Santoli's Tuesday market notes: The market is daring sellers as Big Tech earnings, Fed decision loom

Published Tue, Apr 27 20211:52 PM EDT

This is the daily notebook of Mike Santoli, CNBC's senior markets commentator, with ideas about trends, stocks and market statistics. The market is literally waiting and seeing how Big Tech earnings and the Fed meeting unfold, hovering near the highs as if daring sellers to make a quiet exit. Not too many takers so far. The tape has been sturdy while largely static for the past week and a half. The S & P 500 is sitting right now at its April 16 closing level with a couple of little downside flutters of less than 2% in between. The immediate story is pretty strong breadth, refreshing rotation, tame bond yields and ebbing volatility. The big-picture view is super-loose financial conditions, powerful economic-acceleration drivers and still-rising profit forecasts. The only real question is whether the macro drivers are close to "peak improvement" readings, and if investors broadly are complacently near capacity for equity risk. Neither is clearly the case, but both probably getting close in the short term. In such times, the tape action itself gets a deciding vote and it continues to leave the benefit of the doubt with the bulls, even if the risk/reward looks pretty mixed from here. I still see the market as indecisive here – but thus far benignly so. Day to day value or growth lead, but neither in an emphatic way. Here's "pure value" relative to mega-cap growth the past six months. See how the relationship has absolutely flatlined the past few weeks: To me this reflects fair-to-full valuations in both styles of stocks, but with few selling catalysts given renewed reopening dynamics and the sheer force of megalith tech profitability. Tough to get too worried about the market's macro message when transports, equal-weighted consume discretionary and homebuilders are all outperforming and extending record highs. Treasury yields seem to be coiling after their pullback/sideways slide, perhaps ready to tick higher again? The Citi "bear market checklist" shows the current market is meeting the preconditions for a downturn in about half the factors tracked – not enough to suggest acute vulnerability to this cycle. Notable that the areas keeping this indicator net bullish are mostly rates/credit spreads, no surprise given a literal record-loose reading from the GS financial conditions index. Market breadth today is mixed. VIX is steady within its downtrend, perhaps retaining a bid into the Fed tomorrow. The actual "realized" volatility of the S & P the past 20 days was down to 11 at the open, likely would bleed lower if the indexes stay flat to the close. When this reading gets down to 8 it can mean a "calm before a storm" warning. Not yet.

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This is the daily notebook of Mike Santoli, CNBC's senior markets commentator, with ideas about trends, stocks and market statistics.

The market is literally waiting and seeing how Big Tech earnings and the Fed meeting unfold, hovering near the highs as if daring sellers to make a quiet exit. Not too many takers so far.