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Stocks Drop On April 5 As Fed’s Grip Grows Tighter

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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4/5/22

STOCKS – SHOP, AMZN, SQ, NVDA

MACRO – SPY, QQQ, TIP

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The S&P 500 fell by roughly 1.25%, while the NASDAQ finished down over 2%. Today’s drop quickly erased yesterday’s advance. The pattern in the QQQ ETF worked out quite nicely, with the ETF returning to the origin of the move higher.

The whole drop started when a usually dovish member of the FOMC sounded very hawkish. That doesn’t bode well for tomorrow when the minutes are released.

From a technical sense, there is something much worse at play here, which is a rising broadening wedge. The QQQ closed just a touch below the bottom trend line, not enough to convince me the pattern has broken down. If it does break down, which I expect to happen, nearly all of the gains from the middle of March will be gone.

S&P 500 (SPY)

The same pattern is present in the S&P 500.

TIP (TIP)

The TIP ETF keeps dropping, and it isn’t even oversold yet. Meanwhile, the gap between the TIP and QQQ keeps growing wider. Just watch the TIP ETF.

The relationship is powerful between the TIP ETF and Amazon. So I’d be rethinking my thesis if you are someone looking for Amazon to go higher from.

Dollar (DXY)

If there wasn’t enough going on, the dollar index broke out today, rising above resistance around 99.40; the next stop is over 100. I know that is not much of a call, but it is crucial.

Amazon (AMZN)

By the way, I forgot to mention that there is a head and shoulder pattern on the Amazon hourly chart.

Shopify (SHOP)

Shopify has the same pattern.

Nvidia (NVDA)

Nvidia has the Head And Shoulders pattern too.

Square (SQ)

Square too

Have a good one.

Mike

Mott Capital Management, LLC is a registered investment adviser in the State of New York. 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. Please remember that past performance may not be indicative of future results.