Morning Market Report: Feb. 14th, 2024

Happy Valentine's Day. This is the morning report for February 14th, 2024.

First off as we see in the chart below, yesterday was the Nasdaq's biggest breadth collapse since the Silicon Valley Bank (SIVB) failure in March 2023 (see lower pane below). What we see in the main pane is that regional banks are much weaker than they were last year when the bank collapse started. In addition, the blue vertical lines show that where regional banks rolled over the last two times, the Nasdaq rolled over at the same time. Each time, the Nasdaq became heavily oversold when banks imploded. Whereas this time, when banks rolled over, the Nasdaq (AI) went higher. Which leaves the Nasdaq heavily overbought when bank stocks are weaker than last year. Clearly investors have lost all fear of bank runs over the past year.

Remember Robinhood, the Candy Crush app disguised as a trading platform? It was the first retail brokerage platform to offer commission-free trading by routing all of their trades through Citadel dark pools (private trading exchanges) where they could be front-run by scalper bots, after which trading volumes exploded. Last night they announced a "surprise" profit after many years of losses. In addition, they said that retail investors are flocking back to the market at the highest rate since the pandemic:

"The company pointed to a number of signs that retail traders are back in the market. Its monthly active users rose to 10.9 million in the fourth quarter, from 10.3 million in the third quarter, reversing a trend of falling users that spanned most of 2023...Tuesday’s fourth-quarter earnings report is only the second time the company has posted a profit since going public"

FR: I find this story interesting because below we see that the U.S. Momentum Index (ETF) was recently stopped at the exact same level where the Gamestop-driven retail frenzy peaked in February 2021. After that pump and dump ended, we see in the bottom pane that record Nasdaq DOWN volume ensued.

Be on the lookout for that to happen again, because what I also show on this chart is that due to yesterday's hot CPI, the level at which the Fed would bailout this market just got moved significantly LOWER. So when you combine a potential system-level event with a recalcitrant Fed, you get what I call "System Test". At which point every stock pundit will realize they were wrong about 2024.

On a related note, last night Lyft reported better than expected earnings which follows Uber's better than expected earnings report last week. Last week's earnings report finally propelled Uber above its all time high which was set in...

February 2021.