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Stocks Drop As Fed Governor Signals Rate Hike in 2022

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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June 23, 2021

STOCKS – PLTR, ZM, WMT

MACRO – SPY, HGX

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The S&P 500 finished the day lower by 11 bps to close at 4,241. The move lower didn’t seem to be triggered by any news, but Dallas Fed Governor Kaplan was out around 3:40 PM, noting he forecast the first rate hike in 2022. Remember, in May, Kaplan was the first Governor to emphasize that now was the time to talk about tapering. Now he is going out and talking about raising rates in 2022. So clearly, Kaplan has the job of playing the “bad” Fed Governor, the one that has to go out and talking about the hawkish policy. But given that he is now talking about this, we should be prepared for the Fed to signal before year-end to the market for a potential rate hike in 2022.

S&P 500 (SPY)

My chart in the S&P 500 future suggests we have completed wave “B” and are likely pushing into the wave “C,” resulting in the index moving lower back to 4,120.

Housing (HGX)

Today’s housing sector was weak, falling by 90 bps, following disappointing new home sales. We can see that the index fell sharply going into the final few minutes of the day.

Walmart (WMT)

Walmart looks very weak, sitting on support at $135.75 and an RSI that is trending lower. The gap from mid-February is now closed, and the stock has resumed its lower trend that started in December. It may just be a matter of when the stock falls back to $130.

Palantir (PLTR)

Palantir is nearing a breakout, which could send the shares higher to $29.90. The only problem is that the stock is nearly overbought with an RSI at 70 and a MACD close to converging. So a move to $29.90 may be a fast and short-lived trade.

Zoom (ZM)

Finally, Zoom is now at $376, where I thought it’d climb to. The downtrend is overpowering, and that break-out will not be easy. It is possible, but I doubt it is likely given the stock’s valuation and some indicators. I expect the downtrend to retake control of this stock.

-Mike

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