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#Stocks – $HYG, $NVDA
#Macro – $SPX,
Mike’s Reading The Markets Macro Subscription Service on Seeking Alpha
- RTM: BTFP Declines, Liquidity To Leave?
- RTM: Main Take Aways From FOMC
- RTM: Fed Preview
- Live FOMC Session On 3/20
- RTM: The Market Tides May Be Turning
Stocks fell sharply in the final hour of trading when a nearly $5 billion sell imbalance was posted at 3:50 PM ET. These orders for the closing cross can start being posted at 2 PM ET and build throughout the afternoon, so it is not surprising that the market started selling off ahead of the release of the cross.
There was a reasonably significant volume spike around 3:30 PM ET, which started the afternoon unwind. It led to a sell-off of about 40 bps in the final 30 minutes. This marks the second day in a row with a significant sell imbalance, following yesterday’s nearly $2 billion that came for sale.
What could be driving the sell imbalances in the last two days is the effect of the Fed’s reserve balances falling as the reverse repo facility bottoms out heading into the quarter end and the BTFP loans begin to roll off. Systematic funds may be shedding some of their holdings at this point. It is not clear yet, but it is easy enough to monitor.
We also saw the HYG High Yield ETF fall for the second day today, and this is again important to watch. If the liquidity-induced rally starts to fade, the HYG will also struggle, and spreads will widen. The HYG today fell to support at $77.50, which will be a level that needs to be watched because, if broken, it could lead to a return to the lower support level at $76.40.
Nvidia put in a second bearish engulfing candle today after putting one in on March 8. This was smaller in size and came on much less volume. I have never noticed something like this before, and I am not sure what it means, except for my understanding of the bearish engulfing pattern. I also find it interesting that the candle was formed around the same level as the one formed the last time, around $950.
Interesting and potentially notable, a break of that $850 region likely confirms a double top pattern, so we will need to watch this one closely.
-Mike
Charts used with the permission of Bloomberg Finance L.P. 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.