After an outstanding first quarter in 2024, could stocks be hitting a figurative wall heading into the second quarter ? Blue Line Futures President Bill Baruch and Unlimited Co-Founder, CEO, and CIO Bob Elliott sit down with the Market Domination hosts to discuss their market outlooks, which Elliott states could be entering "a turning point" in the second-quarter tied to the Federal Reserve's interest rate cut pressures.
"We have had a heck of a little run, I'm looking at the 21-day moving average... we haven't closed below the 21-day moving average for the S&P since January 17. In fact, we've only closed below it three times this year... but before that it's been November 1," Baruch states.
Baruch also provides commentary on the geopolitical pressures feeding into crude oil ( CL=F , BZ=F ) price actions.
For more expert insight and the latest market action, click here to watch this full episode of Market Domination.
Editor's note: This article was written by Luke Carberry Mogan .
Video Transcript
JULIE HYMAN: Stocks trading lower heading into the closing bell. And what's proving to be a sour start to the second quarter. We're looking at how to navigate the big picture with the Yahoo Finance playbook.
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And joining us now, we've got Bill Baruch, President of Blue Line Futures and Bob Elliott, Co-founder and CEO and CIO of Unlimited. Thanks for being here, you guys. Really appreciate it.
I want to start of with how we're kicking off this second quarter. And the sell that we're seeing, even though the macro hasn't seemed to have changed very much. I guess with the exception of Treasury yields going a bit higher.
Bob, I'm going to take you first on this. And whether you think that this sell off is justified. Should people be stepping in here to buy the dip?
BOB ELLIOTT: Well, I think there's been a healthy rally that has occurred over the course of the last five months or so end of last year and early this year. And what's happened is we've really repriced expectations significantly. Just think about consensus growth expectations in the US for 2024 went from well below 1 to now 2.2 for 2024. That's a big shift. It's reflected in equity markets.
And as a result, you're going to have to have even stronger outcomes than what we've seen lately in order to get stocks to press higher. You combine that with higher bond yields, and some concerns that the Fed is not going to move nearly as quickly as people are expecting. And this might be the start of a turning point in the equity market to kick off the quarter.
JOSH LIPTON: Bill, same question to you. I want to get you in here as well. A bit of a rough start to the second quarter. What do you make of it, Bill? And where do you think we head from here?
BILL BARUCH: Certainly, coming out of the holiday weekend, we had that PCE on Friday. And some exuberance following the futures on Sunday night. And I think that really when you have that higher open on a Sunday night in the lower open intraday.
From a technical basis, I think that can start to gain a little bit of steam to the downside. But as Bob just mentioned, I mean, we've had a heck of a little run. I mean, I'm looking at the 21-day moving average.
And we tested it, we kissed it today. But we haven't closed below the 21-day moving average in the S&P since January 17. In fact, we've only closed below it three times this year, including January 4th and 5th.
But before that it's been November 1st. So, I mean, it's been a really heck of a run. I'm not even calling this a sell off.
And really we've been anticipating a breather. And what a way we're referring to this is leveling out. I mean, if you're in a flight that takes off, I mean, ultimately, you just kind of level out a little bit. So I think leveling out would just be more of a healthy pullback, consolidate, chop around a little bit.
And this is that time of year know. I know April is typically strong. But we were looking from a cycle rally basis that we could see a top that sort of rotates around a little bit from April and May. That's how we were looking at things.
JULIE HYMAN: So, wherever we are right now? It seems like you guys agree strategically on one sector. And that sector is energy. Bill, I know you have a particular expertise there. So maybe let's start with you here.
Obviously, we've seen crude oil prices climbing up here. Do you think that run is going to continue, and do you chase oil itself, or do you play it in a different way?
BILL BARUCH: Yeah, I think oil overall, if you look at the futures, crude oil has really broken out above some of the previous supply zones where resistance was. And what I'd like to see is it build a support level around $83. Now, that's pretty close.
But I mean, we could have some significant elevation here in the coming days and weeks if we stay out above $83. Obviously, geopolitics have played a role in underpinning some of the strength. And we've had some new news overnight with the strikes on Iran, in the embassy, in Syria.
But China's data over the weekend. We've seen some real strength coming out of the manufacturing sector there. And then on top of that, I think there's something interesting going on within the currency space as China defends the Yuan.
So there's a lot of macro tailwinds that are coming abroad that could help continue to lift commodities in general. But one of the ways we're playing is managing the risk and have been positioning and call spreads that we continue to roll up and roll out in our commodity trading advisor. And that's how we're able to capture this with some limited risk as we rally.