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12/9/21
STOCKS – BA, CMG,
MACRO – FDN, SPY, XBI
- RTM- The Market Might Actual Think The Fed Won’t Taper Faster
- RTM: Stocks Stall Below Resistance
- RTM: The Bond Market Warnings Grow Stronger
- RTM Exclusive: Uber’s Stock May Be Ready To Surge
- RTM: Stocks Rally, As Fed Fund Futures Price First Hike In May
- RTM: Global Market Deleveraging Event Is On The Horizon As Market Prepares For Faster Fed Taper
The S&P 500 finished the day lower by around 70 bps, but it was weaker than that across most indexes. The NASDAQ Comp fell 1.7%, and the Russell 2000 lost 2.25%. It isn’t likely to get much better either with the big CPI report tomorrow.
President Biden indicated that inflation would be high, but he gave no context. So, what we care about is what the street expects, and estimates are for 6.8%, which would be higher than last month’s reading of 6.2%. But again, “high” could be 5.9% for all we know, so I take comments as a way of stating the obvious. What matters is the 6.8% estimate.
Based on the price of oil and gasoline, I find it hard to believe that CPI will be above 6.2%, but I don’t have a quantitative way to figure that out other than looking at the chart and based on past correlations.
So a huge miss on CPI could be seen as quite the negative for the equity market. The Fed is highly likely to accelerate the Taper, regardless of tomorrow’s CPI reading. There is no way CPI will be anywhere low enough to give a pause to the Fed’s tapering pace. But if CPI misses, it could be seen as a sign of falling inflation, but for all the wrong reason, mainly weakening demand.
If you are a bull, you want the CPI to come right around expectations. You don’t want anything with a seven-handle or below 6.2%.
S&P 500 (SPY)
The S&P 500 closed right below technical support of 4,668. That is not enough to mean anything. I believe that we will see lower prices tomorrow and that the gap at 4600 gets filled soon. The case for the triple top pattern strengthens, as does the right angle descending broadening wedge.
Biotech (XBI)
There was a lot of pain again today in technology and biotech. The XBI erased much of the gains it saw earlier in the week after trying to clear resistance at $115.60.
Technology (FDN)
The DJ Internet ETF (FDN) fell nearly 1.5% after hitting resistance at $233. It still has a gap at lower prices to fill. This ETF and many stocks were so oversold that they got big bounces, and now they are starting to get sold again.
Chipotle (CMG)
But even Chipotle has been hammered. The stock hit oversold levels on the RSI, finding support at $1570 and then rebounding to $1750. It only fell 1% today, but I get the feeling the selling isnt’ finished here yet either.
Boeing (BA)
Even Boeing has hammered and also hit oversold levels on the RSI, filled the gap, and is now failing to advance past the trend line. I get the feeling this stock has a date with $165 and an eventual gap fill down at $155.
Anyway, that is all for today.
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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