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Stocks Are Annihilated On September 13, 2022, By Soaring Inflation and Rates

This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.

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9/13/22

STOCKS – AAPL, NVDA, COST

MACRO – SPY, RATES, 2-YR

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MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN AAPL

My latest free video from today:

 

So much for that. It took one day to erase nearly a week’s worth of gains. An almost 6% rally in the S&P 500 was gone in less than 7 hours. This market moves with incredible speed, and we can thank illiquid market conditions coupled with systematic flows that appear to be nothing more than pure momentum chasers.

CPI

It seemed like all of Wall Street thought CPI would be a miss. The only ones that seemed to have gotten it right were the Cleveland Fed. They have a history of getting it right, while the rest of Wall Street focused on falling gasoline prices. It turns out that a 10% drop in gasoline didn’t even help, because CPI still managed to rise 0.1% m/m, which was 20 bps higher than estimates. Imagine the disaster that would have followed had gasoline not been down 10%.

Now, what if oil starts to rise, especially now that it seems:

That nearly turned oil around instantly. You know why, if oil prices start going up and gasoline with it.

Inflation

What is very clear from today’s CPI is that sticky inflation is not going anywhere except up in a straight line. So let’s be honest here: the type of inflation we care about is the type that gets stuck, and the Atlanta Fed’s data suggest inflation is nowhere near a peak.

I nearly forgot to mention that the market now sees the odds of a 75 bps hike at 66% and a 100 bps rate hike at 34%.

That sent the 2-Yr higher by 17 bps to finish at 3.75%, a massive move.

S&P 500 (SPY)

The result is absolute carnage, with the S&P 500 trading around 3,930 and erasing everything over the last couple of days, a 4.3% drop. Worse, the drop today appears to be an impulse wave three down, and once 3,900 breaks, there is a good chance that the ascending broadening wedge I pointed out over the weekend comes alive and drives the market back to the lows, if not to new lows.

Nvidia (NVDA)

Nvidia was crushed today and made a new cycle low, plunging right through support around $134. At this point, the next stop for Nvidia may not come until $115. It seems hard to believe, but look at how far it has fallen since those horrible results.

Costco (COST)

Costco appears to have a Head And Shoulders pattern within a Head And Shoulders pattern. The smaller head and should patterns, if it plays out and falls below the neckline around $509, could lead to a drop of an additional 10%.

 

 

Apple (AAPL)

Apple was smashed today after yesterday’s big move higher. The stock gave everything back to where it started on September 8. If $151 comes into play, it will be a significant level to watch and needs to hold to avoid a share drop to around $140.

See you tomorrow.

-Mike

Charts used with the permission of Bloomberg Finance LP. 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.