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Going to be a short one today…
Stocks finished the day lower, with the S&P 500 dropping around 1% to a new cycle low, closing at 3,655, which was lower than the June low of 3,666. The move lower followed higher rates, a strong dollar, and wider spreads. It sent implied volatility levels higher, dragging the S&P 500.
The index tried to rally but failed early on and is now entering oversold conditions with both an RSI below 30 and an index trading below the lower Bollinger band. But just because a market is oversold, it does not mean it can’t become more oversold.
The S&P 500 was more oversold in January than it is now. I would like to see the RSI make a new low, implying the S&P 500 would need to fall further.
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TIP Vs. NASDAQ
Meanwhile, the 10-Yr TIP rose today by almost 31 bps to close at 1.62%, its highest level since the spring of 2010. But what is crazy is that despite the NASDAQ being down almost 33% from its peak, the index is more overvalued today than at any point since 2009. Stocks just aren’t falling fast enough to keep pace.
AMD is getting closer to filling that gap at $62.60.
Adobe is now below its pandemic lows and could be on its way to $261.
Block fell through the ascending broadening wedge and is probably heading to its pandemic lows.
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.