Stocks staged another wicked reversal on Thursday after opening sharply lower on Facebook’s (META) poor earnings report as well as Q1 GDP coming in much lighter than expected with still sticky inflation. More than whispers of 1970s-style stagflation are making the rounds. Recall that stagflation is stubbornly high inflation with essentially no economic growth. It puts the Fed in a box as they can’t cut rates to spur on the economy and it’s tough to hike too much for fear of a hard recession.

While it was an ugly morning for stocks, as soon as I heard a very high profile and usually wrong media person say, “I hate being so bearish”, I thought stocks had a chance to rally. And it only took 20 minutes for the bottom to be in. The question now is whether the Q2 pullback is over or are we just going to see a deeper bounce before another decline. At this point, I do not have high conviction.

Let’s look at some indices. Here is the Nasdaq 100. A move above this week’s peak will be important to see.

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The S&P 500 is next and looks similar. This week’s peak is key.

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After the close on Thursday, both Microsoft (MSFT) and Google (GOOGL) blew out earnings to the upside. They should both be up significantly this morning and help the indices move higher. If stocks reverse lower today which I do not believe will happen I would question whether the final low could in and then continue to look to May for answers.

On Wednesday we bought more RYDHX. We sold PCY, RYSIX, and some levered and unlevered NDX. On Thursday we bought EALT, FMAT, RYHRX, PMPIX,

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