4/13/22

STOCKS –  GS, C, JPM

MACRO – SPY, QQQ, TIP

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Stocks managed to rally today, regaining most of what they gave up yesterday, but not all. It is really amazing how much symmetry there is in the market. I don’t know how many of you remember this, but we talked about this back in December, how sell-offs seem to happen, and respect parallel trends. This is still the case, with this recent sell-off running lower parallel to the September and January drops. At this point, it seems that the drop should continue along with this general trend until we get below 4,300.

You can also see the potential Head And Shoulders pattern that has formed.

Today’s rally seemed to be all about the unwind of the VIX and hedging that was placed ahead of this inflation data. The VIX fell by 10% today and closed the gap around 21.25. I don’t think it was anything more than that, along with positioning ahead of tomorrow’s monthly options expiration.

The TIP ETF fell by around 20 bps today; meanwhile, the Qs rose by 2%. After years of following one another, I can’t believe that now that relationship will break down now. It is not unusual for the TIP ETF to lead the QQQ by a few days to a couple of weeks, so at some point, the QQQ will need to catch up, and as long as the TIP ETF keeps making lower lows, I suspect the QQQ will too.

JPMorgan (JPM)

JPMorgan fell sharply today after earnings disappointed, which was surprising given how much those estimates fell into results. It sounds like higher rates resulted in a slow down in mortgage originations, while the bank also started to set aside more loan loss provisions. The stock ended up falling below support at $129.50 and is now on its way to $122.

Citi (C)

Citi reports tomorrow, and if the result comes in like JPMorgan, then there is a good chance this stock fills the gap down to $43.40.

Goldman (GS)

Also, Goldman reports tomorrow, and JPMorgan saw pretty weak numbers in its investment banking unit but strong trading. I’m not sure where that leaves Goldman, but maybe that means results are mixed. The chart doesn’t look great, but there may be a falling wedge forming, which could lead to higher prices at some point down the road.

I don’t have much else to cover today; I’m kind of tired, to be honest, and looking forward to having Friday off.

-Mike

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