May 8, 2023

Markets:

Futures tied to the Dow Jones Industrial Average rose slightly Monday as bank shares climbed, and investors looked ahead to a key inflation data release later in the week.

Regional bank stocks rose broadly in the premarket, with the SPDR S&P Regional Banking ETF (KRE) climbing 2.6%. Shares of PacWest outperformed, surging 31%, after the bank cut its dividend. Big banks Citigroup, Wells Fargo, JPMorgan Chase and Morgan Stanley also rose.

On the inflation front, investor attention this week turns to April’s consumer price index due out Wednesday, followed by the producer price index on Thursday.

Following last week’s rate decision from the Federal Reserve, traders are pricing in just a 9% chance for a hike at the central bank’s next policy meeting, according to CME’s FedWatch tool.

Stocks are coming off a volatile week that saw the Dow Jones Industrial Average and S&P 500 notch their worst weekly stretches since March. The losses came despite a late-week rally that saw volatile regional bank stocks jump off their lows.

U.S. Treasury yields slipped on Monday, retracing some gains made after the release of better-than-expected nonfarm payrolls data.

Portfolio:

We enter the new trading week holding positions in EDR and TSLL.  We will be looking to add all week.  Queue is igniting and we hope to see 4200 tested this week.  Would not be surprised to see a bit of a pause here and then a test after inflation data is received later on in the week.  That's our current plan but we want to see where we trade this morning and the type of mometum we see with price.  The potential for powerful set-ups to emerge is right here.  Let's continue to pinpoint opportunity! Be ready and let's have a strong week.