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“You’re short on ears and long on mouth.” – John Wayne

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

The headlines over the weekend regarding the status of the war in Iran have been conflicting, but markets are taking the optimistic side. S&P 500 and Nasdaq futures were both firmly higher to kick off the holiday-shortened week. The S&P 500 is on pace to open at a new record high with a gain of 0.70%, while Nasdaq futures are up my more than 1%.  European and Asian markets were mostly lower overnight, but that’s because they were open yesterday and saw broad gains.

Outside of equities, the 10-year yield is down 9 basis points and back below 4.5%, while crude oil is down 4% to $92.66, although it was down more over the weekend.

Here in the US today, we’re largely done with earnings season, but on the economic calendar, we’ll get house price data at 9 AM easter, Consumer Confidence at 10 AM, and the Dallas Fed Manufacturing Index at 10:30.

After the long weekend, we wanted to provide a quick recap of market performance heading into the holiday. The S&P 500 was up less than 1% for the week, but breadth was positive as three sectors rallied more than 3%, and another three rallied more than 1%. The only sectors that traded lower were Communication Services and Materials, which were both down less than 1%.

In terms of where sectors are trading compared to their trading ranges, four finished the week at overbought levels, while every other sector was neutral. Utilities and Materials are also the only sectors that headed into the weekend below their 50-day moving averages, but Utilities at least moved out of extreme oversold territory.

On a YTD basis, Financials has been the worst-performing sector with a decline of just over 5%. As shown in the chart below, the sector ETF finished the week right between its 50 and 200-DMAs. The 50-DMA, which has recently been acting as support, also coincides with longer-term support in the low 50s.

Health Care has been another laggard this year, but has recently shown some signs of life. After holding support in the low $140 range for the last few weeks, the sector broke out of a short-term trading range to close out the week and closed above both its 50 and 200-DMA for the first time in several weeks. Health Care has been out of favor for a long time now, but there’s a lot of runway for the sector between current levels and the high from earlier this year.

Finally, Industrials were a laggard last week, and along with other sectors, still have yet to trade to a new high. As shown in the chart below, though, the sector is getting close. XLI has traded in a sideways range for more than a month now, with downside support at the 50-DMA and upside resistance at the highs from earlier in the year. If the headlines are right and the Iran war is close to an end, the resistance may start to weaken.

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