NEWS
Stocks Stutter As Q2 Kicks Off

It was a mixed start to the second quarter, with Google and Micron shining while higher interest rates dampened the mood in the rest of the market. Let’s see what you missed. 👀

Today's issue covers traders dumping Trump Media, manufacturing making a comeback, and technical divergences building in U.S. and global stocks. 📰

Here's today's heat map:

3 of 11 sectors closed green. Communications (+0.77%) led, & real estate (-1.75%) lagged. 💚

3M shares were up 6% after completing the spinoff of its healthcare business Solventum and a federal court approving its offer of at least $10 billion to settle PFAS claims of roughly 12,000 U.S. public water systems. 💵

CXApp Inc. ($CXAI) jumped 151% today after the employee workplace experiences company signed a strategic partnership and development agreement with Google Cloud as it prepares to launch its overall platform. 🤖

Telecom giant AT&T was down just 1% after disclosing a data breach that impacted 74 million current and former customer accounts and exposed critical personal information. 📲

FedEx shares fell 3% on news that UPS will replace it as the United States Postal Service’s primary air cargo provider. Notably, both stocks were down on the news as demand concerns kept pressure on the entire sector. 📦

Uranium stocks were back in focus after Goldman Sachs initiated coverage of Cameco Corp. with a buy rating, forecasting a 25% upside from current levels and sending shares up 8%. ☢️

Semiconductors continued their surge, with Semtech’s better-than-expected results and optimism around Micron shares boosting the entire sector. 👍

Other active symbols: $PVH (-19.98%), $WBA (-9.91%), $TPST (+39.13%), $ZPTA (-62.00%), $APAC (-8.91%), $VSTE (+157.60%), & $IREN (+19.82%). 🔥

Here are the closing prices: 

COMPANY NEWS
Traders Dump Trump (Media) Over Losses

In an absolute surprise for nobody, it turns out the Trump Media’s underlying business doesn’t have a strong foundation after all.

Friday evening, the Trump Media & Technology Group released its first financial update after completing its SPAC. And the reaction has not been great so far…

The social media company had just $4.10 million in revenues last year, resulting in a $52.80 million net loss. And to make matters worse, the filing said executives “expect to incur operating losses for the foreseeable future.”

Additionally, while some investors and traders see Trump’s involvement as a major asset, the securities filing cites that it could put the company at greater risk than other social media companies—a double-edged sword, so to speak. 😬

Regulators also found “material weaknesses in its internal control over financial reporting" when it prepared financial statements for the first three quarters of last year.

$DJT shares fell about 22% on the day, with sentiment shifting to “extremely bearish” territory as traders debated the news. Still, the company is highly debated, adding the second-most new watchers on Stocktwits today. 🧐

Like other “meme stocks,” the company must find its footing in business fundamentals rather than being driven solely by hype. And it sounds like that’s going to prove difficult for the foreseeable future. 🤷

Speaking of meme stocks, it’s worth mentioning Reddit completed a round trip back to its opening price, closing at its lowest level as a public company. 🔻

AMC Entertainment also hit fresh all-time lows after last week’s news that it’ll sell another $250 million in common shares. CEO Adam Aaron tried to talk the stock up by saying the domestic box office had its best March in five years, but that wasn’t enough to stabilize the stock price. 💸

It remains a meme-stock and meme-coin world; we’re just living in it. Stay safe out there, folks. 👍

STOCKS
Technical Divergences Build

Technical analysts are warning that a divergence is building between the S&P 500’s price action and underlying momentum. Let’s get into what that means. 👇

Momentum is a key component of trend following and is often looked at to confirm (or question) the strength of an underlying price trend in an asset.

We all know that momentum shifts before direction. When you toss a tennis ball up in the air, its momentum (rate of change) slows as gravity pushes down on it, and eventually, it comes to a halt before reversing and falling back down.

The same goes for a stock or any other asset. Every new high in price requires an incremental buyer and every new low requires an incremental seller. But eventually those parties get tired for some reason or another and the other one takes over. 😫

One indicator often used to measure this tug-of-war in momentum is the relative strength index (RSI), which is plotted in the secondary pane below. It’s marked on a scale between 0 and 100, with the 70 region marking overbought territory (strong buying momentum) and 30 marking oversold territory (strong selling momentum).

