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Stocks were higher, lower, and higher, and they faded towards the day’s end, trading within a fairly wide range throughout the day. More importantly, the dollar continues to weaken significantly, falling against the yen, franc, and euro.
Equities seemed to diverge from their usual pattern of following the FX market, at least for part of the afternoon. This has occurred for a few days, dating back to last Wednesday. I don’t have a clear explanation for it, but that’s what has happened. Either the markets are diverging because the forces that once aligned them are fading, or the equity market has more downside ahead.
Perhaps more importantly, the dollar index is now very close to breaking support around 99.50 and could potentially head lower to 97.60 or even as low as 96.15. That would be good news for the euro and all others.
Stocks may have moved against the currency trend today because rates were lower. Interestingly, stocks and rates have been positively correlated more recently. But not today, it seems, as 10-year rates were sharply lower, stocks went higher. So I’m not sure if something is changing, or if today was just a rally day because investors were still hopeful about the weekend news and tariff exemptions, which wasn’t as positive as it was billed to be in the social media realm.
Essentially, all the S&P 500 did today was fill the gap from the close on April 9. That marked the high for the day, and the index never returned to that level, selling off in the final minutes of trading. Another gap at 5,670 remains unfilled, but given today’s relatively weak market performance, it seems less likely to be filled. Additionally, the strong uptrend that began on April 8 is now broken. This would be a negative sign, and the dollar continues to weaken as the technical suggests, the outlook for stocks rising doesn’t seem likely.
-Mike
Terms By ChatGPT
1.FX market – Short for “foreign exchange market,” where currencies are traded globally.
2.Diverge (in finance) – When two typically correlated assets or markets begin to move in different directions.
3.Downside – The risk or potential for a decrease in value or performance of an asset or market.
4.Dollar index – A measure of the U.S. dollar’s value relative to a basket of foreign currencies, used to gauge its overall strength.
5.Breaking support – A technical term indicating that a price level (support) that typically prevents further decline has been breached, possibly signaling more selling ahead.
6.Positively correlated – When two financial variables move in the same direction; for example, when rates rise, stocks also rise.
7.10-year rates – Refers to yields on 10-year U.S. Treasury notes, often used as a benchmark for long-term interest rates.
8.Rally day – A day when stock prices rise sharply, often due to optimistic sentiment or positive news.
9.Tariff exemptions – Government-authorized exclusions from taxes or duties normally imposed on imported goods.
10.Fill the gap – In technical analysis, this means the price of a stock or index has moved back to a level where it had previously made a sharp move (up or down), leaving a “gap” on the chart.
11.Selling off – A rapid decline in stock prices due to a large number of investors selling their holdings.
12.Unfilled gap – A price level on a chart where trading did not occur during a sharp move, which hasn’t yet been revisited.
13.Uptrend – A consistent upward movement in price over time, often seen as a sign of market strength.
14.Technical (suggests/analysis) – A method of evaluating securities based on historical price and volume data rather than company fundamentals.
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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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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