Stocks Fall Again, And It Looks Like The Party Is Only Starting

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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MAY 13, 2020

Stocks – HON, FB, AMZN, JPM

Macro – SPY, XLF

Short-Terms – Bearish

Long-Term Trends – Bearish

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Whose feeling bullish? Anyone just buying the dip, and sucking it all up? Oh, I’m sure plenty of you are. 

It seems at least for the last two days, the market has been in a sell mode and quickly erased all of the gains for the S&P 500 since April 9. Regardless, as I have been saying, the setup in stocks is pretty awful, from a technical and fundamental standpoint. But don’t take it from me, ask David Tepper or Stan Druckenmiller.  If you do not know who they are, take 5 minutes to find out. 

S&P 500 (SPY)

There are at least four bearish patterns I can now identify in the S&P 500, and none of them have a happen ending. The first is a double top pattern with the S&P 500 failing two times around 2840. The index has to fall and close below 2800 to confirm this pattern. The second pattern is a rising wedge; the index fell and closed below that pattern today. The third is a potential head and shoulder pattern, and the fourth is a triple top. 

S&P  500, spx

But wait, because it gets even worse. The S&P 500’s RSI today broke the uptrend it is had been following off the March lows. Even worse than that, there is now a downtrend that is forming.

Still worse, the advance-decline is now trending lower. 

advance decline

So we can see that 2,820 became a healthy level of resistance going into the end of the day, while 2,800 acted as support. The bad news is that a break below 2,800 sets up a decline to between 2730 and 2760. But ultimately, I still think we head to 2,500. Sorry, just how I see it.   You can see it all in this video for premium subscribers- 2500 Is Becoming Very Possible

Financials (XLF)

Worst still, the Financial ETF XLF today all but confirmed the double top pattern we have been following, with the ETF falling below $21.10. It sets up a decline to $19.70. Not to mention, I saw a ton of put buying in the ETF.  Premium content –  The Decline In Bank Stocks May Only Be Starting

XLF

I could go on; there are ETF’s cracking all over the place. But there is plenty of other stuff to review. 

Amazon (AMZN)

Amazon today finished on the other side of the uptrend, and the RSI is still trending lower too. There was a minor uptick in volume today. I still think it goes back to $2100, to start.

amazon, amzn

Facebook (FB)

Facebook is falling after failing at resistance at $213, and the RSI is now reversing with the stock, along with rising volume. Not a good sign. It likely setups that pullback to $191. 

facebook, fb

JPMorgan (JPM)

JPMorgan cracked and stopped for the time at $84, completing a gap fill. But volume is rising fast, and the RSI still has much further to fall with a chance for the stock to push $80. 

JPM,

Honeywell (HON)

Honeywell broke support today $128, now setting a potential drop to $109. 

honeywell.

Hey but don’t worry, those initial jobless claims tomorrow, and as long as they aren’t as bad last week, then the second derivative means the market goes up, right? Ok…Good Luck! 

-Mike

Mott Capital Management, LLC is a registered investment adviser. 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. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.  

 

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