Stock Market Sells-Off Again Has New Reasons To Sell Stocks Emerge
The stock market fell again today, honestly, it doesn’t matter because the reason shifts on daily basis. Rising rates, inflation, trade wars, technology stock valuations, Amazon, politics, more trade wars, now its Apple and yields again! Ugh. Exhausting to say the least.
I’m not talking about Apple; I’m not, it isn’t worth the time of day. Apple gave guidance of between $60 and $62 billion; analysts have been slashing their estimates since the start of the year and are currently sitting at $61 billion because that is the mid-point and it is the most comfortable place for them to live. The markets have not worried about iPhone sales since the beginning of February, and up until yesterday, Apple was up over 5 percent on the year. The Taiwan Semi news was not good, it should not have been enough to send Apple’s stock down 7 percent in two days.
It tells us two things, well three things; investors have a short-term memory and forgot about Apple’s iPhone weakness, as they were bidding the stock up from the lows around $150 in the middle of February. Second, they were looking for a better than expected results, or three; they were not paying attention when Broadcom said the same thing last month! Come on.
That is me not talking about Apple, too.
S&P 500 – Broader Stock Market
Moving on, the S&P 500 fell by over 80 bps, today, well because of Apple dragging down the whole sector with it. The bigger question is where is this market genuinely going? All I can tell you at this point is that each low has not been lower than the previous, and that shows us in an incredibly bizarre way; the stock market is still trend higher.
Even the XLK technology ETF, managed to hold on to support around $66 and is still firmly within its long-term channel.
Why did I mention Bonds, because the 10-year got to 2.95 percent. First people are concerned the yield curve is too flat., now those concerns shift to yields on the 10-year nearing 3 percent, blah blah blah.
Well here is the thing, the US 10-year / German 10-year spread is at a fascinating point as of today. Now, let’s see what happens next week? Do the European bond buyers rush back to US Treasuries and start purchasing Treasuries? Maybe. It would surely not be the first time.
Not only that, the dollar index has yet to breakout over 90.50.
Unforuatnately, the bond market is getting a lot of assistance from global bond buyers, taking advantage of our higher interest. That has helped to keep a lid on yields rising significantly on the long end.
To this point, the dollar has gone nowhere, and without the dollar breaking out and start rising significantly, I can’t see yields on the long-end getting much higher at this point. Perhaps they peak right around 3 percent, after all, it was one of my ten predictions. But until the dollar breaks out, and the global bond buyers step away, I think this may be the upper end of the trading range.
I have a few other things on my mind, but well save those for tomorrow or Sunday.
That is it; I have a pounding headache.
Mott Capital’s Reading The Markets – An In-depth Global Macro Stock Market Commentary – In Video Format – See How Michael Dissects The Markets
Free Articles Written By Mike:
Join our 2,429 Daily Subscribers And Get This Commentary In Your E-Mail! Subscribe
[vc_tweetmeme type=”follow” follow_user=”michaelmottcm” show_followers_count=”true” large_button=”true”]
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future.
© 2018 Mott Capital Management, LLC. Use, publication or reproduction in any media prohibited without the permission of the copyright holder.
Tags: #stockmarket #sp500 #bonds #yields #apple #dollar