Stocks Grow Even More Overextended on April 15

Stocks Grow Even More Overextended on April 15

April 15, 2021

STOCKS – DOCU, FCX, TSM, MU, BTC

MACRO – SPY, VVIX

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Stocks rose today in a surprising move, but very little actually changed from a technical perspective. What did change was that the index became even more overbought, with an RSI now at 73.3. There is also a reasonable amount of resistance, around 4,180, based on a Fibonacci extension from the March 4 lows. Again, my viewpoint has not changed, the market is overextended, and I expect to see a drop back to 3,960.

It was a strange day, in a sense, because the VIX fell, but the VVIX index was up again. This is a warning sign; pay attention to what it is telling you; it should not be ignored, nor should it be dismissed.

10-Year (IEF)

The 10-year yield fell sharply today, closing at 1.57%. The 10-year found some decent support, around 1.51%, and managed to hold the lower trend line. Perhaps that is it for the move lower in yields.

Taiwan Semi (TSM)

Taiwan Semi did not have a good day and has not kept pace with the recent rally one bit. Perhaps it is sending a message, but again, this should not be ignored.

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Freeport (FCX)

Freeport was up nicely today; as I noted yesterday, it had a bullish setup. The stock probably has some further to rise, perhaps to $39, as I mentioned yesterday as well.

DocuSign (DOCU)

DocuSign may have a little bit further to go before turning lower. The stock appears to be heading towards resistance around $246; I expect it to stall once it gets to that level.

Micron (MU)

Micron is back to trading poorly. The stock initially popped following results and then stalled out for the third time, around $96. I still contend it will fall back to $85; for now, $74 seems too much of a stretch.

Bitcoin (BTC)

Anyway, Bitcoin probably has a little bit further to climb. Based on a projection, I can get it up to 66,000, and that could be all she wrote for this one. Truthfully, I’m tired of hearing about Bitcoin. I don’t believe that Bitcoin is the future of anything because I don’t see how any government would allow this to become a legal tender form. Once a country does that, it would lose the power to control its currency and issue debt denominated in its own currency. Think about Greece in the middle of the European debt crisis. If they had not been part of the euro, they would have found it much easier to relieve many of their problems. Not to mention Bitcoin is subject to capital gains taxes. I see too many hurdles here. Maybe I’m not visionary enough, though.

-Mike

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