Stocks Stall Ahead Of Massive Data Dump and Earnings

Subscribe to The Free Market Chronicle and join the 2,704 subscribers getting it for FREE!

4/24/24

#Stocks – $META

#Macro – $SPX, #RATES,

Mike’s Reading The Markets Macro Subscription Service on Seeking Alpha

Stocks finished flattish on the day, but we are moving into the busiest part of the week. Now that Meta’s results are out of the way, we will have GDP and PCE to finish the week off, along with earnings from Microsoft and Alphabet. On top of that, next week will be even busier with an “alphabet soup” of economic data points and more big earnings reports.

I have repeatedly cautioned the last two days not to get complacent. The equity market had all the signs of a negative gamma regime driving trade. That stalled out today because gamma levels in the S&P 500, while still negative, have risen a lot over the past few days, which has helped to stabilize markets.

(GAMMALABS)

As one would expect, the S&P 500 did basically nothing today. It tried a few times to keep the rally going, but it only managed to gain 0.02%.

10-Yr

But again, it is not about the S&P 500 right, or the NASDAQ for that matter. It is about bond yields and the dollar, and the data over the next couple of days is going to have a lot of say as to where rates and the dollar go. The 10-year has been consolidating and patiently waiting at the 4.65% level for some time, and break out would get the 10-year moving to 5%. There is a bullish ascending triangle that is present in the 10-year Treasury, and the RSI shows that momentum is pointing higher.

Anyway…

META (META)

Meta reported better-than-expected earnings and just barely beat on ad revenue, which came in at $35.635 billion versus estimates of $35.573 billion. Total revenue was $36.5 billion, less than 1% better than estimates for $36.1. The company noted that second-quarter revenue would be $37.75 billion at the mid-point, a miss versus estimates for $38.2 billion. Meanwhile, the company said capex would rise to $37.50 billion versus estimates for $34.5 billion. They are making less than expected and spending more, which has the stock sinking 12.6%.

The market was very nervous heading into the result. This was obvious from the elevated put skew and a large amount of put gamma down at the $470 level, which suggested hedging activity. It looks like, at this point, the stock will try to fill the gap from its earnings report in February at $394, which seems like the obvious place. (See: Meta: Investors Anxiously Await)

More tomorrow, as always,

Mike

Charts used with the permission of Bloomberg Finance L.P. 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.