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#STOCKS: #NVDA
#MACRO: #SP500, #RATES, #OIL, #GDP,
Stocks moved lower as Nvidia faced rising implied volatility and a bearish technical setup. More importantly, the S&P 500 broke the rising wedge pattern we’ve been monitoring for some time. As of now, we’re seeing the effects of last week’s bearish engulfing pattern. Remember, I mentioned last week that, based on past behavior, it can sometimes take a week for these patterns to play out.
The 2B top pattern failed earlier this week. Currently, the rising wedge is broken, the engulfing pattern is playing out, and the bump-and-run pattern is still in play.
The setup at this point is pretty interesting, not just from the technical mentions above but also from a cycle standpoint, as the 80-day cycle is now peaking.
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Additionally, the 180-week cycle is peaking, which suggests we could be in for a major shift in the market compared to what we’ve experienced over the past two years. This cycle has produced powerful signals in the past, including the 2000 and 2007 tops and even the 2009 low. So, we will continue to watch how these two cycles develop.
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10-year rates continued to move higher today, reaching 4.25%. The next level of resistance comes around 4.33%. Things will get interesting if the 10-year manages to push through because after that, it could run to around 4.7%.
Well, so much for the USDJPY strengthening; instead, it has continued to weaken against the dollar. Certainly not what I was expecting. But then again, the in the 10-yr rate move has happened faster than I anticipated. The USDJPY just continues to trade in line with the 10-year. So, if the 10-year continues higher, then the USDJPY is likely to continue weakening.
Oil prices continue to struggle, but the 10-year is detaching from oil. The reason for this, I think, is that nominal GDP continues to be strong. However, based on some of the anecdotal data and observations, some of the inflationary pressure may come from wage growth, labor costs, and higher services costs. The Philly Fed services prices paid and received significantly increased in October, while the Richmond Fed average wages rose sharply in October. This type of inflation is not the same as what we’ve been accustomed to. So, the 10-year may continue to decouple from oil.
Finally, the Atlanta Fed GDPNow model suggests a real 3Q growth rate of 3.4%. More importantly, the model indicates that PCE for the quarter is running at 3.6%, which means inflation has reaccelerated since the second-quarter slowdown. Additionally, it implies that nominal GDP growth is currently around 7%. So much for the recession…
-Mike
Charts used with the permission of Bloomberg Finance L.P. 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.
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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.
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