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STOCKS – FB, SNAP
MACRO – SPY, VIX,
- RTM: Stocks May Drop Into Mid-June [Audio]
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- RTM: Stocks Rally In Front Of Powell [Mid-Day Update]
Stocks had a volatile session following Snap’s disastrous revenue surprise, and then to top it off, new home sales missed analysts’ estimates by a vast margin. It sent stocks sharply lower most of the day before rallying back after the European close at 11:30 AM to finish lower by 81 bps.
The move down today looks similar to the move we saw last week when the market sold off following Powell’s WSJ interview, with that bear flag pattern. I don’t know if this plays out the same way, but the patterns look very similar.
What seems to be happening is that the market is increasingly pricing in the risk of a recession occurring here in the US and a Fed Pivot. Eurodollar futures are currently suggesting that the first-rate cut may come in September 2023, but that has slowly been moving forward as the number of rate hikes is being reduced.
Does it mean that the equity market is closer to a bottom? The biggest problem is that futures are pricing in fewer rate hikes and a Fed pivot, but the reason for the changes in these expectations is that the market expects a recession, and that is not good for equity prices.
It is starting to get reflected in the dollar index, and while it could just be a short-term pullback, you can see that the RSI has broken the trend line and may have signaled a significant shift in momentum.
That leaves the next shoe to drop for the equity market, which will be earnings estimates. That hasn’t happened yet, but that is likely to change by the time we get through the middle of July.
Snap fell by 43% today and managed to fill that gap around $13 pretty nicely. The good for Snap is that are no more gaps to fill.
Facebook did manage to fall out of that diamond pattern today, which could indicate that the stock has more downside to come.
That’s all there is going to be today.
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. 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.