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August 7, 2021
STOCKS – XOM, FCX, AAPL
MACRO – QQQ, OIL, COPPER, DXY
Mike’s Reading The Markets (RTM) Premium Content – FREE 2-WEEK TRIAL
- RTM Tactical Update – Inflation May Miss Expectations But The Fed Will Still Taper
- RTM- Strong Job Report Triggers A Rotation
- RTM – Holding Steady Into The BLS Report
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN AAPL
If last week were all about employment and the first half of the Fed’s dual mandate, this coming week would be all inflation and the other half of the Fed’s mandate. From an inflation standpoint, the Fed’s goal has been met, and that is unlikely to change anytime soon. Following Friday’s strong jobs report, the Fed is just about where it needs to be from an employment standpoint. It is close enough that I think the Fed is likely to tell everyone at Jackson Hole the economy has made substantial further progress, which is the first hint that a taper is coming at the September meeting. I get into more details about that in this week’s tactial update commentary, which you can either read as a member of Reading The Markets or by making a one-time purchase for a direct download.
But the initial reaction by the market on Friday was clear. Yields rose sharply, spreads widened, pushing the dollar dramatically higher. This put a big bid into the reflation sectors as investors sensed a taper was coming, and low rates would be a thing of the past. Nothing is that simple, though, because not every sector will be a winner, especially if the dollar continues to move higher, which I have been saying for a long time it would even as many were looking for a big debasement.
Dollar (DXY)
The dollar index has put in a huge double bottom and has a ton of bullish momentum behind it. All it needs to do is break resistance at 93.20, and it should move sharply higher, probably back to 95 or 96.
Oil
This will be bad news for energy, commodity, and multi-national stocks. Oil prices have already started to decline, and they will likely have further to fall from here as the dollar strengthens. Oil has been trending lower, and once support at $67 breaks, there is a good chance oil is trading sub-$60. There is a lot of bearish momentum behind oil prices.
Exxon Mobil (XOM)
This will weigh heavily on stocks like Exxon, which is trending lower, and hanging on to support at $55 and probably on a path to $44.
Copper
Copper prices will also have a problem going forward due to a stronger dollar, which will push the price lower, maybe to as low as $3.75. There are clearly bearish trends here, too, based on the RSI moving down longer-term.
Freeport (FCX)
Freeport doesn’t differ that much from copper and should continue to head lower towards $31.50.
Nasdaq 100 (QQQ)
The Qs have been run sharply higher since the May 19 low and are overdue to correct. The price hit the last week was equal to 100% of wave blue “A,” and it is also equal to 78.6% of wave red “A.” Maybe it is by chance, but all the Qs need to do is break the uptrend at $365 a push lower. The RSI and MACD are both already diverging lower, coming off very overbought levels, so this is as good a place as any for a nice pullback.
Apple (AAPL)
Apple has already broken its uptrend and has a path lower toward support at $130.
Have a great weekend
-Mike
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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.
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