The Market

The market has now obviously priced a little more than green shoots but probably a little less than a full-fledged V-shaped rebound in the economy. Depending on what kind of data we get going forward, we might very well stay in something like a 900-950 range on the S&P 500 for quite a while. 

There are a few clues that this rally (+38% for the S&P since the March lows) is getting a little tired. The most significant in my opinion is the relative underperformance of the NASDAQ yesterday, especially considering it had been a solid outperformer since March. The banks, as a group a stunning outperformer (it more than doubled) during this rally, might have a difficult time keeping this torrid pace after the stress test results are released. No matter what the results are, some banks will come out worse than others and we will see, as we started to these past few days, some divergences within the group.