The reversal in last Thursday’s market is a preview of what a stock will look like.
Markets expected a regular Thursday market session as it awaited for the March jobs report, scheduled for release on Friday. This happened instead:
Gap-Up Open: The day began with a gap-up open due to rumors of weakness in the job market. There was speculation that the March jobs data might be softer than anticipated, potentially prompting a Fed rate cut in June. While this premise was questionable, it led to some short-squeeze action and underlying support.
Fed Member Kashkari’s Comment: Later in the day, headlines emerged that Fed member Kashkari wondered aloud whether rates should be cut if inflation continued to move sideways.
Dramatic News from Tel Aviv: The real surprise came when residents in Tel Aviv, Israel, noticed their GPS applications showing them in Lebanon. The reason? The Israeli military was scrambling GPS signals in anticipation of a possible drone attack by Iran. Reports indicated that Israel had detected signs of missile/drone attacks from Iranian territory, potentially on Friday. Israeli officials informed the U.S. that any Iranian attack would trigger a response.
Market Reaction: This news caused oil prices to spike, defense contractors’ stocks to rally, and the overall market to sell off steadily. The S&P 500 plummeted from a 52-week high to a 10-day low within a few hours. Such sharp intraday reversals often signal major turning points.
Unsettled Market: With the impending jobs report and the uncertainty around a potential attack on Israel, the market is now highly unsettled. Volatility has surged, and there’s likely to be a significant shift in sentiment as a result of these developments.
Correction Anticipation: The upcoming jobs report has the potential to accelerate a correction anticipated for several months.
As long as readers hold XOM 0.00%↑ Exxon and RTX 0.00%↑, the retirement portfolio is fine.
Further Reading: REPO Rate Spike in 2019.
2023:
Buy Amazon
In other news, Amazon AMZN 0.00%↑ gave up on AI. No, it’s not fear of China’s PDD 0.00%↑ .
Here is Amazon stock’s fair value of $199. Nearly all analysts (49) rate the stock a buy.
Source: Stock Rover Research (Pick the standalone service).