I want to bring in Jay Woods.
He's a chief market strategist at Freedom Capital Markets.
Jay, great to see you on this Wednesday here.
Yeah, kind of a non-volatile day, not what you suspect, you know.
You know, after 4 down weeks, I think this has gotta feel good for some traders.
Is that right?
I think a relief is what the word is, as we are having a relief rally, but we continue to Monitor what's going on in the world because it's a slow week and yes, a little bounce back from that Friday low was what we needed.
We've gotten it, but we haven't gotten back to levels where we feel all is clear.
Yes, OK, so what are the levels that you're watching as chopiness could very well remain in this market?
Yes, this market has methodically gone step by step.
Lower we've never had that real washout.
We thought we were having that on Friday.
So that Friday low just under 6500, we'll keep it around 6500, uh, that should be the new floor.
We don't want to see a retest of that.
If we do, we want to see it hold.
We want to see support, but it's that way back up we talked about this line in the sand, well, imaginary line in the sand, the 200 day moving average at 6630.
The average broke below that, the S&P 500 for the first time in 214 days.
So that trend is breaking, if not broken.
If we can't recapture that line in the sand, that 6630 level, get back above the 200 day moving average, something the traders watch very feverishly here, then this market could be heading a lot lower.
OK, so obviously the levels matter.
You follow those.
Watching the chart patterns, that is, it seems to be a headline driven market.
What headlines matter here in deciding the next move?
Yes, it's all about oil.
I mean, anything that comes out of the Strait of Hormuz, we get tankers flowing through there safely.
Then you're going to see oil prices come down and equity prices rise.
But right now what we've seen in the yields in the 10 years spike above 4.4%.
That was a little extreme and now equity is starting to take a nosedive, holding up for now.
But if the war continues, we go boots on the ground, we may get another leg lower and it could happen quickly.
OK, so energy very much is in focus still.
Other sectors that you're watching, is there any sort of rotation happening here?
There is a rotation, but it's not the rotation you want to see.
Obviously the energy sector is.
Well, materials, the XLB that had a nice little run into this.
It's starting to recover.
Why?
A lot of fertilizer stocks, uh, the MOO, great ETF, uh, that has been doing well.
That's a good place to go during these turbulent times.
And then the staples are probably going to catch another bid.
They've been beaten down, but it's a good safe place to put your money.
And then lastly, I'll give you one Pfizer, uh, that stock is breaking out 6%.
Dividend.
Yes, COVID's over, but the stock is finally turning around and it's a good place to be in turbulent times.
What are the data points that matter?
You know, there's a lot of concern that the data is going to start changing based on what we've seen now the 4th week coming to the end of the 4th week of this war in Iran.
Yes, that's the million dollar question.
All right, so with the price of crude going up, that's more for you and I at the pump, the biggest tax on the American consumer that has not come through.
In the inflationary data in the CPI, the PPI, so we've got to see how that affects things.
Is it transitory, the word that they don't like to use, or is this going to be a deeper hit to the economy?
Because when the consumer starts paying more at the pump, they're going to pull back in other discretionary forms, so consumer discretionary names, travel and leisure names.
We may see people start to pull back right now we have.
Seen it.
Airlines still doing well, but it is something to watch.
And then next week unemployment.
Unemployment continues to remain elevated.
If it ticks up, then we're going to have rising unemployment, rising inflation, and growth slows, and we're talking stagflation, and that could be a problem.
So I think we only have like 20 seconds left, Jay, but now this complicates the rate outlook, right?
Oh, without a doubt, we're going to watch the Fed's rate.
Decision, the dot plot if you will, was for really no more cuts, maybe one cut as a new Fed chair takes over.
But when the Fed meets in 5 more weeks, we don't expect any rate cuts.
We may be talking rate hikes.
Hopefully I'm wrong.
Yes, yes, we'll wait to see how all that data plays out.
Jay Woods, thank you as always.
All right, Jay Woods there, Freedom Capital Markets.
Thank you so much for joining.
