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#STOCKS – $AMD, $NVDA
MACRO – $SPY, #RATES
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- RTM: Job Report May Fuel A Rate And Dollar Break Out
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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.
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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 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 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.
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. 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.