Another Round

Amid higher rates we have stocks showing an appetite to gobble up just about anything, including some alarmingly negative commentary out of Micron last evening. Of course, with MU up 6% as I write this, not to mention LULU surging higher after earnings, bulls are feeling their oats again and calling for an imminent melt-up. 

As we have noted, April has some impressive overall bullish seasonality. If Powell is going to continue to blink at the first sign of any bank troubles then the market may very well keep calling his bluff on inflation--At least that is one of the tenets of the bull argument. 

I still think these bullish narratives have grown out of price, rather than the other way around, however. Specifically, higher rates from here, with last Friday's dip and reversal in rates on the 10-Year   looking like a bear trap.

Higher rates, and oil, could wreak havoc on many underlying (in my view, erroneous) assumptions bulls are making right now with stocks. With higher rates, The Fed will have no choice but to keep hiking and perhaps even more aggressively and for longer than the market currently thinks. 

As for cutting rates, as the bond market thinks will happen this year, it is highly unlikely to happen with each rally we see in stocks like today, which renders this entire chicken-and-the-egg-riddled markets downright silly as times. 

For now, last week's highs on the S&P, as seen on the daily chart, below, where we failed on FOMC day last Wednesday, are the test to observe.