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4/11/22
STOCKS – MSFT, AMD
MACRO – 10YR, SPY, QQQ, FXY, DIA, DJT
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MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN MSFT
Stocks fell sharply the day before the giant CPI print and the Fed’s Brainard Q&A session. The CPI print, although important, will not influence what the Fed does unless it is materially hotter than the already 8.4% y/y estimate. What Brainard says will likely have a more significant impact, especially if she continues her hawkish tone from last week. I wouldn’t be surprised if she is even more hawkish than last week. The Fed wants financial conditions to tighten, and they haven’t tightened anywhere close to where the Fed wants them to be. Inflation will not get anywhere close to coming under control until conditions tighten to neutral or above. So the real risk is that she is more hawkish than previously.
Just in case that wasn’t enough, at 1 PM, there will be a 10-Yr auction. Something worth keeping an eye on, considering the move higher in rates: the 10-Yr moved up to 2.78% and is very close to making that next move up to 3.25%. It may seem like the 10-yr move is overdone, but we have to remember that things can get even more oversold in times like this because markets are responding to a policy shift, and to some extent, there is a clock ticking, which comes at the next Fed meeting.
Dollar (FXY)
The dollar is also surging, and it moved up to 125 versus the Yen. That is a huge deal. The Yen hasn’t been this weak since 2015. I’m wondering when the BOJ steps in and tries to warn the market. There is a reason the dollar hasn’t gone higher than 125 since 2002.
S&P 500 (SPY)
This sent stocks down, with the S&P 500 dropping by almost 1.7% and closing below support at 4,430. Because of the sharp rebound in March, there is very little support until 4,340.
Nasdaq (QQQ)
The Qs went up in a near-vertical channel, and now they are going down in a near-vertical channel. I’m looking for $336.
Dow Jones (DIA)
It is worth noting that the Dow Jones Industrial has a head and shoulder patterns on the hourly chart. The rally off the March lows should vanish very quickly.
Dow Transports (DJT)
The transports have been destroyed, and for today they paused. The Dow Transports have a pennant pattern, and I expect the bottom to fall out.
Microsoft (MSFT)
Negative commentary out of UBS today was enough to push the shares of Microsoft significantly lower. Microsoft appears to have a Head And Shoulders pattern, but we won’t know for sure until it breaks $280.
AMD (AMD)
AMD was still feeling the effect of the downgrade from Truist last week. AMD gapped below support at $100 today, which is very significant. That will become firm resistance now, and I think this is the start of the drop to $89.
That’s all for today.
-Mike
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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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