Half an hour into a Monday session, the technology trade is slipping, though the S&P 500 (SPY) stays positive on the day.
Market Levels
The first support to hold for the S&P 500 is 7680, where buyers could step in. A breakdown points to 7610, where most of this morning's put flow sits. S&P options activity has been more bearish than bullish even after an early rise. Upside support sits at 7740.
Several names gave back morning gains. Horwave went negative on a technical basis and is now flat, erasing its morning gains. The DRAM ETF is still up about 3.8% but well off its highs. A pre-market bid failed to hold into regular trading, which is pulling the market back for now.
Volatility sits around 18.4, implying a move of a little less than 1.2% up or down for the S&P 500. The price start was decent, but the internals are fading.
CoreWeave (CRWV) sat at the center of last week's cost-of-capital worries. It was up about 7% in pre-market and is now up only slightly. The Magnificent Seven is holding up, except Meta (META), which reports this week.
Oil
WTI crude is hanging around the $100 level. Some geopolitical risk premium had been priced in before Friday's close on expectations of further escalation or weekend attacks, but that did not materialize.
Technically oil is still in a bullish formation despite today's pullback. Crack spreads have made lower highs over the past three to four weeks, because oil keeps rising while its byproducts rise less and in some cases stall. The technical setup still points higher.
Over the weekend, Russia continued strikes on Ukraine. There was military positioning around Iran and Israel, tanks moved into place, and Iran has tested ballistic missiles over the last couple of days, keeping tension high. Vladimir Putin proposed bringing together President Trump and Xi to discuss the Ukraine war, which could pull oil prices back a little. Disruption in the Strait of Hormuz and logistics problems worldwide could keep prices elevated. Retail gas and diesel prices remain at relatively high levels. Oil is not a bullish factor today, but the fundamentals could support higher prices.
Housing
The NAHB homebuilder sentiment index came in at 29, below the 31 the street expected and down from 32 previously. This is a sentiment or diffusion index, so a lower number means weaker sentiment. It is the lowest reading since June 2012.
Housing sentiment keeps dropping under several pressures: rising input prices, climbing inventory for existing homes, and higher interest rates. The housing market is close to recession and stalling out, which this data reflects.
There is a mismatch in the economy right now. Sentiment is weak, yet people still buy folding phones and flying cars.
