New market thoughts from Raymond James’ Jeff Saut Investment Strategy: “The Big Chill” 04/16/19

The movie “The Big Chill” is a 1983 American comedy-drama film whose plot focuses on a group of baby boomers who attended the University of Michigan, reuniting after 15 years when their friend Alex commits suicide. Kevin Costner was cast as Alex, but all scenes showing his face were cut. It was filmed in Beaufort, South Carolina. And, that is what happened to the equity markets yesterday as they went into “the big chill” since they were frozen around the flat-line for most of the session leaving the S&P 500 (SPX/2905.58) in a fairly narrow 13 point trading range. There were basically four stocks that weighed on the D-J Industrials (INDU/26384.77) with JP Morgan off 1.14%, Merck down 1.13%, Boeing clipped for 1.1%, and Goldman Sacks smacked for 3.8%. The stock market’s breadth was still decent, as were the economic reports. All this foots with my work that calls for a stall for a few sessions and then a leap to new all-time highs barring any unforeseen negative news.
My work shows that the S&P 500 futures are likely to “take this week off” leaving the short-term internal energy mix mellow into next week. This implies that any pullback should be shallow and set the stage for a rally to new all-time highs. It looks to me like any new upside blast to new highs will be delayed for a week or two, but the long-term internal energy is very bullish. The first large batch of 1Q results are due. Normally, Weird Wednesday is the peak of expiry week manipulation intensity. Due to Good Friday, the usual suspects might do the deed today. Late tonight, China will release some key economic data. This should impact European U.S. trading. And, that seems to be the message this morning as the preopening S&P 500 futures are better by ~10 points at 5:11 a.m. Indeed, in bull markets most of the surprises come on the upside.

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