Stocks Are Starting To Turn Lower But The Cycle Is Not Complete Yet

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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August 11, 2021

STOCKS – AMZN, ROKU, MRNA, WFC

MACRO – SPY, QQQ

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Stocks were mixed again, with the S&P 500 up around 20 bps and the Qs down around 20 bps. Meanwhile, yields moved lower following the in-line CPI report. The S&P 500 has revealed very little to us in recent days, and it has become an increasingly difficult index to forecast because of the rotation that seems just to move back and forth, keeping it from declining.

The trend line from the other day broke, and we managed to re-test that trend line early this morning, which failed to produce a rally. Still, we have yet to get the big move lower in the S&P 500. Momentum indicators have really flattened out, making it push in terms of when or if a breakdown ever occurs. We could end up consolidating sideways. But for now, I will patiently stand by my call for a push lower to 4430 and the lower trend line.

Nasdaq (QQQ)

The Qs have been a little bit more decisive, and that is because it’s more technology and growth-oriented than the more balanced S&P 500. Again, with the Qs, it is at 2 essential Elliot Wave and Fibonacci levels at play here, indicating this is ideal for a peak and the big reversal lower. The uptrend off the May lows is now broke, and both wave “C” appear to be complete.

Amazon (AMZN)

Amazon fell below a big price today, when it broke its post-earnings lows falling below $3,300. Follow through tomorrow will be a negative indication and will likely lead to the stock falling further, as this will bring turn the dip buyers into sellers. Meanwhile, anyone sitting on the sidelines waiting to see what was going to happen, will get into motions sending the shares back to $3,200, if not lower over time.

Wells (WFC)

Wells Fargo needs to climb just a little bit higher to close the gap from February 2020. It probably does it too, to come this far and not do it would be a big surprise.

Roku (ROKU)

It is starting to look like a double-top pattern is forming in Roku. The stock has been in free-fall since reporting results, why shouldn’t. The growth outlook for this stock does not justify the valuation the market gave it. Becuase a company has a strong future doesn’t mean the stock will have the same future. Markets can pull expectations forward, and unfortunately, that is exactly what has happened here.


Moderna (MRNA)

Moderna fell as largely expected. The gamma squeezed popped as most eventually do. For now, it is finding some support around $370. How long it acts as support is anyone’s guess, but $350 seems more ideal.

-Mike

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