Good Friday AM from your Hometown Lender,

The week closes out with once more economic data set, Consumer Sentiment. It tanked to the worst levels seen during the pandemic.

Think about that for a moment…

Still markets are taking their cue from political news, not economic data. Believe it or not, with the bad reading today, stocks are rebounding from yesterday sell off. Why? Well maybe the worsening economic data will push the Fed to cut sooner which will benefit equities. None the less, it is a roller coaster every day. Bonds are hanging in there having leaked a bit this week but nothing to worry about.

A good piece in Bloomberg today talking about equities and the contrarian view is that we may be seeing a bottom.

US stocks tumbled into a correction yesterday, with the S&P 500 capping a 10% plunge from a peak in mid-February. It’s another milestone in what’s been a grim year for American investors. Here’s a roundup of the latest Bloomberg analysis on the selloff: 

This marks the seventh-fastest correction in records going back to 1929, data compiled by Bloomberg show. It took 16 sessions for the S&P 500 to sink 10%. Three of the seven fastest drawdowns happened under President Donald Trump – in 2018, 2020 and now.

• Chart watchers say the S&P 500 needs to recapture its 200-day moving average, which is currently near 5,738. Some technical charts also show the S&P 500 is already at oversold levels. The index’s 14-day relative strength index is hovering around 30. 
• Bank of America strategist Michael Hartnett says this is a technical correction, not the beginning of a bear market. “Since equity bear threatens recession, fresh declines in stock prices will provoke flip in trade and monetary policy,” he wrote. 

• The AAII survey is registering extreme pessimism — a bullish signal in some circles because it indicates a mass surrender among individual traders and means that everyone who wanted to sell has done so. The index was at similar levels in 2022 and 2009, and prior instances have coincided with stretches of bear-market bottoms.
• But Dow Theory is signaling more pain ahead. Believers of the metric point to the fact that the Dow transports index has fallen about twice as much as the Dow industrial average from their peaks — a worrisome trend for key pillars of the US economy.

• US equities have fared the worst among the major asset classes since Trump took office on Jan. 20, with the S&P 500 dropping about 8% and the Nasdaq 100 Index sliding more than 10%.

It’s still early days for the selloff.

“Most corrections take about two months to play out,” said John Kolovos, chief technical strategist at Macro Risk Advisors. While stocks appear oversold, “we aren’t there yet in terms of time, as it took us about two weeks to get to these levels,” he said.

Stay safe, enjoy the weekend, and first… make today great!