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4/6/22
STOCKS – SHOP, AMZN, ACAD, NVDA
MACRO – SPY, QQQ, VIX
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MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN ACAD
The S&P 500 fell by around 1%. The FOMC minutes came as I expected, indicating $95 billion a month in roll-off of the balance sheet, to start with. I had been looking for $100 billion, close enough in my book. Anyway, the minutes seemed to cause a lot of confusion in stocks. It is clear from reading the minutes that the Fed wants financial conditions to tighten, and want it to happen quickly. That is a bad sign for the stock market, because as I have been warning for months now, tighter financial conditions are bad for stocks. It’s a big part of the reason why the QQQ ETF is down 13.5% from its November Intraday highs.
The chart below shows the relationship between the QQQ and the Chicago National Financial conditions index, where 0 is considered neutral. The NFCI is currently at -0.38, so there is a lot of tightening left to go. The impacts on the QQQ will not be good.
S&P 500 (SPY)
The S&P 500 gapped lower today, and below a key support line. That is probably not good. It has also turned back below its exponential 10-day moving average. This moving average has served as a pretty good guide for the trend of the market. So if it stays below the average, it will tell us a lot about the direction of things to come.
VIX
The VIX shot up to nearly 25 today, which was just too high, and so that gave stocks the tailwind to rally off the lows after the release of the minutes.
Amazon (AMZN)
I had mentioned yesterday Amazon had a Head And Shoulders pattern in the hourly chart, and today the stock gapped below the neckline. That neckline at $3,270 should be firm resistance now if this is a true H&S, and result in Amazon dropping back below $3,000.
Shopify (SHOP)
The same thing happened today in Shopify, with resistance now at $690, and the potential for the shares to drop back below $600.
Nvidia (NVDA)
Nvidia has the same pattern, and that also broke below the neckline, with resistance at $260, but the potential for the stock to fall below $230.
Acadia (ACAD)
Acadia continues to move higher, and is now at a huge resistance level around $27.25, in what appears to be an ascending triangle, a bullish pattern. Once resistance breaks, it has room to rise to $30 and then we can start to think about the giant gap to fill up at $45. Wouldn’t that be nice.
-Mike
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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.
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