September 18, 2021

Stocks – FCX, AAPL, FB, TSM

Macro – SPY, DXY, COPPER, EWY

Mike’s Reading The Markets (RTM) Premium Content – $45/MONTH OR $400/YEAR

• RTM Tactical Update: Earnings Trends May Have Started On A Path Lower
• RTM – Will The 50 Day Hold?
• RTM- Waiting For What’s Next
• RTM- Just Watch The VIX
• RTM Video – Inflations Worries Are Completely Overblown
• RTM- This Is Not The Same BTD Market
• RTM Exclusive – GM Nears Massive Breakdown
• RTM Exclusive – More Call Buying In Merck

MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN APPLE

 

It will be a big week with the Fed on deck Wednesday afternoon. It’s the quarterly meeting, which means there will be an economic forecast along with the dot plots. Given the slowdown in the economy, it seems highly plausible that the Fed will downgrade the 2021 GDP growth forecast. However, it that is unlikely to deter the Fed from tapering its asset purchase. I expect that the Fed will have strong language in the statement to indicate that tapering will begin at the November meeting.

The S&P 500 fell this week ahead of the meeting and finds itself in an unfavorable position as it once again is testing its 50-day moving average. However, as I reviewed in this week’s free YouTube video, the market’s breadth is not nearly as strong as in periods past. The most obvious is the deterioration in the percentage of stocks above their 200-day moving average.

Additionally, the RSI is trending lower and testing the lower bound of support around 42. The RSI has made a series of lower higher even though the S&P 500 made a higher high; this is a clear bearish divergence. Meanwhile, the index also broke a significant uptrend which started in October of 2020. With the potential to test support around 4365 and perhaps 4235.

Several factors from a fundamental standpoint suggest earnings growth rates may decelerate faster, as earnings estimates themselves turn lower. All of this is likely to weigh on the index when the Fed begins reducing the pace of its asset purchases, which will help the dollar index break out. It is one way the Fed can fight rising inflation rates and help to bring commodity prices down by jawboning the dollar higher. However, this puts substantial pressure on the international markets, specifically emerging markets. (Downloadable on-demand content- Earnings Trends May Have Started On A Path Lower)

South Korea (EWY)

South Korea has been one market showing signs of struggle with the index down by more than 6% off its highs. The RSI suggests that the KOSPI continues to trend lower, potentially as low as 2,963.

 

AUD/JPY

A key risk gauge is the Australian Dollar – Japanese Yen pair, trading decidedly lower in recent weeks. After attempting to turn higher, the downtrend has resumed. If this worsens, it will be a clear signal of risk-off, if not already.

Copper

Copper prices are another risk-on/off signal and will struggle under the weight of a rising dollar. The RSI is trending lower, suggesting the drop in the metal is not over. Additionally, the descending triangle is a bearish technical pattern, with the next level of support somewhere around $3.95.

Freeport (FCX)

If copper is going to head lower, then Freeport will not be spared in the process. There is a massive level of support at $31.50, and once broken will help to push the shares lower to $24.80. The RSI is sending a clear message that the trend in this stock remains lower.

Taiwan Semi (TSM)

Taiwan semi is one stock that is likely to struggle if the dollar pushes higher, with a big gap that needs to be filled around $112.

 

Apple (AAPL)

The uptrend in Apple is broken on both the price and the RSI. That will set up a drop to around $135.

Facebook (FB)

Facebook has broken its uptrend, which also formed at the end of March, similar to the one seen on the S&P 500. However, Facebook has created a new low on the RSI and broken the uptrend on the price as of Friday’s close. It may be foreshadowing what happens next with the S&P 500.

Anyway, have a great Sunday!

-Mike

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