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Stocks Rise On October 25, 2022 on The Non-Existent Fed Pivot Hopes

This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.

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10/25/22

#STOCKS – $MSFT, GOOGL

#MACRO – $QQQ, #RATES

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Stocks raced higher today as markets believe the Fed is again pivoting. I’m sorry to say I think they will again be very disappointed because stocks don’t pay attention to the details.

Fed Funds Futures have fallen by a whole ten bps since Thursday. Yes, ten bps to a peak rate of 4.9% from 5.0%. The last time the S&P 500 was trading, around 3,850 Fed fund futures were pricing at the peak of 4.5%.

On October 6, the 2-yr was trading at 4.26%, and the 10-yr was trading at 3.82%. So bond yields are up, let’s say, up about 20 to 40 bps, but stocks are back to where they were. But the Fed is pivoting? Where is the Fed pivoting to? Bonds are still pricing higher rates than were expected on October 6. So, where exactly has the Fed pivoted? The bond market doesn’t think it has. Sure, yields have fallen some from their parabolic rise.

Anyway, as you can tell, I am beyond tired because fighting the market is a very tiring experience, especially when the same issue comes up again and again and again.

NASDAQ ETF (QQQ)

The QQQ traded up sharply today, but failed to get past resistance at $284 meaningfully. The QQQ is now trading at $280 after disappointing Microsoft and Alphabet results. If the market trades lower tomorrow, we could be looking at a failed breakout attempt.

 

Microsoft (MSFT)

Microsoft fell after hours, despite reporting better-than-expected results. The cloud business came in as expected, and Azure saw a slowdown. It will come down to guidance on the conference call. It is probably not by chance that Microsoft stopped rising at the same resistance region as the Qs stopped rising.

Alphabet (GOOGL)

Alphabet missed on both revenue and earnings, sending the shares down after hours. The stock is currently trading back at the recent lows, with $97 being the critical support level. After that, the shares could slip to around $83.

See you tomorrow.

Mike

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. Past performance of an index is not an indication or guarantee of future results. It is not possible to invest directly in an index. Exposure to an asset class represented by an index may be available through investable instruments based on that index. 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.