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August 15, 2021
STOCKS – AMZN, ROKU, MRNA, CSCO, GM
MACRO – SPY, QQQ, TLT
- RTM – Leverage Financial Conditions Are Getting Tighter
- RTM Tactical Update – Tapering Is Coming, And It May Lead To Equity Market Turbulence
- RTM – 2Q’21 Investor Letter
- RTM – Yields, Amazon, Moderna All Lower
- RTM- Will Inflation Be Hot Enough,
- RTM – A Stronger Dollar Will Weigh On Energy And Materials
Jay Powell speaks at a Q&A event on Tuesday, and the FOMC minutes on Wednesday, making two big Fed moments this week. Could Jay Powell use this week as a trial balloon and comment that substantial further progress has been made, indicating that tapering is coming? Yes, it would be the perfect time for him to make such a comment because if the market reacts unfavorably, he could easily walk back those comments at Jackson Hole or soften the tone. Additionally, some information in the minutes may give clues as to the size of a taper or the timing of what the taper could look like. So while many are expecting things to heat up next week at Jackson Hole, we may get a preview of this event this week. (You can read more in this week’s Long-Term Tactial Update- Tapering Is Coming, And It May Lead To Equity Market Turbulence 8.14.21 — just $19.99)
Bond yields fell sharply when consumer sentiment was much weaker than expected, keeping the downtrend in rates alive. Following the stronger PPI reading, the 10-year rallied to resistance and the trend line around 1.38%, which means that All eyes needed to be on rates. But the breakout was avoided, and as I have been saying for months, the general trend in rates remains lower, and one needs to wonder what message the bond market is sending that the equity market is missing. It seems possible the 10-year continues to head lower and pushes back down to 1.18%.
Nasdaq 100 (QQQ)
Last week I noted the Qs from an Elliott Wave and Fibonacci perspective was well-positioned for a pullback. Based on Friday’s close, those Fib’s and wave counts are still working, leaving the ETF in a strong position for a sharp pullback here.
S&P 500 (SPY)
This week we can add the S&P 500 ETF (SPY) to that list. The Fibs and Elliott Wave counts are rather stunning when we compile all of the points that suggest the recent highs make a nearly perfect match for a topping pattern. First, a potential ABC count makes waves A and C equal when starting with the September 24 low.
Next is a 5 wave count that starts off the October 30 low, with an extended wave 5 count of 1.618% of wave 3, while wave 3 is equal to wave 1.
You can combine this with a strong count off the March 2020 low, making a strong case this the end of the rally.
You can also combine the 5 wave count off the March 2020 low with the ABC pattern mentioned off the September lows.
So like the Qs, it is possible that we can consider that the S&P 500 is well-positioned for a pullback here and if these levels hold as resistance around 4,460, and it seems highly likely that happens, then we could have a candidate for a turndown. Right or wrong, we will find out this week.
Amazon (AMZN)
Amazon managed to hang on to support this week at $3,300 but still has a gap to fill down around the $3,200 level, and given the weakness in the stock, I think that the lower gap gets filled, with the stock continuing to push lower. The 200-day moving average is holding as support, but I don’t think that will last much longer.
Moderna (MRNA)
Moderna’s gamma squeeze popped this week as we expected. The stock, for now, is using the uptrend as support, but there was a lot of damage to the momentum indicators this week that suggest the declines are not finished yet. The RSI uptrend is broken, and the MACD has turned negative, all signs of broken momentum. So is the unwind complete? Probably not, with the $350 the best place for support for now. (Should be free to read – The Moderna Squeeze Is About To Pop)
Roku (ROKU)
Roku continued its decline this week, and for now, it is finding support at the 200-day moving average. This moving average has served as support in the past, but I’m not certain how much longer it will. The stock is very overvalued, and the company doesn’t have the growth rate to maintain that valuation. Sorry, nothing wrong with the company; the stock is just way overvalued. A drop below $290 confirms the double top pattern is in place, and the stock should face a long and steep decline at that point. (Should be free to read – Roku’s Slowing Growth Creates A Big Problem For The Stock)
GM (GM)
GM hasn’t finished falling yet either, with clear downward momentum on the RSI and MACD. The $49 price level I pointed out months ago is coming, better later than never, I guess. (Should be free to read – The Shares Of General Motors May Suffer A Very Sharp Pullback)
Cisco (CSCO)
Cisco reports this week, and I need this to get to $57.25, which comes to within 2% of my $58.40. I’d prefer it to happen before they report because we all know that Cisco almost always beats on the top and bottom lines and then gives guidance below expectations, sending the stock lower. The stock is well-positioned to get to that $57.25 level, but it is really cutting it much closer than I’d like.
Anyway, good luck
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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