Leaders Index 3-13-23

The market didn’t bounce much after last week’s decline. The SVB failure last week spooked markets and it continued after Signature failed over the weekend. The major averages opened lower in a continuation of last week’s selling. The major averages rallied to decent gains, but mostly lost them by the close. The COMPQ and the NDX gained .49% and .79% on the day. The SPX ended lower by .15%. They all finished in about the middle of their intraday trading ranges. Volume was higher across the board, but the gain was very small on the Nasd. Leading stocks were hit hard again with the leaders index losing 2.47% on the day. The index closed in the lower half of its trading range on very high volume, showing a lot of selling pressure in quality growth stocks. The market was really spooked by the bank failures and continued to work its way lower. The financial situation may force the Fed to back off rate hikes a bit. An old saying is that the Fed raises rates until something breaks. Something broke last week and continued over the weekend. The bank problems may force the Fed to ease up on expected rate increases as interest rated across the curve fell. The Fed is in a difficult position now as inflation is still well above its target, but the rate increases are causing stress in the banking sector. It is looking like the Fed will raise rates by 25 basis points next week and then may hold off and see how things go. If more banks get into trouble the Fed may have to hold off even more. The market is weak now and lower prices seem likely. This could however set up the negative sentiment and price action that could lead to the final bottom of the bear. We will have to see. The CPI comes out tomorrow, and that will set the tone for trading. Jerry