Market Radar 10. February 2023


Recession postponed again
A recession in the USA is now being postponed further and further. According to the data collection recently published by the Federal Reserve Bank of Atlanta (so-called GDP-Now indicator), gross domestic growth of 2.2% is now forecast for the USA in the first quarter. This is significantly more than institutional market participants expected at the end of last year and comes at a time when many market strategists on the trading desk floors now have to regard their hesitant actions at the beginning of the year as a flaw that must now be papered over as quickly as possible.

The S&P 500 is currently struggling with the support area between 4000 and 4100 points. If we close above 4100 after market close today, portfolio managers could feel compelled to buy into rising prices as early as the weekend. However, if we test the 4000 point mark today (closing price in the S&P 500 yesterday: 4081.50), i.e. experience a downward pull of around two percent, then there could be a strong rebound towards the close of trading. If not today, then the 4000 mark will be bounced off on Monday. 

Or we can already turn upwards today without testing the 4,000-point mark in the S&P 500.
February is actually a seasonally weak month for the US stock market. However, if one considers February only in the pre-election years and ignores the three years before and after, then this retrospective calculation is completely reversed. February then becomes a month in which investors have almost always been able to make money from stocks in the past.

The market radar assigns an entry stamp on the long side for most major US stock indices for today. This means that swing traders can lie in wait for entries on the long side. Buy the Dip is now the trump card in the game of games.

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What do we see under the radar of the major stock indices?

Will financial stocks be the leaders of tomorrow?
As in the major US stock indices, the market radar now assigns entry stamps on the long side for many industries. This applies to the financial sector and all sub-groups: banks, regional banks, fintech, brokers and stock exchanges, investment companies. Such industry breadth within the financial sector suggests that financials stocks could take a leading role in sector rankings in the coming weeks and perhaps months.

Technology stocks are already the leaders today
However, we see much stronger momentum than in financial stocks in the technology sector: We see swing entries in the areas of digital communication, Internet cloud and Cathy Woods innovation stocks. All other tech subgroups are trading too close to the highs to be able to target a swing entry here – at least on an ETF basis. For stocks from the areas of software, cybersecurity and of course everything that has to do with artificial intelligence (AI), one could directly aim for a break-out as a set-up or – in the case of the hyped AI stocks – perhaps wait for a slightly sharper correction – because these new darlings of hot stock traders have already run pretty hot.

The new mastermind in companies is AI.
The company’s stock (AI) has doubled since the beginning of the year. Yesterday there was a sharp setback of about 15%. Based in Redwood City, California, the company has a market cap of $2 billion. On Jan. 31, announced that its C3 Generative AI Product Suite product will launch in March 2023. With this AI software, it will be possible for relevant data within a company to be quickly entered into speech-intelligent software. The software can then grow into a kind of brain in the company. Instead of calling the specialist for problem solving in the company, the AI can be “drilled” in advance in a conversation. Microsoft (MSFT) invested in in its IPO in 2020. Since December 2022, has been working with the consulting firm Booz Allen Hamilton (BAH) together. Since Booz Allen advises government agencies, could provide AI-based solutions for more efficient processes for U.S. agencies.

The company (BBAI) has risen by more than 600% since the beginning of the year. With a market capitalization of about $400 million, it is significantly smaller capitalized than provides AI-based solutions for collecting, interpreting and synthesizing data to make decisions in real time. The company is headquartered in Columbia, Maryland.

The fact that the company advertises extensively with bears on its homepage should perhaps not be taken too “figuratively”.
Waterways are outstripping land railways

Shares from the transport, tourism and airline sectors have also recently shown relative strength. On Thursday, I noticed an opposite move in ocean and land transportation stocks. While the Marine ETF (BOAT) shot up 1.5% yesterday, the Other Transportation (IYT) ETF lost more than 2%.

When shipping stocks rise, this is usually a sign that goods traffic is well utilized. Usually an indication that cyclical industries are likely to continue to be on the winning side.