Weekly Trader's Outlook

If you read the last week's blog, you might recall that I had a "Volatile" forecast for this week, citing persistent elevated uncertainty around the Iran war, along with a near-term oversold technical set-up. Perhaps unsurprisingly, it was another volatile week for stocks, but we did get a bounce. In fact, the S&P 500 (SPX) is on track to be higher by over 2.0% on the week and notch weekly gains for the first time in six weeks. There were several Iran headlines that flowed throughout the week, along with last night's speech from President Donald Trump on the situation. While investors might have had expectations that Trump would outline a plan for de-escalation, or perhaps even a cease-fire between the two countries, he stated his objective is nearing completion but warned that military operations would intensify over the next "two to three weeks." Stock futures sank and oil prices spiked following the speech, but stocks have been able to muster some resiliency today, despite WTI crude trading near $110/barrel. Uncertainty remains elevated, and investors still appear to be left with several unanswered questions: How long will the war last? How high will oil prices go and for how long? Will the U.S. attack Iran's energy infrastructure (April 6th was the deadline Trump communicated last week)? Will the U.S. put boots on the ground? And ultimately, what will be the net effect to global economic growth and corporate earnings growth? Hopefully, a relatively peaceful solution can be achieved with minimal loss of human life and limited damage to the global economy, but in the meantime, it appears stock market and headline volatility will continue.

Outside of geopolitics, Treasury yields pulled back, economic data was relatively strong, and concerns around rate hikes from the Federal Reserve have subsided (more on this in the "Economic Data, Rates & the Fed" section below). On the technical front, both the Russell 2000 and S&P 500 Equal Weight index moved back above their respective 200-day SMAs, and the Philadelphia (PHLX) Semiconductor index (SOX) moved back above its 100-day SMA (more on this in the "Technical Take" section below).

At the time of this writing (2:37 p.m. ET) stocks remain mostly in the red, though well off the lows of the session (DJI - 179, SPX - 14, $COMP - 55, RUT + 5). WTI crude is still up 11% to around $111/barrel, but markets don't appear to be too spooked about the move, at least not today. Tomorrow we'll get the monthly Nonfarm Payrolls report, though markets will be closed for Good Friday. Next week, markets will get two of the monthly inflation reports (Consumer Price Index, or CPI, and Personal Consumption Expenditures, or PCE), but it's likely that the data will be overlooked since it is backward-looking and inflation will probably creep higher in the coming months due to higher energy prices. I'm a little surprised that stocks are not down more than they are, given the three-day weekend and the potential for military strikes to intensify, both by the U.S. and Iran—previously Iran threatened to target assets of U.S. tech firms in the Middle East if the war continues to escalate. As I stated previously, it's difficult to provide a weekly forecast for stocks when the price action is dictated by war headlines rather than economic and technical indicators. However, I will point out that today seems to be one of the first days that the inverse correlation between the SPX and oil prices is at least being challenged—WTI crude +11%, SPX -0.10%. That's probably an encouraging side for the bulls, but if oil prices climb higher next week due to escalation will stocks remain resilient? It's impossible to predict, but I'll provide a "Volatile with a Slightly Bullish tilt" forecast for next week, given today's relative strength and this week's (modest) technical improvement.

• Monday (April 6): no reports
• Tuesday (April 7): Consumer Credit, Factory Orders
• Wednesday (April 8): EIA Crude Oil Inventories, MBA Mortgage Applications Index
• Thursday (April 9): Continuing Claims, EIA Natural Gas Inventories, GDP – 3rd Estimate, PCE Prices, Personal Income, Personal Spending, Initial Claims, Wholesale Inventories
• Friday (April 10): Consumer Price Index (CPI), Factory Orders, Treasury Budget, University of Michigan Consumer Sentiment

