4/2/22

STOCKS – INTU, NVDA, SQ

MACRO – SPY, QQQ, VIX

Mike’s Reading The Markets (RTM) Premium Content – $65/MONTH OR $520/YEAR – The First 2-weeks are FREE to try.

• RTM Tactical Update: All Eyes On The Balance Sheet Reduction
• RTM: Reversal May Be In Place
• RTM: Stocks To Reverse, Bond Yields To Fall?
• RTM: Fundamentals Unchanged [Daily Update]
• RTM: Volatility Measures Rise As Stocks Stall [Daily Udpate]
• RTM Exclusive: Betting On Surging Volatility (Short-Term Options Idea)
• RTM: The Most Important Close In Some Time
• RTM: Oh Nvidia [Daily Update]
• RTM Exclusive: Betting Exxon Drops [Short-Term Options Idea]

This week’s Free YouTube Video – Trouble Lies Ahead For Stocks As The Fed Tightens Its Grip

S&P 500 (SPY)

The S&P 500 finished the week unchanged and has not indicated what it wants to do next. The index attempted to break higher during the week, clearing resistance at 4,580, but that looks like a failed breakout attempt after closing well below it by Friday. There is a chance the index completes the gap fill at 4,660, but if that doesn’t happen earlier in the week, I don’t like the odds of it happening.

VIX

There is a good chance the S&P 500 will struggle to start the week. The FOMC minutes pose an unknown to the market and likely contain plenty of hawkish language around the potential balance sheet run-off. With the VIX under 20, it seems that traders do not have enough hedges in place and will likely be buying puts heading into that event, which should put downward pressure on stock markets. The VIX has been trending higher for months and is now sitting at the bottom of that trading channel.

Nasdaq (QQQ)

The substantial wage gains in the job report and hotter than expected prices paid index in the ISM sent real yields soaring on Friday and caused the Treasury curve to invert. The higher yields rise, the harder it will become for the market to stay at current levels. The relationship between the QQQ and TIP ETF is powerful, and a wide gap has opened between the two recently. In this case, I think the QQQ needs to trade down to the TIP.

Nvidia (NVDA)

Sure enough, Nvidia fell back below support around $268, and that price now becomes resistance. The significant uptrend in the stock is broken, and the gamma squeeze is over. I think $231 is in the stock’s near future.

Intuit (INTU)

Keep an eye on Intuit; it looks like there is a bear flag that has formed, and a break below $419 sets up a significant drop to $325.

Block (SQ)

Block may have stalled out at $133, with the RSI clearly in a downtrend. It seems like the perfect place for the stock to stall out, resume the downtrend, and for the RSI to head to 30 while the shares fall back to $105.

 

That’s enough for this week. See you Monday.

Mike