Stocks Fall Ahead Of The Make Or Break Job Report

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10/6/22

#STOCKS – $AMD, $NVDA

MACRO – $SPY, #RATES

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Stocks fell today, despite trying to rally as rates and the dollar pushed higher. The job report tomorrow will drive what happens next and based on a lot of different data, I think those forecasts of 250,000 news jobs may prove low. Those ISM data points have shown three solid months of improvement in the service industry and suggest an improving labor market, not softening. Additionally, the BLS job report has beaten consensus estimates every month since October 2021, except for March and April of this year, and the April miss was by a small margin.

Of course, tomorrow can be the day that NFP comes in below estimates because I am pointing it out. But again, all one can do is analyze the data and form an opinion based on it. So that has allowed me to believe that the jobs data will be better than expected and potentially significantly better than expected.

2-Yr

The 2-Year appears to be breaking out as well, suggesting there may be more upside for rates to come. The 2-yr is flirting with the 4.25% level, and should that level be cleared, then it has a lot of room to run higher.

S&P 500 (SPY)

Meanwhile, the S&P 500 has formed one of my diamond patterns. If that is correct, the index is set for a pretty significant drop back to the origin of the rally and suggests a reversal of all the gains and potentially undercut the September low.

AMD (AMD)

AMD pre-announced revenue numbers after the close, showing sales of about $5.6 billion vs estimates of $6.7 billion. That is a huge miss, more than 16%. It is no different than Nvidia when it gave that horrible guidance, and it really should not come as a surprise. Even Micron cited it had a big slowdown in PC sales when it reported, I think it was last week? It feels as if Micron reported ages ago, but I think it was last week. Anyway, the point is, there was no way AMD was immune, and that is probably why the stock has been crushed. Now could it fall further, sure? But really, it all depends on that support level at $61. Once that support goes, this stock has no support, from what I can see, until the upper $40’s.

 

Nvidia (NVDA)

Nvidia is also trading lower after hours on the AMD news, and I have no idea why this stock holds up, so well. I guess what I am wondering now is if the sector has deteriorated further since Nvidia gave that guidance in mid-August. My guess is it has, and if it has, it probably comes on the gaming side, and if that data center side goes, watch out. For now, the stock stalled out at $131, and support comes at $117.

-Mike

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