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The S&P 500 and NASDAQ finished the week lower by around 5 and 6%, respectively. It is tough to find many bright spots in this market, especially with what is taking place in real rates. Options expiration kept things from getting ugly on Friday; with $390 being the big gamma level on the SPY ETF, put owners were anxious to sell their puts going into days end once it became clear the S&P 500 index wasn’t able to break support at 3,840. So that left the market with a late afternoon rally.
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The internals on Friday was pretty bad, though, especially on the NASDAQ, with 451 more new lows on the day than new highs. That was the lowest reading since early July.
More importantly, the cumulative new high minus new low shows another new low being me on the cumulative count. It is something that I do not view as positive for the market overall and is just another warning sign that new lows are coming to this market sooner than later.
QQQ vs. TIP
The QQQ runs about 12 days behind the TIP ETF, and the decline in the QQQ is coming on schedule. Based on the TIP, the QQQ isn’t likely to see much of a rebound anytime soon, either.
S&P 500 (SPY)
As far as where the market is going this week, I have decided to try and not predict the weekly movements in the market this week because I do not want that to be confused with the conviction I have that market is heading to the June lows, and I believe the high likelihood for them to make new lows. Additionally, the 2008 analog suggests that between now and October 25, the outlook for the S&P 500 and the NASDAQ could be brutally painful.
Zoom is the poster child for stocks making new lows on the NASDAQ, as Zoom, in my observation, has been one of the greatest leading indicators of where the market is going overall. No surprise then that Zoom just made a new low on Friday. That said, Zoom probably isn’t finished falling either, with the following significant support at $76.45 and then $70.
Emerging Markets (EEM)
If you want to see the effects a strong dollar is having worldwide, look no further than the EEM ETF, which made a new low on Friday and is probably heading even lower. Support at $38 has broken, and the next support level doesn’t come until $36.45.
Docusign jumped after its results, but this stock is no different than Zoom, and those gains are melting quickly. Like Zoom, Docusign will probably be added to the stocks on the NASDAQ making new lows very soon. There is no support until $46.85.
DoorDash is getting ready to travel up the stairway to heaven with that massive descending triangle and sitting just above support at $56.80. DoorDash will probably be another stock added to the growing list of stocks making new lows.
Anyway, this will be a big week, with the Fed and all; good luck.
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.