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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STOCKS – QCOM, AMZN, LRCX
MACRO – SPY, QQQ,
- RTM Exclusive: Apple May Be Heading For A Big Drop
- RTM: The Recession Trade
- RTM: Live Event REPLAY
- RTM: Yield Curve Collapsing With Growth Implication
- RTM Exclusive: Volatility May Be Heading Much Higher
- RTM: Rates Explode Higher, But So Do Stocks
- RTM Yields Surge
The S&P 500 fell nearly 3% today to close at 4,200. Meanwhile, the Qs fell by 3.7% to close below $325. It is an exciting test for the indexes, whether or not they will be successful in taking out the lows from February 24.
The RSI on the S&P 500 is clearly moving lower and is yet to hit oversold levels and is currently at 38. Additionally, the advance-decline line made a lower low and seems to be leading the broader index lower; I suspect the S&P 500 will create a new Intraday low in the coming days and head to support at 4,050.
With oil at $122, the dollar index at 99.25, and Wheat trading at its highest prices since 2007, it seems as if the global economy is heading towards a massive slowdown or recession. Additionally, there has been no relief in the overnight funding markets, which means stress continues to build.
Also, the NASDAQ composite looks very weak, as the cumulative number of stocks making new highs minus new lows continues to make lower lows. I still think the signal this sends is that the market’s internals continues to deteriorate, and until this at least shows a sideways movement, the NASDAQ will continue to drop.
Meanwhile, financial conditions continue to tighten as the IEF/LQD ratio increases. It is now nearing the December 2018 levels.
The pressures and fears this places on the market have resulted in the spread between the ten and 2-year rates to drop to 22 bps as recession fears rise.
Additionally, the full recession rotation was on full display today as the discretionary, housing, materials, and financial sectors were smashed. The discretionary ETF fell nearly 4.9% on the day, and the XLY dropped below support at $166. I went through this rotation and more in a 15-minute video today for members of my service, RTM. (Try RTM and get the first 2-weeks for FREE – RTM: The Recession Trade)
Amazon fell by 5.6% on the day and has now given back all of those post-earnings gains, as I expected would happen. I am wondering now if it will make it all the way to $2450 or not.
Lam Research fell below support at $540, which makes support at $470 critical because the drop is huge after that.
Qualcomm broke support at $152, and that gap at $140 is now in the process of getting filled.
That’s all for today.
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 results.