since December 2012. Again, the US economy is MUCH more mixed than broadly strong that I hear so many say.

And that strong March payroll report? Plans to Hire fell another 1 pt, down for a 4th straight month to 11%, the weakest since October 2016 not including Covid. Remember in last week's ADP report, small business, those with under 50 employees, hired only a net 16k and those staffed with 20-49 people actually shed 11k jobs. 

Those that that are still working are looking at higher compensation as these components rose after the February drop. Also, those planning on increasing capital spending fell to the lowest since April 2023 and no inventory restocking seen yet as plans to increase it remain deeply negative at -7%.

While those that Expect a Better Economy rose 3 pts to a still very negative -36%, those that Expect Higher Sales fell 8 pts to the lowest since May 2023. As for a Good Time to Expand, only 4% said yes and that's the least since also May 2023. The earnings outlook did rise by 2 pts but at -29%, remaining very much below zero. Credit conditions softened by 2 pts after the 2 pt improvement last month.

And, for those getting a loan, they are paying an average of 9.8%, matching at least an 11 yr high that this question goes back to. That is one high cost of capital for small business and why demand for loans has slackened too and the amount of C&I loans outstanding is just off the smallest level since September 2022.

Finally, ahead of tomorrow's CPI, Higher Selling Prices jumped by 7 pts to 28%, a 5 month high and as seen in the chart below, maybe be bottoming. Higher inflation is back as the top business worry said the NFIB.

The NFIB's bottom line "Small business optimism has reached the lowest level since 2012 as owners continue to manage numerous economic headwinds. Inflation has once again been reported as the top business problem on Main Street and the labor market has only eased slightly."

My bottom line, the US economy has pockets of strength but certainly pockets of weakness and only some cylinders are driving the bus. Monetary policy is restrictive for some and not for others. We can't paint this economic and market situation with broad brushes, it is MUCH more mixed and nuanced.

NFIB Small Business Optimism

Plans To Hire

Expect Higher Sales

Higher Selling Prices

Average Interest Rate on Short Term Loan

Here were some of the notables in yesterday's March NY Fed Survey of Consumer Expectations where inflation expectations were mixed and the labor market answers softened a bit.

The one yr inflation expectation was unchanged at 3%, rose to 2.9% from 2.7% for the three year guess but slipped by 3 tenths to 2.6% looking out five years.

"The mean perceived probability of losing one’s job in the next 12 months increased by 1.2 percentage point to 15.7%. This is above pre-pandemic levels and the highest reading since September 2020. The mean probability of leaving one’s job voluntarily in the next 12 months also increased (by 1.1 percentage points) to 20.6%, above the series 12-month trailing average of 18.9%."

And also with the labor market, "The mean perceived probability of finding a job (if one’s current job was lost) decreased for the third consecutive month to 51.2% in March from 52.5% in February, the lowest reading in almost three years, and well below its February 2020 pre-pandemic level of 58.7%."

Wage expectations were unchanged and spending intentions were down a touch.

On the credit front, current conditions improved slightly but "consumers were slightly more pessimistic about future credit access with a larger share of respondents expecting tighter credit conditions a year from now, and a smaller share of respondents expecting looser credit conditions." 

And, again highlighting the stress that low income people are under, "The average perceived probability of missing a minimum debt payment over the next three months rose by 1.5 percentage points to 12.9%. This is the highest reading in four years since the onset of Covid. The increase is most pronounced among respondents between the ages of 40 and 60, and those with income below $50,000."

On this last point, and to what I said above about the US economy, the US consumer is also VERY MUCH a mixed bag depending on what you're buying, needs vs wants, and how much money you make and save.

As you've heard me say many times before, I pay a lot of attention on the 40 yr JGB yield as its the furthest out on their yield curve, thus the least manipulated by BoJ policy and where real market messaging can take place. It was up another 1.8 bps overnight to 2.15% and that is just 1 bp from the highest level since February 2013. I remain bearish on long duration and much prefer short.

While the BoJ did move last month to tighten, in its own itsy bitsy way, the heat on Governor Ueda is still there because wage gains are still not keeping up with inflation and the yen keeps weakening. He said this today in parliament, "We have to consider reducing the degree of monetary easing if the underlying price trend rises along with our outlook. We will carefully consider this at every policy meeting as it depends on incoming data."

