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September 26, 2021
Stocks – FB, CAT, MU, NKE
Macro – SPY, DXY, VIX
- RTM Tactical Update: Nike And FedEx Fire The First Warning Shots
- Live Q&A Session Today At 1 PM ET
- RTM: VIX Crush Sending Stocks Up
- RTM Exclusive- GE Maybe Poised For A Big Rebound
- RTM- The Taper Is Coming “Soon”
- RTM Exclusive – AMD Nears A Massive Break Of Support
- RTM- Gearing Up For The Eye Of The Storm
- RTM Exclusive: Teladoc’s Stock Is Ready To Unravel
- RTM- Targeting The 200 Day-Moving Average
- RTM Tactical Update: Earnings Trends May Have Started On A Path Lower
Stocks finished the week of September 24, higher by around 50 bps, after starting the week down by nearly 2%. As previously discussed, much of the rebound was driven by a push lower in implied volatility, as noted by the sharp decline in the VIX on Wednesday and Thursday. Friday proved to be a different outcome, with the S&P 500 rising just 15 bps once the VIX returned to lower levels.
Friday’s price action seems to have confirmed that the sharp rally was nothing more than a reflexive trade due to the fast nature and movement of the volatility in the market. With the VIX back to where it started, I would be surprised if the strong buying witnessed last week sticks around. I explained in all in this free YouTube video recorded Friday morning.
S&P 500 (SPY)
The recent rebound in the market at this point was a 61.8% retracement on both the S&P 500 cash and the S&P 500 futures. If it is the case, then the move higher was nothing more than a corrective wave in an otherwise downtrend. It would tell us that another leg lower is coming with a likely retest of the September 20 lows.
The dollar index looks like it is getting ready to break higher. It would not be surprising considering non-commercials and non-reportables are buying the futures contract and have their most prominent net long positions in forever.
Micron will report this week, and I have been relatively bearish on it now for a few months. DRAM prices have been falling more recently, and there had been a massive put buyer of the September $75 strike price a few weeks ago. It looks like they rolled out of those and into the October ones, based on the changes in open interest. You can see the triangle pattern that has formed, which is a sign of consolidation, but generally, these patterns will break in the direction of the trend, which has been firmly lower. Volume has been nothing special either, which tells us that buyers are still hesitant to step into the stock even at these reduced levels. There is probably one more leg lower left, with the potential for the stock to fall to that $58 to $60 range.
Caterpillar shares have made a lower low on the price and a higher low on the RSI. That is typically a good indication that a bottoming process is in the works. It doesn’t mean the stock can’t go a little lower still, but at least for now, that is a positive sign. A lot will depend on what happens when the stock gets to resistance at $199. If it can’t break above that level, it stands a good chance of getting back to $210.
It doesn’t look good for Nike here, gapping below support at $150 while closing below it on extreme volume. I’m hesitant to say it will fall to $133 because it is so oversold now, but the stock can’t get above $151 over the next few days; the odds of a drop to $133 increase dramatically. (You can read more about Nike and FedEx’s results and what they mean for the S&P 500 in this week’s premium newsletter update, on my Shopify store — Nike And FedEx Fire The First Warning Shots for a $9.99 download fee)
Facebook broke the uptrend last week, and now the stock is oversold. Perhaps it rebounds back to $365 over the very near term. But once a significant uptrend breaks like this one has, it is generally not a positive sign.
Have a great Sunday.
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