4/3/22

STOCKS – SHOP

MACRO – SPY, QQQ, VIX

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Stocks went up today for no apparent reason—just a strange day. The S&P went up around 80 bps while the Qs rose around 2%. Not much has been accomplished, with the S&P 500 gaining back just a portion of the significant losses from the end of last week. I think this market remains in a range for now, which should cause maximum frustration for everyone.

NASDAQ (QQQ)

The Nasdaq has what I would consider an unstable pattern, with a straight line gain followed by a rising channel. In my experience, when I have seen patterns like this, these patterns tend to resolve themselves by falling back to the origin. Does that mean it has to work every time? It does not. But typically, that is what I have seen happen. These are usually confused with bull flags, but bull flag usually slopes down, not up. I think it resolved with the NASDAQ going back below 15,000.

S&P 500 (SPY)

Also, notice that the S&P 500 futures managed to get back to where they broke down on Thursday afternoon. As you will see below, I think there is a good chance the decline is only starting.

VIX

I also find it surprising that the VIX is moving lower, ahead of a continued flow of economic data and the FOMC minutes on Wednesday afternoon. It is now at the lower end of the range. Additionally, a VIX under 20 will not provide the same fuel we saw post FOMC to rocket the market higher unless the plan is for the opposite this time, with everyone rushing to buy puts after the FOMC minutes and pushing the market down.

 

So I checked, and since November, the biggest rallies have followed the FOMC Meeting, while the biggest drops have followed the FOMC Minutes. The green arrows point to FOMC meetings, the Red to FOMC Minutes. Perhaps that has been because the meeting gives Powell the chance to soften the hawkish blows, while the minutes do not.

I’m not sure what Shopify is doing right now. Does it want to go higher or lower? The stock is stuck around $730; the RSI over the long-term is trending down but trending higher over the short-term. I think there is still one more move down for Shopify before it can start heading higher again. At the very least, a retest of those lows.

Anyway, that’s all I can come up with today.

Mike