In a perfect world, this indicator moves along with price, so when prices make new highs RSI makes new highs. When prices make new lows, the RSI makes new lows, too. 🤝

When they don’t move together, however, analysts start to pay attention. Just like the tennis ball losing momentum as it climbs upward against gravity, waning momentum in a stock is a sign of a potential trend change.

And now is one of those times.

As the chart shows, the S&P 500’s prices have been advancing steadily this year while momentum has been making lower highs. However, there’s not been a catalyst for sellers to take control just yet. 🤔

So, how do technical analysts identify a real trend change vs. a warning sign like we’ve had over the last few months? By combining the indicator with other technical signals like a trend break. 🎯

And that’s what many traders are watching for now. Prices have been riding this steady uptrend line for months, but a break of it would signal a potential trend change. Analysts say that combined with the momentum divergence that’s been building, would be a clear sign that bears have taken control of the short-term trend.

Since these divergences happen somewhat regularly, they haven’t been worth mentioning. However, the initial weakness to start the quarter, combined with the fact that these divergences are appearing across many global stock market indexes, made it worth highlighting. 🔍

Check out a chart of the Nikkei 225 or a broad market ETF like the developed markets ex-North America vehicle ($VEA); many are sporting significant momentum divergences.

It remains to be seen when they’ll start to matter. But the bears are on alert and ready to pounce if and when the trend starts to shift. 🐻

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ECONOMY
Manufacturing Makes A Comeback

To many people’s surprise, cyclical stocks like industrials, financials, and energy have been among the best performing so far in 2024. And today we may have gotten a peek into why. 👀

ISM Manufacturing data showed that U.S. factory activity unexpectedly expanded in March for the first time since September 2022, with production rebounding sharply and demand remaining strong. 🏭

While the move was barely above the 50 level that separates expansion and contraction, it did stop 16 straight months of shrinking activity.

These numbers are volatile month to month, so investors and traders will be watching the next few months' worth of data closely for confirmation. But the uptick didn’t appear to be just a U.S. phenomenon, as China’s numbers picked up nicely, too. 🌏

For now, cyclicals remain in focus as money looks for a new home beyond the globe’s biggest tech and healthcare stocks. 📊 

Bullets From The Day

✈️ United Airlines asks pilots to take time off as Boeing’s issues reverberate through the industry. The airline is offering pilots unpaid time off in May and potentially through the summer as delayed Boeing deliveries weigh on the company’s expansion plans. This comes after the airline said it would pause pilot hiring in the spring, with that measure likely to be extended into the summer and potentially the fall if delays continue. CNBC has more.

🪓 Microsoft to unbundle teams and office amid antitrust ser. The tech giant has introduced new versions of Microsoft 365 and Office 365 subscription services that exclude its business collaboration chat offering Teams. It comes after rivals like Slack and the European Union regulator raised concerns that inconsistent licensing and pricing across regions allowed Microsoft to force Teams onto customers. They also argued it hid the true cost of the product, reducing consumer choice and competition. More from TechCrunch.

⚔️ Nippon Steel isn’t giving up its fight against regulators for U.S. Steel. The Japanese firm’s deal to buy U.S. Steel for roughly $15 billion has faced much scrutiny from regulators and competitors who argue the company is too important to national security to be under foreign control. In an effort to convince regulators the deal is worthwhile for everyone involved, Japan’s largest steelmaker pledged no job cuts, said it will honor all agreements with the union, and move its own headquarters to the U.S. Reuters has more.

Links That Don’t Suck

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💾 Google to destroy browsing data to settle consumer privacy lawsuit

⚠️ What U.S. consumers should know about the health supplement linked to 5 deaths in Japan

🧑‍⚖️ 5-Hour Energy billionaire Manoj Bhargava sued by the owner of Sports Illustrated for $49 million after a tumultuous takeover

🏡 Homebuyers need to earn 80% more than they did in 2020 to afford a home in today's market

👨‍💼 McKinsey is offering some staff 9 months of pay and career-coaching services to leave the firm: report

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