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 – NFLX, NXPI
MACRO – SPY, DIA, TIPS
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Stocks did a bunch of nothing today, with the S&P 500 finishing the day down ten bps, while the Qs finished lower by seven bps. It felt like a pause day for the equity market in what is otherwise a downtrend.
Tomorrow we will get the BLS Job report, and it obviously carries a lot of weight. The estimate is for 400,000 jobs added in December. The BLS job report has been trailing the ADP report, and over time these two tend to move together. The BLS report appears to be trailing the ADP, and one could argue that the BLS is due for a big surprise to the upside tomorrow.
Yields continue to surge with the 2-yr jumping to 88 basis points, and real yields, such as the 5-yr TIP, making a massive move, jumping to -1.34% from around -1.6% yesterday. That move in real yields probably isn’t over just yet, especially if the jobs data tomorrow comes in stronger than expected.
When looking at the S&P 500 on the intraday chart, we can see more closely the consolidation taking place throughout the trading session, with support at 4,670. There was a very well-defined triangle pattern that broke in the final 30 minutes of the day. A strong job report that sends yields even higher could send the S&P 500 down by another 2% to around 4,570, filling the gap from December 21.
The Dow is just a big mess, with the average closing below 36,250, just barely. It is too close to call, but the call for a 2b topping pattern still works and grows stronger.
Netflix gapped below its 2020 trendline, and it appears to have fallen outside of its rising wedge pattern. We could finally see this stock fall back into the $480 region.
NXP Semiconductor appears to form a rising wedge of its own, perhaps a wedge inside a wedge. Regardless, there is a wedge and could be looking at $180.
I really can’t find any other stocks that look like they are ready to move, just in holding patterns for now. Tomorrow should bring a lot of clarity.
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