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#STOCKS – $AMD, $QCOM
#MACRO – $SPY, #RATES, #DOLLAR
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The S&P 500 finished lower by 30 bps, despite rising by more than 1% at the open. The market fell after the hotter-than-expected JOLTS data showed 10.7 million job openings versus a forecast for 9.7 million. The data also sent rates and the dollar higher. The Fed references the JOLTS data a lot, especially when it comes to the number of Job openings to the number of unemployed people.
That ratio rose back to 1.9, which is going in the undesired direction of the Fed. Pre-pandemic, that value was just 1.25%. Based on the Jolts to Unemployed ratio, there has been very little, if any progress.
Meanwhile, according to the latest estimates from the Cleveland Fed, October is expected to see CPI rise 8.1% and core rise 6.5%. It won’t improve in November, with CPI rising by 8% and core RISING by 6.6%. So very little progress is being made on inflation.
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Despite very little progress on inflation and jobs, the equity market thinks the Fed will show its hand and tell the market it will slow the rate hikes so that stocks can rise and financial conditions can ease. Seems unlikely to me. The Fed Fund Futures, seem to think the terminal rate is going higher from here. Today, the futures now see the overnight rate over 5% through July of 2023. That is higher than where they were on October 20, the day before the WSJ article piece dropped.
S&P 500 (SPY)
Stocks tried to break out today but failed, and I view that negatively. Additionally, the S&P 500 has retraced 61.8% of the drop starting September 12. So if the index stopped rising here, it would not surprise me. The index tried to break out of that bull flag today and failed, and the longer-term trends have been bearish this whole time. If rates are going to rise and the dollar is too strengthen, then it just isn’t good for stocks.
I’m not sure why AMD isn’t falling today. The company gave disappointing guidance. Gross margin guidance was a miss; revenue guidance missed by a lot at the mid-point of the range. A clear bear flag has formed in the chart, and should it fall below the uptrend; the stock probably has a long way to fall.
It has been a long time, but Qualcomm never did fill the gap at $92 from the summer of 2020. Maybe it will soon get that chance. The RSI in Qualcomm is very bearish, with that long steep downtrend. Not looking good, in my opinion, for where this one is heading.
We will see what happens tomorrow. It will be a big day.
Charts used with the permission of Bloomberg Finance LP. 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. Past performance of an index is not an indication or guarantee of future results. It is not possible to invest directly in an index. Exposure to an asset class represented by an index may be available through investable instruments based on that index. 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.