Santoli’s Wednesday market notes: Tech stocks bounce and energy wins believers

Published Wed, May 5 20211:41 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 has regained traction and is back on track, though the action is a bit tentative so far. A mild bounce in growth/tech, furious grab for energy plays and the usual bid in recovery names combining to keep the S & P 500 near the middle of its three-week range near record highs. The index slipped below its 20-day average (the main short-term trend path) intraday yesterday, but finished above. The S & P has tested the line a half-dozen times over the past six months, cracking below for proper pullbacks twice and otherwise using it as support. Modest shortfall in services ISM at still-strong levels and a bit of a miss on ADP payrolls. But no real doubts evident about the sturdiness of the domestic-revival story, with a cyclical tilt to market leadership and equities acting as if Treasury yields are set to move up, even as yields themselves sit inert. Banks, retail, transports outperform, with utilities, staples, real estate weak. Still no clear escape from the mindset that recent data represent peak growth rates and perhaps "good as it gets" for a while. We'll see how we trade off the official jobs number Friday for a potential "tell." Energy keeps winning more believers, an unexpectedly big drop in inventories and rocking demand for petrochemicals just two of the story lines. Here's the exploration/production ETF over five years – recent breakout from the depths, with perhaps some upside tests a good distance higher from here: The rush out of mega-cap growth and trendy upstart tech yesterday was oddly urgent, given lack of specific news drivers or drastic macro/yield changes. For sure probably tied to portfolio reshuffling by funds that feel over-allocated to growth with no observable catalyst after blowout earnings failed to drive strong rallies to new highs. Pretty meek bounce today in AAPL, etc. given the force of the sell-off there. Looking like a give-up sell-off in PTON, which is in that pure TAM-tech stay-at-home basket with TDOC, ZM and much of the smaller cloud group – broken charts, down huge from highs but also still up 2x to 3x from 18 months ago. And, of course, they're all still toweringly expensive. Nothing to attract either momentum or value investors yet. Market breadth is solid, not great, better again on NYSE than Nasdaq. Credit is steady, hasn't been a driver either way, just generally supportive. VIX surrendering some of yesterday's twitch higher, under 18, back in the post-Q1 range, also more than three points below yesterday's high, sometimes seen as a plus for stocks in the very short term.

Traders on the floor of the New York Stock Exchange.

Source: NYSE

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

The market has regained traction and is back on track, though the action is a bit tentative so far. A mild bounce in growth/tech, furious grab for energy plays and the usual bid in recovery names combining to keep the S&P 500 near the middle of its three-week range near record highs.