CrowdStrike Breaks Out, Three Days of Up, Is a Trade Deal in Sight?

Miles and Miles

Seems like forever ago

Seems like yesterday

Dotted lines...passing, countless

Back and forth

Stephen, don't ever grow old

Standing upon yellow footprints

The prettiest face

Two baby boys grown to men

I can save you

Little brother, I've failed you

In search of forgiveness, redemption

Some day

Perhaps

On my way

One or the other

Dotted lines scream by

Countless

Countless...

So many...

Back and forth

Round Trip

Three-day rally. Some rally indeed. Any give-back at all? Not yet. Maybe Friday. Maybe not. As Monday night turned into Tuesday morning, in this column, we openly discussed the possibility that the Monday afternoon panic might have been a short to medium-term market bottom. Wow, just wow. We traders and investors have made a whole lot of hay since going into that final hour of trade on Monday.

Incredibly, through, three-straight overwhelmingly positive sessions for equities, there has not been a whiff of profit-taking. Only on Thursday did the increased trading volume even begin to slow down. I have been seeking technical confirmation of a bullish change in trend. We have not seen the pause necessary for such a volume-based confirmation. Such a pause may still happen.

This is fine, too, though. The closing pennant has closed indeed, and the violent move prophesied a week ago, clearly was in an upward direction. Huzzah. Is all of the money back in the accounts? Define "all"... the S&P 500 has taken out the high of April 9th. and created a "baby" ascending triangle. Take a look:

I simplified this chart for readers by removing all of the "day ones" and the closing pennant. Too much cluster prevents learning. I did leave the Bear Flag from late March as that had been the driving bearish signal that had produced the early April beat-down. Now, I illustrate the Ascending Triangle. Yes, this shows a level of resistance that readers might not have otherwise seen. That's the pivot and the S&P 500 is right there, gang.

The index has retaken its 21-day exponential moving average, which brought the swing crowd on board. The trading volume through four days this week is already greater than it was for last week's four-day period. That tells us that even with the 50-day and 200-day simple moving averages still to our north, portfolio managers have started to increase long-side exposure.

Oh, most importantly, many readers who have been with me for quite some time already know this: Ascending Triangles are bullish signaling patterns. Still, I would not mind seeing some profit taking on Friday and get that pause that I seek. If only to make the technical analysis neat and tidy. That said, bullish posturing is also fine by this guy.

Good News on Trade

Financial markets were supported on Thursday by both good news on trade and dovish sounding central bankers. Hard news on trade? No, no hard news. Remember, in an algorithm-driven marketplace, all you need is some keywords for the "robots" to read and react to. That's all it takes. Treasury Secretary Scott Bessent expressed his expectations that a trade deal with South Korea might be imminent and said that those talks were moving more rapidly than one might have thought. On the South Korean delegation, Bessent said, "They came with their 'A' game."

In addition, speaking to reporters after a lunch with Norway's Prime Minister, Pres. Trump countered comments made by Chinese officials in recent days that there had not been any talks between the world's two largest economies. The president said, "They had a meeting this morning." When asked who "they" were, President Trump replied, "It doesn't matter who 'they' is. We may reveal it later. They had meetings this morning and we've been meeting with China." Did you believe him? That doesn't matter. The keyword reading algorithms that I just mentioned believed every word.

Apparently, while some traders expressed doubt, where there is smoke, there is at least some fire. On Friday morning, Reuters is reporting that Beijing may be weighing the possibility of exempting certain U.S. imports from their 125% tariffs and have been soliciting input from U.S. companies on which products should qualify. This has been confirmed by American Chamber of Commerce in China President Michael Hart. CNBC is also reporting that Pres. Trump has said that Pres. Xi of China has called him.

On top of that, as rumors of positive movement of reaching trade deals between the U.S. and Japan, South Korea and India have made their way around Wall Street all week, rumors have spread through the zero-dark hours on social media that the specifics regarding any deal with India could focus on e-commerce, agriculture, and data storage.

Help From the Fed?

Both Fed Gov Chris Waller who holds permanent Federal Open Market Committee voting rights and Cleveland Fed Pres. Beth Hammack spoke publicly on Thursday. Atlanta will not vote on policy again until 2027, but as we all know, the entire committee is welcome to opine on policy at scheduled meetings, whether or not they currently hold voting rights or not.

