This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.
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STOCKS – $ZM, $FDX, $COF
MACRO – $SPY, $QQQ, #RATES, $VIX
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- RTM: The Fed May Not Be Able To Stop Raising Rates Anytime Soon
- RTM: Fed’s Dot Plot Much More Hawkish Than Expected
- RTM: Pre-FOMC Meeting Briefing
- RTM: VIX Is Still Stuck
- RTM: Post FOMC Rally, No Matter What?
- RTM: Microsoft’s Stock Is Poised To Break Lower
- RTM: Capital One Shares May Plunge
Stocks finished the day lower as rates pushed higher. Where stocks go from here will depend on rates, I think it comes down to that. Based on current rates, I don’t think stocks have fallen enough. The simple QQQ to TIP relationship shows that the TIP is now trading at its lowest level since 2018 on an unadjusted basis, and since rates are heading much higher than they were in 2018, the TIP ETF should probably be much lower.
It doesn’t mean the QQQ ETF should trade at its 2018 lows, but it suggests the QQQ isn’t finished falling. But the fact that the TIP ETF made a new 2022 low indicates that the QQQ should be making a new 2022 low. The chart below shows the QQQ on a 12-day offset to the TIP ETF, and the move down in the QQQ seems to be on schedule.
Today’s exciting thing about the TIP ETF was a 10-Yr TIP auction priced at 1.24%, below the 1.28% when issued rate. That means the auction had a solid demand for the new bond issuance. When this happens, it causes the yield of the bond trading in the market to drop. You can see this on the TIP chart when the price rockets higher at 1:00 PM, indicating that the rate is falling. But look at what happens later in the day because the price craters, meaning the yields started rising again and went above the when-issued rate. So whoever participated in the auction was down just an hour later. That is pretty amazing to me.
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Capital One (COF)
Capital one broke support today, which I think is a pretty big deal, considering how it held there for so long. Momentum is bearish, and support is a long way off.
Nvidia fell by 5% today and is now getting very close to that support level at $117; we talked for some time.
Zoom made another new low today and could be all you need to know to figure out what is coming next to the rest of the market.
See you Sunday.
Charts used with the permission of Bloomberg Finance LP. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.