At 4:20 p.m.:

Closing Volume

- NYSE volume 8% below its one-month average.

- NASDAQ volume 19% below its one-month average.

Breadth

SS&P 500 Sectors

% Movers

Nasdaq 100 Heat Map

I am leaving early today as I remain sick.

Thanks for reading my Diary.

Enjoy the evening.

Be safe.

TechNova

Back, but not back.

Part 1:

Landed late last night. Another seminal stay in the land of the rising sun. Had a chance to reconnect with an old Sensei of mine that I have not seen or practiced with in over 25 years. He suffered an aortic dissection that has left him land locked in Japan permanently since he can no longer fly on a plane.

Got a chance to finish my thesis, but I am unsure on if or how I plan to release it. It is the darkest piece of writing I have ever put together, and yet the one I feel most confident in. My mind is trying to remain in a difference space at the moment, so putting out that energy is something I want to fight a bit longer.

That said, since I have mentioned the work quite a bit, I will give you some of the main axioms soon, so it doesn't feel like a tease. The reality is that I have been letting the axioms dribble out for several weeks now, and they are all playing out.

Before leaving I mentioned that Donnie's pettiness will have him withhold help to California (to get back at his rival Gavin) thus cause an insurance crisis and a decades worth of lawsuits that will hamper the rebuild of the state. I promised I would apologize if Donnie surprised us with any sense of personal growth. The apology will not be forthcoming as he confirmed you cannot teach a 78 year old dog new tricks.

Per NYT : "President Trump vows to withhold aid from California unless water is redirected from north to south within the state"

That condition he mentions has already been debunked many times : "Trump was repeating a false claim he has repeatedly made that California Gov. Gavin Newsom (D) and other public officials have refused to allow water from the northern part of the state to flow down into the Los Angeles area.

Los Angeles does not get its water from the Northern California systems Trump described, and water experts have repeatedly explained that the scale and severity of the Southern California fires was not caused by empty reservoirs or a lack of water flowing from Northern California." - WaPo.

This is the new normal after THE PIVOT.

I also wrote that we WILL see several Rate Cuts this year. I expect no less than a full basis point in 2025. Why? Because Donnie already said "The President has no control over prices". Yes, you need to be super comfortable with "Irony" during the PIVOT. Rate cuts will push us into Hyper inflation, but Donnie wants rates at Zero, and in a Soft Autocracy, the rates go where the King wants them to. You do not need any economic, or reasonable standard of justification. It will happen. So plan your investments around lower interest rates.

With the Index +16 handles and close to an all-time high, I have moved to net short in exposure.

I have two research meetings at 1:30 PM and 2:15 PM

Back at around 3 PM.

* Low in price and high in yield for the day...

Bond prices continue to drop — with increases in yields of +7.1 basis points on the long bond and a +5.5 basis points rise in the 10-year Treasury. 

- NYSE volume is 19% below its one-month average;

- Nasdaq volume is 29% below its one-month average;

From Peter Boockvar:

Continuing claims rise to highest since November 2021

Initial jobless claims of 223k were 3k above expectations into the weekend of MLK day. The week before this saw continuing claims rise to 1.899mm, which happens to be the highest figure since November 2021 and provides another data point of evidence that the hiring pace has slowed.

* AAPL: Apple  (AAPL)  target lowered to $280 at Goldman. Goldman lowers their AAPL tgt to $280 from $286. Analyst Michael Ng highlighted, "We expect AAPL F1Q25 EPS of $2.35 (in-line with FactSet consensus of $2.35) and revenue of $124.2 bn (v. consensus of $124.8 bn). We forecast 1% yoy iPhone revenue growth in F1Q25 as shipment declines of 4% yoy (in-line with IDC) is more than offset by 5% yoy iPhone ASP growth. Competition has intensified within the Chinese smartphone market, but we're encouraged by the potential for accelerating iPhone growth in F2026 driven by new product innovation for iPhone 17/18 and the continued rollout of Apple Intelligence to new markets with a more robust feature set. Services growth should continue to compound at double-digits with App Store spending growing 15% in F1Q25E and ample runway for adoption of Apple's services.”

* PG: Procter & Gamble  (PG)  price target raised to $180 from $176 at Wells Fargo

Wells Fargo raised the firm's price target on Procter & Gamble to $180 from $176 and keeps an Overweight rating on the shares. The bias on Procter & Gamble organic sales growth improved with the first quarter-over-quarter acceleration in nearly two years, anchored by strength in most of Procter & Gamble's key markets and a marked improvement in China, the firm says. Not perfect, but Procter & Gamble got more interesting today, adds Wells.