There is also a Bloomberg story that "according to people familiar with the matter", "The Bank of Japan will likely consider raising its inflation forecast at a policy meeting later this month after surprisingly strong results from annual wage negotiations."

You, like I, might wake up and first look at the S&P futures, then the 10 yr yield but also watch the yen and the 40 yr JGB yield.

40 yr JGB Yield

Lastly of importance, the ECB released its Bank Lending Survey, which is a quarterly report, and said "Credit standards for loans to firms tightened slightly, while they eased moderately for housing loans." The demand side was noteworthy, "Demand for loans from firms declined substantially, contrary to banks' expectations of recovery. A small net decline was reported for housing loans. These declines were driven by the level of interest rates, lower financing needs for fixed investment by firms and subdued housing market prospects."

Bottom line, in the aggregate, we should not expect much economic growth this year from Europe, even with some rate cuts, with some countries outperforming others.

Today is the first day in several weeks that financials have been weaker in a strong tape.

I am not certain what that means, though.

I took in today's SPY and QQQ common short trading rentals at $519.02 and $411.79 for a small profit.

I moved to medium/large private equity shorts.

I added to common short of SPY $520.45 and QQQ $442.98 near the opening.

Upside

- (VVOS)  +35% (CARE Oral Medical Devices receive full approval for Medicare reimbursement)
- (MTEM)  +22% (presents interim data from MT-6402 phase I study in patients with PD-L1+ solid tumors at the 2024 American Association for Cancer Research)
- (TSHA)  +7.1% (Piper/Sandler Initiates TSHA with Overweight, price target: $9)
- (ALKS)  +6.2% (Phase 1b study of ALKS 2680 demonstrates improved Wakefulness in patients with Narcolepsy Type 2 and Idiopathic Hypersomnia)
- (SNOA)  +6.1% (expands negative-pressure wound therapy products for use in United States)
- (AEO)  +4.3% (JPMorgan Chase and Co Raised AEO to Overweight from Neutral, price target: $31)
- (PLLTL)  +3.0% (announces JV partners of North American Lithium agree to complete several ongoing capital project initiatives and continue operations with the goal of completing ramp-up activities to achieve steady state production within 2024)
- (BB)  +2.8% (announces collaboration with AMD to advance foundational precision and control for robotics industry)
- (WDC)  +2.7% (Mizuho Securities Reiterates WDC with Buy, price target: $80 from $66)
- (ALLY)  +2.4% (Tier1 firm Raised ALLY to Buy from Neutral, price target: $46 from $42)
- (DLR)  +2.2% (Wells Fargo Raised DLR to Overweight from Equal Weight, price target: $155 from $135)

Downside

- (TLRY)  -13% (earnings, guidance)
-undefined -12% (reports prelim Q4, guidance)
- (INMD)  -10% (earnings, guidance)
- (BCLI)  -5.7% (reports prelim Q1 earnings, cuts guidance)
-KA -4.4% (reports Initial Clinical Response Data at AACR 2024 of its Ongoing Phase 1/2 VISTA-101 Clinical Trial)
- (CHPT)  -3.3% (Goldman Sachs Cuts CHPT to Sell from Neutral, price target: $1.50 from $2)
- (NSC)  -2.1% (reaches $600M agreement in principle to settle East Palestine derailment class action; reports prelim Q1)

* Markets remain resilient in the face of rising rates, crude oil and other commodities:

Source: Hedgeye

and...

Source: Hedgeye

* The Oscillator has moved from oversold to overbought - slightly so

* Bond yields fell overnight, with declines of 3-4 bps

* The U.S. dollar is lower against the yen - in last few minutes just turned down aggressively

* Oil is up again (+$0.32) after this week's ramp higher - Brent is at $90.67

* Gold is +$28 following a move to all-time highs... silver has been turbocharged and is +$0.38 higher!

