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STOCKS – MU, AMZN, ROKU
MACRO – SPY, QQQ
- RTM- Is The Equity Market Simply Wrong?
- RTM Short Term Bearish Idea- Ford Further Downside
- Fed Tapering May Fuel The Dollar’s Rise, Trigger A Risk-Off Event
- RTM – A Shift In Risk Sentiment Is Approaching
- RTM- Tapering Is Probably Coming Very Soon
Today, stocks rallied by around 1% on the S&P 500, closing roughly 0.20 below the previous high set on August 16. The Qs rose by 1.5%. The move higher followed a solid session overnight in the Asian market, which had been trending lower for some time now, with markets like Japan, Taiwan, and South Korea falling by more than 5% in recent weeks. Many of these markets hit oversold conditions at the end of last week, resulting in a big bounce, with South Korea rising by 1% overnight and Taiwan by almost 2.5%. For the most part, the US market seemed to be in a buying mood to enter the US session.
Additionally, the IHS Markit PMI today came in weaker than expected across the board, and that no doubt helped spur the bulls who want to believe the Fed will not taper anytime soon. The PMI data, despite missing estimates, was solid if you compared it to historical trends, and suggest the economy is doing quite well. So it may not be the case here that the data was bad; it just tells us that the economy continues to slow back to its longer-term trend, which is probably in the 2-2.5% range of GDP growth. I don’t think any data is bad enough to give the Fed a reason not to taper asset purchases. The delta variant does cause risk, but the Fed is likely going to taper by what $10 billion starting in November? At some point along the way, the Fed could stop the taper if things get bad. So I don’t see the risk of the variant posing a threat to this potential move.
S&P 500 ETF (SPY)
My Fibs and Elliot Waves still work, given the pullback on the close. How much longer they will work remains to be seen. We can stick with the idea that this region makes for a strong candidate for the end of this rally and for a corrective wave to start.
The SPY ETF managed to move back to the trendline it broke last week and stopped there. This could merely be a retest of that trendline. We should find out pretty early tomorrow if that is the case. If we gap over the trend line, it is probably a good sign we will have to wait longer for the corrective wave.
Nasdaq (QQQ)
The Qs did the same thing. So again, there remains a solid chance for both of these to enter a corrective wave lower in this region.
I do not believe that today changes anything.
Amazon (AMZN)
It wasn’t just the Asian markets that were oversold because there were pockets of stocks in the US Markets that were oversold. Amazon is one of them, and the stock bounced back, rising by nearly 2%. The stock also failed right at the 200-day moving average. We will find out tomorrow how much conviction the bulls have here.
Roku (ROKU)
Roku also bounced today after hitting oversold levels on Friday. It too stopped rising right below the 200-day moving average.
Micron (MU)
Micron shares were higher today, and maybe I was a few days early with my call for lower prices. There is a gap that needs to be filled at $75 and perhaps that happens first.
Ok, that’s all for Monday.
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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