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STOCKS – NVDA, MU, QCOM
MACRO – SPY, VIX,
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The S&P 500 rallied today by 95 bps and closed at 3,978. It managed to rise right to its 10-day exponential moving average, which for now has served as resistance. A meaningful break above that moving average could suggest that we see a significant move higher. But until that happens, I’m hesitant to say we can see a rally, although I will admit eight down weeks for the S&P 500 seems hard to imagine.
I really would have liked to see the market resolve the issue of the big rally off of Friday’s lows by now, and to this point, that hasn’t happened yet. Typically the days leading into Fed events have been bullish, while the days that follow the Fed’s event have been bearish.
So based on that, if we are going to sell-off it should happen tomorrow. The chart below shows that day after a Fed event tends to be the day that starts the sell-off. The Fed minutes didn’t reveal anything that was dovish, that’s for sure. I think the Fed is in a rush to get rates to at least 2%, potentially by year-end. Additionally, their view of the economy seems to be too upbeat, and doesn’t seem to reflect how inflation is eating away at growth.
So if the market is going to turn lower and gives us that pop in the VIX to get a solid medium-term bottom, this does seem like the ideal time. I think it would set up nicely with a post FOMC meeting, rally, heading into options expiration and quarterly rebalancing for June month-end, like what we saw in March.
At this point, a drop to 3,810 maybe all we need.
My VIX triangle seems to be in better shape than it was yesterday. I can certainly count it much better. So again, if the market drops tomorrow, the VIX should spike. As the market digested the Fed minutes, which to me indicated the Fed is looking at specific economic metrics and not the economy as a whole, and will be tightening regardless of the economy.
Nvidia is down about 6% after hours due to a weak sales outlook. There isn’t anything groundbreaking here, yet. The stock is still trading above a technical support level at $154, which is what matters more at this point than the results themselves. If the stock breaks that support level, it is a sign of more trouble to come.
Micron is falling tonight too, as are most chip stocks. Micron is of particular interest because the shares are approaching a support level based on the chart around $65.20. That has been a price point that has served as bottom recently and in the past. A break of that support may be a very bad sign for the stock’s direction.
It’s sort of a similar situation for Qualcomm, with that important level of technical support coming around $131. Again, that has been an important price point on a few occasions going back to 2021. Like the others, if that level breaks it too would suggest lower prices are coming.
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. 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.