* Bitcoin is -$1,200 to $70.5k

Tuesday's gone with the wind
My baby's gone, gone with the wind
Long gone

And I don't know
Where I'm going
I just want to be left alone
When this train ends
I'll try again
I'm leaving my woman at home
My baby's gone

- Metallica, Tuesday's Gone

"Workin' on our night moves Trying to lose the awkward teenage blues Workin' on our night moves In the summertime And oh the wonder Felt the lightning And we waited on the thunder Waited on the thunder."

- Bob Seger, "Night Moves"

This daily Futures feature is like inside baseball. I try to show you and write about what I believe thoughtful hedge fund managers are looking at when they awake -- let's call it our normal routine -- setting the stage for their strategy for the day. The market is a complicated mosaic and the more info you have, the better trader and investor you will be!

The market (and money) never sleeps -- and neither do I, it appears! I have previously described the importance that overnight futures trading hold for me here. It is a guidepost to my strategy in the regular trading session. Moreover, the overnight/early morning futures hold opportunities as they are (1) inefficient, though liquid and (2) it seems fear and greed are often exaggerated outside the regular trading session. I frequently try to capture those efficiencies by trading actively both in the pre- and after-market sessions.

Here are brief observations I wanted to highlight and provide a summary of overnight price movements in various asset classes:

* Stock futures were a bit higher overnight - narrowly traded. S&P futures peaked at + 7 and bottomed at -5. Nasdaq futures peaked at +38 and bottomed at -24. At 6:27 a.m. ET, S&P futures were +3 and Nasdaq futures were +12.

* Commodities were broadly higher. Brent crude +$0.28 after a brisk run higher in recent days.

 * The S&P Short-Range Oscillator has moved back into positive territory (overbought) - from -0.97% to 0.1%

* The VIX is at 15.41 (+0.22). I reestablished some straddles on the recent VIX run over 15 .

* The U.S. dollar is weaker against the yen, euro and pound.

* Interest rates are lower. The yield on the two year Treasury is 4.583% (+2 bps). The yield on the 10 year Treasury is +3 bps to 4.394%. The long bond is at 4.527% (+3 bps)

* Overnight, the inversion of the 2s/10s Treasuries curve is down to -25 basis points

* Gold is +$25.60 and sits at $2,376. Turbocharged silver - on everyone's radar now - is +$0.27 to $28.09

Here is a synopsis of some of my columns I believe were important, or in the event you were out for the day and/or did not read my Diary. The principal intent is to review the logic of my market moves and other factors:

Stagflation Lies Ahead 

Dust in the Wind

Shall We Go, You and I, While We Can?

Problematic Paramount Global

Straddle Heaven

Is NVDA Rolling Over?

Selling Premium

Here were yesterday's trades:

* Added to private equity shorts

* Added to short Index calls

* And one of the reasons I have reduced my presence on the platform...

Around noon I will be travelling to NYC for a funeral, back Thursday morning.

I will try to post from the plane this afternoon.

This table is a valuable resource for momentum-based short term traders:

and...

* Tom Lee is uber bullish...

From JPMorgan:

US: Futs are flattish, bond yields are lower, and USD slightly lower as investors await CPI; pre-mkt Mag7 names are mixed with Semis up. Cmdty markets are higher lead by Energy and Metals. The macro picture is light today but keep an eye on the 3Y auction, which may give some cues to investor positioning ahead of the CPI.

and...

EQUITY AND MACRO NARRATIVE: Yesterday’s session was quiet as investors prepare for Wednesday’s CPI print. One thing that is notable: we saw a significant unwind of a SPX put spread, measuring in $-billions. My derivs team flags one interesting feature ... that this unwind occurred ahead of CPI. One thing to consider is a cooler CPI print would be a boon for risk assets and the 'catch-up' trade. The team likes weekly or bi-weekly IWM calls and call spreads. Further, positioning is much cleaner as we have seen HFs selling for multiple weeks, so the risk/reward may be skewed to the upside.

Amen, brudder:

"One glance is worth a thousand earnings forecasts. The tape tells all, and our job is to learn how to listen properly."

- Stan Weinstein

Bonus - Here are some great links:

What Happened Last Week? 

The VIX Spike 

Red Flags vs Green Flags

Bloomberg ETF IQ 

Real Money Is Outpacing Paper Money

I am back short SPY/QQQ common at $519.19 and $441.45, respectively.