* PG: Procter & Gamble price target raised to $165 from $161 at Stifel.

PG Stifel raised the firm's price target on Procter & Gamble to $165 from $161 and keeps a Hold rating on the shares. The firm notes that its FY25-FY26 EPS estimates are largely unchanged following "solid" fiscal Q2 results and full-year

* OXY: Occidental Petroleum  (OXY)  price target raised to $81 from $78 at Raymond James. OXY Raymond James analyst John Freeman raised the firm's price target on Occidental Petroleum to $81 from $78 and keeps a Strong Buy rating on the shares. The fourth quarter was "forgettable" from a stock performance perspective, but has set the Exploration and Production group up nicely going into the New Year, the analyst tells investors in a research note. The firm expects largely in-line results from its coverage, and notes that efficiency gains continued at a pace that almost nobody anticipated, production growth is largely not the goal, and looks like a by-product of these efficiency gains, and says that it expects acquisitions to continue. 

(TLT)  breaches $87 to the downside.

Stepping up my short book.

With S&P cash rallying to only -4 handles I am adding to my index shorts:

*  (SPY)  $606.17

*  (QQQ)  $529.39

I am short their new idea,  (ROAD) : Construction Partners, Inc. - Spruce Point Capital Management LLC

Upside:

-VNCE +71% (P180 Acquires Sun Capital’s Majority Stake in Vince Holding Corp)

-XCUR +40% (acquired all equity securities of GPCR Therapeutics USA Inc. from GPCR Therapeutics)

-FTHM +12% (entered into a Sales Agreement with Roth Capital for up to $10M shares)

-HZO +12% (earnings, guidance)

-QNRX +12% (announces Further Clinical Evidence of QRX003 Effectiveness in Netherton Syndrome)

-SHOT +10% (reaches an amicable litigation Settlement Agreement; entered into a Securities Purchase Agreement for 2.27M shares at $0.439/shr)

-TAL +10% (earnings)

-LYTS +9.6% (earnings)

-GE +7.5% (earnings, guidance)

-ELVA +6.8% (Raymond James Initiates ELVA with Strong Buy, price target: $4.50)

-BANC +5.7% (earnings)

-VEEE +4.3% (early indicators from first few weeks of 2025 suggest that demand for products is rebounding from 2024 levels)

-UNP +4.1% (earnings, guidance)

-AMTX +3.7% (provides update on Federal Policies in the United States and Operations in India)

-ELV +3.7% (earnings, guidance)

-OSIS +3.5% (earnings, guidance)

-ALK +2.7% (earnings, guidance; announces $1B share buyback program)

-LDOS +2.1% (wins 8-year TSA logistics contract worth up to $2.6B)

Downside:

-EVTL -35% (prices $90M underwritten public offering at $6.00/unit)

-ASTS -17% (prices $400M in 4.25% 2032 convertible notes)

-EA -17% (earnings, guidance)

-LAKE -13% (prices 1.82M shares at $22.00/shr in $40M offering)

-ALXO -11% (updated data from the ASPEN-06 Phase 2 trial at the 2025 ASCO Gastrointestinal Cancers Symposium)

-PLXS -9.1% (earnings, guidance)

-BNGO -7.0% (announces effective date of Jan 24th for 1-for-60 Reverse Stock Split)

-RLI -5.9% (earnings)

-TLSA -5.9% (will not engage in capital raising activities for the immediate future)

-AAL -5.7% (earnings, guidance)

-GRFS -5.3% (Board agreed to make objections to administrative disciplinary proceeding related to Gotham case)

-VEEV -4.2% (Goldman Sachs Cuts VEEV to Sell from Buy, price target: $200 from $261)

-FCX -2.8% (earnings, guidance)

-MKC -2.5% (earnings, guidance)

Wolf Street howls about the difference in our country's economic classes and status: "Subprime, Prime, and Overall Auto-Loan Delinquency Rates: Why this Surge in “Subprime” Delinquencies when “Prime” Is Pristine?"

On the rally off the early morning lows, I have reshorted the indexes:

*  (SPY)  $605.91

*  (QQQ)  $529.48

* Recently interest rates have been turning back up.

* The move higher in rates from the election has been non trivial — but has been ignored by many.

