Another record close for the for the Nasdaq as it added 0.4% and the S&P 500 which edged up 0.3%. The Dow also added 0.2% as market participants bet the Fed would hold rates steady at its Wednesday FOMC meeting. Yields rose with the 2yr adding 1.5bps to settle at 4.89% and the 10yr added 4bps to finish higher at 4.47%.
As of this writing futures for all three of the major US indices are off slightly with the Dow down 17 bps and the Nasdaq and S&P 500 down 14bps and 12bps respectively. A light economic calendar will keep the focus squarely on Wednesday’s FOMC meeting though it will be interesting to see what ORCL’s results do for the market in the meantime.
Eco Data Releases | Tuesday June 11th, 2024
| Date Time | Event | Survey | Actual | Prior | Revised | |
| 06/11/2024 06:00 | NFIB Small Business Optimism | May | 89.7 | — | 89.7 | — |
S&P 500 Constituent Earnings Announcements by GICS Sector | Tuesday June 11th, 2024
ORCL is next up for the software industry which is looking to build something positive after ADSK held serve on their latest release on Monday. ORCL has languished in 2024 after robust returns in 2023, but it is showing some signs of selling exhaustion as performance relative to the S&P 500 has been diverging positively (no new lows since December 2023). We are not ready to recommend the stock outright at this time, but it is worth noting that the Software Industry historically does very well in bull market cycles and the sector is currently oversold. This is a tactical setup worth paying attention to.
Tactical Tuesday
Downside momentum exhaustion in the software industry dovetails nicely with our weekly tactical segment as the Software Industry is oversold with the equity bull market ongoing. We need to see rates continue lower through the 4.35% level and equities to remain in an intact uptrend, but if the cycle continues, Software is likely to move. The Software industry has been viewed with some skepticism in 2024, but at its core, it is just another victim of inflation pessimism. The dynamic at play in rough terms is the skepticism stems from the impact higher rates will have on start-ups and the VC firms that support them. If cost of capital becomes prohibitive the large contingent of pre-IPO startups may collapse due to tightening financial conditions. There is a fear that many of these nascent technology firms are current subscribers of big software co.’s and may hit their subscription-based earning models very hard if the VC ecosystem is imperiled. As long as the rates are headed lower, this risk abates.
- ORCL (200-day m.a. | Relative to S&P 500)
- Price chart has now based sideways for more than a year after robust gains into the middle of 2023. A move above $130 is our technical buy signal
- S&P 500 Software Industry (200-day m.a. | Relative to S&P 500)
- S&P 500 Software Industry triggered a sell signal in April. Watch the intermediate-term downtrend channel relative resistance and the 6900 level on price for bullish “tells”
Sources: Bloomberg
