Santoli: The bloodbath in Netflix is somewhat reminiscent of 'Marlboro Friday'

Published Wed, Apr 20 20222:24 PM EDT

This is the daily notebook of Mike Santoli, CNBC's senior markets commentator, with ideas about trends, stocks and market statistics. The indexes are generally holding yesterday's pop, rotating away from danger and for now keeping in place the idea that a "higher low" could be in place for a market that has spent months pricing in a good deal of challenging news. Here's the S & P 500 since just before the peak with intraday levels visible — it managed to stay out of the trough below 4,400, but it still needs to prove that 4,600 is not still a ceiling (if we get there on this run). The Nasdaq 100 is an amplified version of the same chart, farther from its highs, having surrendered any claim on leadership status, but also putting together what some traders view as a good effort at a higher low near 14,000. That's a level that has held some significance since it became an all-time high almost exactly a year ago. Netflix 's bloodbath is not spilling over to growth/tech in general, though it is hitting media broadly speaking – anything requiring a long runway of subscriber growth and/or in the direct path of TikTok in competition for eyeball hours. Microsoft is doing its best to support Nasdaq, while "value old tech" gets some relief ( CSCO , INTC , IBM ). The Netflix reckoning is somewhat reminiscent of Marlboro Friday ( Philip Morris imploding in 1993 on cigarette price cuts), Nokia 's "oh no" moment when mobile phones hit the commodity wall and, to a degree, Amazon in the post-2000 period when the long-term bears thought it was game over. All media now looks same-ish, as can be seen in the match-up of NFLX and DIS cashflow multiples: Treasury yields and commodities both retreated after massive runs to overbought levels. This takes a bit of the pressure off the inflation/rate-spiral story, but the charts still have plenty of momentum. Broader market is hanging in OK, and the equal-weight S & P is now just 3.2% off its record high vs 7% for the market-cap-weighted version; S & P ex-Tech is off 4.5% from peak. Yes, leadership is defensive and "late cycle," and it's hard to see a roaring risk-taking cycle kicking up again with 100 basis points of Federal Reserve rate hikes priced in over the coming two months. But it could easily be true, as I wrote over the weekend , "There's now broad recognition of a narrower path to a happy economic outcome ahead — and any fresh evidence pushing against the case for an imminent recession might find the market mis-positioned for such an upbeat turn." Sentiment remains a net positive, with last week's 30-year low in bullishness among the AAII retail set roughly confirmed by another negative bull-bear spread among the pros in the Investors Intelligence survey. It's just one piece of the puzzle, but combined with the lifting of pressure from sellers needing to pay tax bills and the generally favorable seasonal patterns in late April (noted last week), it all gives the market a bit of breathing room. Market breadth today is well-mixed, 60/40 up/down volume on NYSE, about the reverse of that on Nasdaq. Decent rotational action with banks up almost 2% and housing/consumer cyclicals bouncing as growth lags. VIX is hanging around 20, the rough dividing line between agitated and stable action, a fairly benign reading for now.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, March 29, 2022.

Brendan McDermid | Reuters

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