Neither offered immediate help. Both inferred that the Fed will act if need be. Hammack said, "If we have clear and convincing data by June, then I think you'll see the committee move if we know which way is the right way to move at that point in time." To me, this sounds like a whole lot of nothing, but then Hammack added, "You've seen that this is not a Fed that's afraid of moving quickly if we need to move quickly." The algos loved that one.

Waller added his two cents... "It wouldn't surprise me that you might start seeing more layoffs, a tick up in the unemployment rate going forward if the big tariffs in particular come back on." Waller then got more specific... "I'm not going to overreact to any increase in inflation that I think is attributable to the tariffs, but if I see a significant drop in the labor market, then the employment side of the mandate, I think, is important that we step in."

For the record, The Fed's next policy decision will be made on May 7th. There is no change in policy expected at that meeting. The Fed's media blackout period ahead of that decision will go into effect on Saturday.

On The Macro Front

Initial jobless claims printed at 222,000 for the week on Thursday, in line with expectations and still a very low number. Continuing Claims actually dropped by a rough 37,000 people in this week's report and now stand at their lowest level since December, so labor market deterioration is not yet in the data.

Consumer-level inflation has been rapidly decelerating since peaking for this part of the cycle In January at 3%. February consumer price index prints at growth of 2.8%, followed by March CPI of 2.4%. The Cleveland Fed's NowCast model now shows April CPI running at 2.35%. Hedgeye's model, which has helped me stay one step ahead on the macro throughout this time of trial, is just above 2.3% for April.

Aside from employment and inflation, on Thursday, Existing Home Sales for March slowed to their weakest level since 2009 while March Durable Goods Orders fell out of bed, ex-aircraft.

AI Data Center Demand Slowdown?

I don't think so. On Thursday, Amazon AMZN Vice Pres. of Global Data Centers Kevin Miller said: "We continue to see very strong demand, and we're looking both in the next couple of years as well as long-term and seeing the numbers only going up." Nvidia NVDA Senior Director of Corporate Sustainability Josh Parker added, "We haven't seen a pullback." Parker also commented, "Anthropic and the other AI companies, what we're seeing is tremendous growth in the need for baseload power. We're seeing unprecedented growth.

These two men spoke from a conference organized by the Hamm Institute for American Energy. Almost as if they were part of the show, these comments came as power and cooling equipment Vertiv Holdings VRT ran 7.54% and turbine manufacturer GE Vernova GEV ran 7.26% in response to their quarterly earnings releases.

Breakout!!

I hope you kids have been following cybersecurity provider CrowdStrike CRWD. I have been telling you that this name is a Sarge fav since the cows came home and I stuck with them (though I traded around the core) through their troubles last year. CRWD remains my "best in class" cyber-security name.

The double-bottom pattern of bullish reversal is as clear as a bell here. On Wednesday, CRWD took out its 50-day simple moving average and 21-day exponential moving average, drawing increased exposure from portfolio managers and swing traders alike. Going off of that $392 pivot, my target price for the shares is $470. I'm pretty sure that makes me the second highest target on Wall Street for CRWD, second only to Saket Kalia of Barclays whose target is $475 and who is rated at five stars by TipRanks.

Remember...

Sans any trade-related headlines, a little giveback ahead of the weekend, when traders are more likely than not to reduce risk in uncertain environments is not necessarily a bad thing. From a technical perspective, this would actually be quite healthy. Rock on, my young friends.

Economics (All Times Eastern)

10:00 - U of M Consumer Sentiment (Apr-F): Flashed 50.8.

10:00 - U of M One-Year Inflation Expectations (Apr-F): Flashed 6.7%.

10:00 - U of M Five-Year Inflation Expectations (Apr-F): Flashed 4.4%.

1:00 p.m. - Baker Hughes Total Rig Count (Weekly): Last 585.

1:00 - Baker Hughes Oil Rig Count (Weekly): Last 481.

The Fed (All Times Eastern)

No public appearances scheduled. (Last day prior to blackout period)

Today's Earnings Highlights (Consensus EPS Expectations)

Before the Open: ABBV (2.44), CL (.86), HCA (5.76), SLB (.73)

At the time of publication, Guilfoyle was long CRWD equity