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The week of December 19 will be anything but slow and quiet. There will be a ton of economic data, and the highlights won’t come until Friday when we get PCE, the University of Michigan, durable goods, and new home sales. On top of that, there will be a 20-year auction on December 21 and a 5-year TIPS auction on December 22. So if you thought this week would be calm, that is not the case.
The PCE report is the Fed’s preferred inflation measure; truthfully, this is not a market-moving event. The most significant drop came in the S&P 500 futures on August 26, the same day as Jackson Hole. The biggest gain came on October 28, when the S&P 500 futures rose 2.7%, marking a short-term top. Otherwise, the market tends to do nothing. I’m not sure why the PCE doesn’t get the same respect as the CPI, but it doesn’t,
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S&P 500 (SPY)
At this point, the S&P 500 is in the middle of filling the gap down to 3,750, which remains the biggest level of support for the S&P 500. Additionally, the option gamma level will reset, removing the support we recently saw in the S&P 500. This could clear a path for the index to fill that gap at 3,750.
If this is a rising wedge pattern, we should see the S&P 500 return to the lows seen in October. If this is a bear pennant, we could see the S&P 500 undercut the October lows and make new lows.
In the meantime, the dollar index appears to have formed a falling wedge, a bullish reversal pattern. It would indicate that the dollar should strengthen further and potentially rise all the back to 111.
I noted in Tuesday’s paid-subscriber commentary that Apple appeared to have formed a triangle pattern and was likely to break lower. That happened this past week after it broke below the lower bound. The $130 to $135 region has acted as support in the past, and I’m not sure that area will hold this time. The RSI still shows it could fall further before reaching oversold levels, and Apple may make a new low this time.
Meanwhile, Tesla continues to deflate after breaking support at $181 and is now working to fill the gap around $136. That will be a crucial spot for the stock to stop at. If the selling continues and shares drop below $136, Tesla is probably going below $100.
Oil has a falling wedge that is present, meaning that oil prices are due to rise. But it may have one more leg down to make first to around $65. Otherwise, I think it will be due to rebound and push higher back to approximately $85.
Finally, Zoom continues to flirt with making a new 52-week low. Again, this is another important one to watch, as it tends to be a market leader, and if it makes a new low, then the rest of the market probably isn’t too far behind. If it breaks below $69, the next level of support for Zoom doesn’t come until $66, which would be a new 52- week low.
Have a good week, and see you next. Remember, if you want to get these daily commentaries every day, Monday through Thursday, you still can for just $99 the first year.
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.