• Monday (April 6): ICON PLC (ICLR), Pharvaris NV (PHVS)
• Tuesday (April 7): Aehr Test Systems (AEHR), Greenbrier Companies Inc. (GBX), Levi Strauss & Co. (LEVI), Phenix Education Partners Inc. (PXED), Nano-X Imaging Ltd. (NNOX)
• Wednesday (April 8): Applied digital Corp. (APLD), Constellation Brands Inc. (STZ), Dela Air Lines Inc. (DAL), Nurix therapeutics Inc. (NRIX), PriceSmart Inc. (PSMT), RPM International Inc. (RPM)
• Thursday (April 9): Blackberry Ltd. (BB), Neogen Corp. (NEOG), Simply Good Foods Co. (SMPL), WD-40 Co. (WDFC)
• Friday (April 10): GoldMining Inc. (GLDG), Unity Bancorp Inc. (UNTY)

There was a moderate dose of economic data for markets to digest this holiday-shortened week, and overall, the batch was constructive from a bullish perspective. The ADP employment report , retail sales, and consumer confidence all came in above estimates. On the downside, the Atlanta Fed lowered its "Nowcast" for Q1 GDP once again this week. However, markets likely need to wait a couple more weeks to get the economic data which includes the impact of the Iran war before drawing conclusions. Here's a breakdown of the reports:

• Nonfarm Payrolls: Briefing forecast is for 63K.
• Unemployment Rate: Briefing forecast is 4.4%.
• Average Hourly Earnings: Briefing forecast is +0.3%.
• ADP Employment Change: Private sector employment increased by 62,000 jobs in March, which was above the expected 40,000 gain. The growth was primarily driven by small businesses (+85,000) and services industries, such as education/health services (+58,000). Job losses were seen in trade, transportation and utilities (-58,000).
• JOLTs – Job Openings: Fell to 6.882M from 7.24M in the prior month, but slightly above the 6.85M expected.
• Retail Sales: February retail sales increased by 0.6%, which was up from a -0.1% decline in January and better than the +0.4% economists were expecting. Core retail sales increased 0.5%, which was up from 0.0% in January and above the +0.4% expected.
• Consumer Confidence Index: Increased 0.8 points in March to 91.8, and above the 87.5 economists were expecting. The gain was primarily driven by a 4.6-point increase in the Present Situation Index (to 123.3), which reflects improved views of current business conditions.
• Chicago PMI: 52.8 vs. 54.0 est.
• EIA Crude Oil Inventories: +6.93M barrels.
• EIA Natural Gas Inventories: +36 bcf.
• Initial Jobless Claims: Initial applications for U.S. jobless benefits decreased 9K from last week to 202K, which was well below the 212K economists had expected. Continuing Claims increased 25K from the prior week to a seasonally adjusted 1.841M.
• The Atlanta Fed's GDPNow "nowcast" for Q1 GDP was revised down to 1.6% today from 2.0% last Friday.

U.S. Treasury yields pulled back from recent highs and the yield curve experienced some steepening this week. Compared to last Friday, two-year Treasury yields are down ~14 basis points (3.794% vs. 3.934%), 10-year yields have fallen by ~12 basis points (4.305% vs. 4.424%), while 30-year yields are lower by ~6 basis points (4.89% vs. 4.951%).

Market expectations around the Federal Reserve's next move shifted back to potential rate cuts from a potential hike this week, though the probabilities remain modest. Per Bloomberg, the probability at the June Federal Open Market Committee meeting shifted from a 5% chance of a hike to 4% of a cut versus last Friday. As it currently stands, the probability of a cut from the Fed doesn't get above the 65% threshold until July of next year.

Last Friday, I highlighted the technical breach of support at the 100-day SMA on the PHLX Semiconductor Index (SOX) and provided a "bearish" near-term technical outlook. However, stocks bounced this week, and chip stocks, which has been the symbol of the "artificial intelligence (AI) infrastructure" play, were one of the primary recipients of money flow. The recovery in the SOX has put the index back above its 100-day SMA, which is incrementally bullish from a near-term technical perspective.

