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STOCKS – AAPL, DOCU, ROKU, TSLA
MACRO – SPY, QQQ, POWELL
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MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN APPLE
The stock market witnessed a dramatic sell-off on Friday after a big rally in the morning. The index had been up as much as 1.3%, and around 12 PM ET, everything began to fall apart. Blame it on the Nord Stream pipeline shutdown news, but the selling started 20 minutes before the news hit, with the index dropping nearly 50 bps. I think the turn lower had already been in place, but clearly, the news didn’t help.
With a three-day weekend, it is hard to determine how the market will open on Tuesday or if the narrative will shift. However, that significant support level at 3,920 is still big, and if we gap below that, I think the declines could accelerate with the next stop coming at 3,830 and potentially lower than that. I believe we are currently in a minor wave five down, and if that is the case, then we should see 3,830 in the days ahead, regardless of how we open on Tuesday.
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Powell will speak on Thursday in a Q&A session with the Cato Institute, so I think these will be serious questions, not softballs. He will likely be asked about the coming FOMC meeting and his thoughts on the job report. Although I am not sure, he will tip his hand on a 50 or 75-bps rate hike at the next meeting. He could say something like the job data was strong, and if we get a CPI report as expected, then he thinks a 75 bps rate hike is warranted, but I’m not sure he will even go that far. The CPI report comes during the FOMC blackout period, and I don’t think he wants to find himself in the same position he was in for the June meeting.
The cumulative number of stocks on the NASDAQ making new highs minus new lows is on the decline again, and typically when this happens, it results in a new leg lower for the NASDAQ. It could be the case yet again.
The QQQ, like the S&P 500, is sitting on a critical support level at the $295 region. A break of support opens a short-term window to $289.
DocuSign is one such name that has recently made a new low. It is expected to report results on September 8. DOCU could be a good stock to watch, if nothing else, just from a pure sentiment gauge. Given that the shares are in the middle of filling a gap down to $46, it doesn’t exactly provide one with much confidence.
The good news for Roku is that it hasn’t made a new 52-week low. The bad news is that despite breaking a massive long-term downtrend and breaking out of a falling wedge, which should have been bullish. Instead, all the stock could do was trade sideways, not good, which means the chances of a new low and dropping to $58 are increasing.
Tesla broke the neckline on the Head And Shoulders pattern, which could push the shares down to $246 or another 12%.
Finally, Apple will release its new iPhone series this week. But more importantly, the stock may have given us a sneak peek of what to expect from the market. Unlike the S&P 500 and the QQQ ETF, Apple’s shares closed below support on Friday, which could signify that the indexes are likely to follow. After all, if Apple starts heading lower towards $152, I think the entire market will follow Apple down.
Have a good labor day weekend.
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.