Date: April 12, 2024

Stock Market Pullback Proceeding on Schedule – Gold, Apple & Nvidia

Since the March 27th peak, we have seen a few mild pullbacks in the major stock market indices. That March high although late in the quarter is precisely what our work had been suggesting since the year began. As usual, they didn’t make it easy. I remain of the opinion that it was not a peak of significance. Rather, the market would embark on a one to two month decline that would be less than 10% and bottom by Memorial Day.

Thursday was an odd day. The stock market was up roughly 1% but there were an equal number of stocks going up than down, not exactly a bastion of strength. There were also more sectors declining than advancing. Apple and Nvidia pulled up the major indices and as you know, I think both stocks should use rallies as selling opportunities.

Chatter this morning is that Iran is set to attack Israel over the weekend and the U.S. is unwavering in their support. What a mess. I am little surprised by the magnitude of the pre-market decline. The is key is where everything closes on a Friday. If the bulls give up on the first rally attempt, it could be an ugly day, especially if stocks trade at new lows for the week. That would give very little incentive for folks to buy ahead of what appears to be a volatile weekend.

Q1 earnings season starts today with the banks on tap. JP Morgan and Wells Fargo are first. Both stocks have risen significantly into the reports, so a sell the news thesis wouldn’t be a shock. A surge higher to new highs would have me contemplate harvesting some acorns in the sector.

You know what’s surprising about the mild pullback so far? The defensive sectors like staples and utilities are not proving any cushion as interest rates continue to surge, like we saw in 2022. Remember when most pundits were looking for 6-7 rate cuts this year? I was in the 2-3 camp with the risk being less. Right now, the 2-Year is telling us that only a single rate cut is coming and not until late in the year.

Finally, I started hearing radio ads for gold. Of course, the metal is at new highs. What happened to those ads when gold was at $1500? They might not ring the bell, but these ads, Costco selling out of gold bars and the parade of pundits on TV touting gold certainly have my ears ringing.

I returned from AZ with some extra, unexpected baggage in the name of a little virus. Being there for number 6 which was back to back was definitely a bucket list event. Getting to share it again with my daughter made it even more memorable although many of her friends just happened to “show up” at our hotel.

There is some intangible that makes UCONN basketball so special. It’s hard to describe how this smaller, rural state school has won 6 rings for the men and 11 for the women. And if the women get healthy next year, it will be an even dozen.

The men have one retired Hall of Fame coach, Jim Calhoun, and one more in the making.

It always amazes me how many former players come out for the big events and how many of them went on to be hugely successful. They all visit with Coach.

When I pestered the big fella for yet another picture with his favorite short, Jewish guy, it hit me that this was probably the last one as all 7′ 2″ of Cling Kong will likely be headed for the NBA. For the past two years, no one has been more excitable and fun to be around than Donovan Clingan. He acts like a very big kid which makes him even more likeable.

Things don’t happen quickly in CT, especially with the DOT. However, less than 24 hours after winning the national championship, someone was already updating the sign on I-84.

On Wednesday we bought PDBC and RYSPX. We sold EMB, PCY, DXHYX and some levered NDX. On Thursday we sold EAT.


Paul Schatz, President, Heritage Capital