Earlier today we reported that Morgan Stanley's Michael Wilson, who is hardly Wall Street's biggest bear anymore (that designation now goes solely to BofA's Michael Hartnett whose note we will discuss shortly), doubled down on his recent "tactical" bullishness and expects the stock rally - and especially the Nasdaq - to go on above 4,100 (it just crossed 4,000) and eventually be resisted by the 200DMA.
However, not everyone agrees. Below is an excerpt from the latest market comment by JPMorgan's TMT uber-trader Ron Adler, who - unlike his grossly clueless colleagues in sellside research who only know how to repeat BTFD every single week - is clearly skeptical that this rally has legs. We excerpt his latest comments below:
We see more selling into the strength here as the SPX Index continues to make highs. The market has admittedly absorbed a ton over the past month:
Substantial CB tightening ► The LDI unwinds ► Terrible Tech earnings ► Crypto’s umpteenth ponzi-like blow-up. If investors needed an excuse to sell over the past month, they had plenty.
Many growth HFs are taking this move as a gift; we are starting to see more supply in growth software and even a few bid-wanted situations within the space. Still, we see more LO portfolio shifts into GARPY tech (out of more defensive areas).
Passive demand is also adding some kerosene to inferno. SPX now >50 & 100dma while the NDX is closing in on its 50dma (11500) and the RTY its 200dma (1876).
While slowing inflation showing up in the eco data is a game changer for many, there are a fair number of traders who want to sell this move with every ounce of their being; however, they’re all fully aware they won’t nail the top (which seems very uncapped right now) and will likely sell on weakness. I’d still trim >3900.
For reference. The last time the SPX closed with a positive move of this magnitude (outside of covid) was the Fed pivot in late 2018 (day-after-Christmas-rally, +4.96%). I guess team “Soft Landing” is going to sell a few more jerseys today.
And as a bonus, here are market thoughts from some of the other top JPM desk traders:
- JACK ATHERTON (TMT) - AMZN: WSJ reporting that Jassy is leading a cost savings review focused on unprofitable businesses. Alexa in focus and running at $5B+ OI loss with >10k employees and a major recipient of investment capital. As we leant from META – AI focused capex is significant. No specific numbers here but I suspect we’ll learn more about this over the coming weeks/months. As a reminder, AMZN currently has an employee base of 1.54m which has approx. doubled from per COVID. 4 weeks ago, this headline would have been seen as a negative sign for underlying business but as with META this week, cost savings are now seen as an inevitability that corporates should embrace sooner rather than later.
- BRIAN HEAVEY (Consumer) - As would be expected with a cooling CPI, we are seeing a large LO de-risk in STAPLES. Seeing Packaged Food, Tobacco an HPC all for sale. Conversely, we are seeing cover bids across retail. Our flow is generally in dept stores and specialty but clearly covering is broad based. The biggest question we're getting is "Are LOs buying discretionary" - The answer generally is NO but we are seeing some small pockets now - most notably in housing linked names like HD/LOW.
- PIERRE NAPERT-FRENETTE (Energy) - Solar, headlines regarding CA net metering. Removing the grid-connection charges that the solar industry found overly damaging. This isn't final yet. there is an oral arguments scheduled for next Wednesday, and a vote could happen a few weeks after that. If this holds though, it is a very strong positive for the resi solar stocks. SPWR and RUN have most exposure (~40%). NOVA and ENPH less (~20%), followed by SEDG (10-15%).
More in the full note available to pro subs.