Near-term technical translation: bullish

The S&P 500 index (SPX) has been in a near-term downtrend since early March, coinciding with the start of the Iran war. The SPX, along with $DJI and $COMP, has fallen below support at the 200-day SMA, which is technically bearish, but there has been some incremental improvement over the past three days. First, the index appears like it is attempting to push above the upper trendline of its recent downtrend. Second, there have been three consecutive green candles over the past three days which suggests evidence of dip buying activity. From my perspective, the technicals don't shift from bearish to bullish until the SPX gets back above the 200-day SMA, but there appears to be some early signs of recovery. In terms of near-term support, I would use Monday's low (6,316 on an intraday basis, 6,343 on a closing basis) as that line in the sand.

Near-term technical translation: modestly bearish

The Bitwise 10 Large Crypto Index is up 1% from Friday's close, with bitcoin up 1% and ether up 4% as of this writing on Thursday. While it appears the crypto market may have bottomed in February, some investors believe there is further downside remaining in this bear market, characterizing bitcoin's recent run to $126,000 as a bubble that still requires additional deflation.

Examining the bubble argument more closely, some market participants incorrectly attribute bitcoin's entire return since its launch in 2009 to a single speculative bubble. While bitcoin has experienced periods of speculative excess, it has historically recovered from each episode and continued its long-term upward trajectory.

To put this in perspective, we examined several centuries of speculative market tops. Because it is often difficult to identify precisely when a bubble begins, we defined each episode as the period during which prices accelerated most aggressively prior to peaking. This analysis spans from the Dutch Tulip Mania of the 1600s through the precious metals bubble in 2025 and bitcoin's most recent bull market following the spot exchange-traded-product (ETP) launch.

Across 13 well-known bubbles, we found that the median episode lasted 18 months before peaking, with prices rising nearly 400% on average.

What this suggests is that while bubbles can last for years, none we have observed have persisted for 17 years, which is the age bitcoin reached in January. While we do not dispute that bitcoin has experienced speculative bubbles, the common criticism that bitcoin is merely a speculative bubble is easily refuted by empirical data.

The Bloomberg chart below shows the current percentage of members within the S&P 500 (SPX), Nasdaq Composite (CCMP), and Russell 2000 (RTY) that are trading above their respective 200-day Simple Moving Averages (SMA). In short, stocks are on track for weekly gains and market breadth expanded slightly as a result. Compared to last Friday, the SPX (white line) breadth ticked up to 48.50% from 47.29%, the CCMP (blue line) is slightly higher at 36.42% vs. 35.74%, while the RUT (red line) exhibited the most relative improvement moving up to 50.42% from 48.57% (all week-over-week).

Market breadth attempts to capture individual stock participation within an overall index, which can help convey underlying strength or weakness of a move or trend. Typically, broader participation suggests healthy investor sentiment and supportive technicals. There are many data points to help convey market breadth, such as advancing vs. declining issues, percentage of stocks within an index that are above or below a longer-term moving average, or new highs vs. new lows.

This Week's Notable 52-week Highs (45 today): Alcoa Corp. (AA - $1.50 to $70.56), Burlington Stores Inc. (BURL - $0.01 to $330.82), Equinix Inc. (EQIX + $4.01 to $999.99), Marvell Technology Inc.  (MRVL - $0.25 to $106.46), Ross Stores Inc. (ROST + $0.24 to $220.19), Silicon Labs Inc. (SLAB + $0.54 to $208.25)

This Week's Notable 52-week Lows (133 today): Automatic Data Processing Inc. (ADP + $1.07 to $202.35), Alexandria Real Estate Equities Inc. (ARE - $0.49 to $42.80), Costar Group Inc. (CSGP + $0.44 to $40.07), Floor & Décor Holdings Inc. (FND - $0.66 to $48.56), Global Payments Inc. (GPN - $0.80 to $64.56), Lamb Weston Holdings Inc. (LW + $0.02 to $38.50)