5/26/22

STOCKS – NVDA, AMZN, ADBE

MACRO – SPY,

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• RTM: Tighten Until Something Breaks

Stocks finished the day higher, with the S&P 500 climbing by 1.99% to close at 4,057. There was no material reason for the rally; it isn’t like there was a flurry of good news or economic data. Today’s rally reminded me a lot of those rallies we typically see the day before an inflation report comes out. The S&P 500 has rallied into the CPI report only to sell off on a few occasions.

Options data were pretty negative today, with a lot of put buying in the SPY and call selling, certainly not supportive of a big rally that we saw today.

I bring this up because tomorrow, we will get an inflation data dump with the PCE readings, which tend to be the Fed’s preferred metrics. Anyway, beware because hotter data could certainly ruin today’s sneakingly suspicious run-ups in stocks.

Additionally, the S&P 500 has rallied about 7% off Friday’s Intraday lows, which is typically what these rallies have yielded. Of course, there could be another 2-3% to the upside. But to this point, this looks like every other rally attempt we have seen in 2022.

Additionally, this sideways market movement looks like the movement we saw at the end of April.

There is also this typical post-Opex rebound, which we tend to see the first few days following OPEX.

The FOMC cycle may be dead, but has perhaps one day left to be proven correct.

I guess the message here is that with the PCE data tomorrow, many things can change, and there are plenty of indications to say the market isn’t out of the woods yet.

Nvidia (NVDA)

If you want to take that one step further, you can use Nvidia as a good example. The stock was getting smoked pre-market but somehow managed to rally and finish the day higher by more than 5%. But notice where Nvidia closed, right below resistance at $179. It couldn’t get through it. That may say a lot right there.

Amazon (AMZN)

Amazon rallied today by more than 4%, but it was unable to get through resistance around $2250. Maybe it’s a double bottom, though. What do I know?

Adobe (ADBE)

Just look at Adobe; still stuck in that same trading range.

Anyway, that’s it. See you over the weekend at some point.

-Mike

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