* With little change in corporate profits estimates, the equity risk premium continues to evaporate (taking away from future market gains, at the very least).

* Given rising rates and elevated multiples, the launching pad to higher stock prices grows ever less attractive.

* I call BS, again.... to those that ignore these factors.

You'll be swell, you'll be great
Gonna have the whole world on a plate!
Starting here, starting now
Honey, everything's coming up roses!

Clear the decks, clear the tracks
You got nothing to do but relax!
Blow a kiss, take a bow—
Honey, everything's coming up roses!

Now's your inning
Stand the world on its ear!
Set it spinning
That'll be just the beginning!

- Ethel Merman, Everything's Coming Up Roses

With market strategists needing to attach reasons to a momentum-based market advance (read: inflows and buybacks combined with FOMO) and a (continued) reset higher in valuations — lower interest rates are often cited as propelling the recent rise in equities.

At least that it was I hear from commentators, panelists and guests on Fin TV.

In reality, this is not occurring.

Indeed, over the last few days,  (TLT)  is moving back to $87 and near the recent lows.

Interest rates across the middle to longer end of the yield curve are back moving higher this morning:

* The yield on the 5-year Treasury note is +2.5 basis points to 4.45%.

* The yield on the 10-year Treasury note is +3.2 basis points to 4.63%.

* The yield on the 30-year Treasury bond is +3.3% to 4.85%.

Small jiggles in the risk free rate of return have a profound impact on net present value models. Since the election that jiggle in rates (higher) has not been trivial.

With little change in S&P EPS forecasts for 2025 combined with the aforementioned (and recent) rate increase, the uber-important equity risk premium is making new lows.

So, while the Kool Aid is being passed around to a chorus of Everthing's Coming Up Roses, to this observor, the S&P Index looks like it could make an important near-term top this month — as noted in my four part series yesterday Part 1, Part 2, Part 3, Part 4). 

Everything is not coming up roses.

Clear the decks, clear the tracks!

I can tell... just you wait.

* Wash, rinse, repeat

I am getting so sick and tired of this:

These repeated investment boners help to explain why FIN TV will never consider (my recommendation) that investment recommendations be published so viewers can address the value proposition from contributors (based on performance and not personality).

Wolf Street howls about subprime, prime, and overall auto-loan delinquency rates.

Apropos to my Promises, Promises post yesterday:

In further support of a point I made in my recent four part series on the markets Part 1, Part 2, Part 3, Part 4:

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

From JP Morgan:

US: Futs are lower as markets look to take a breather after making a new intraday ATH. Pre-mkt, Mag7 names are all lower ex-META and Semis are weaker with NVDA/AVGO lower. Bond yields are mixed with the curve steepening, though the USD is flat. The Cmdty complex is under pressure across all 3 complexes. Today’s macro data focus is on jobless data and regional activity indicators ahead of tmrw’s Flash PMIs.

and...

EQUITY AND MACRO NARRATIVE: (Thoughts from yesterday afternoon) The macro story is on track for a Goldilocks outcome but is still susceptible to Trump-induced headline risk. That said, Trump 2.0 headline risk may see lower vol spikes over a reduced time period, relative to Trump 1.0. Most client conversations view permanent tariffs for Canada/Mexico as being unlikely while Trump’s recent actions toward China (China’s Vice Premier at the Inauguration; cutting suggested tariffs from 60% to 10%; looking to visit Beijing within first 100days) as hinting for a deal. If true, plus a significant China stimulus in March we could see money pour into China or its proxies (EU Luxury, NKE, SBUX, etc).

"It's OK to be wrong; it's unforgivable to stay wrong."

- Marty Zweig

Bonus — Here are some great links:

Infrastructure Breaks Out

The Market's New Trend

Tech Hits Lows vs QQQs

How Stocks Trade After Inauguration

Pelosi Portfolio Update

* Bull markets die hard

One day is never decisive, but...

* The S&P Short Range Oscillator was steady at 3.3% — an overbought.

* Some cracks in the financials on Wednesday (just at a time Fin TV was all over itself the day before yesterday and overweighted in sector — no comment today, though!).

* Breadth was awful yesterday by any standard, especially compared to the northerly move in the averages (NYSE breadth was 2-1 negative and Nasdaq wasn't much better).

* Weakish close.

* The bell might have been rung on Bitcoin — with the DJT and Melania coin offerings (the best heist since Brinks!).