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Stocks Surge On February 8 But Are Still Deteriorating Beneath the Surface

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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2/8/2022

STOCKS – FB, GOOGL, AMZN

MACRO – SPY, TIP, IEF, QQQ

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Stocks finished the day, mostly higher, with the S&P 500 up around 85 points. The index really couldn’t get much beyond 4,520, which is now turning into a powerful level of resistance, and has been that way since mid- last week. A rise above that resistance level sets up a run to around 4,545.

The sellers had been showing up the last three days around 3:15 PM, today they didn’t show up, which left the index trading flat those last 45 minutes. I really can’t see anything that gives me a lot of conviction one way or the other. Based on the data I have seen, liquidity remains thin, and spreads are wide. So it wouldn’t take much effort to move this market one way or the other at this point. (Premium content, first 2-week of RTM are free to try – RTM: Will The Sellers Show Up At 3:15 PM ET?)

In fact, despite a gain in the NASDAQ Composite of more than 1% there were still more stocks making new lows than new highs. The cumulative chart shows that the indicator is still making new lows, and diverging from the index. In fact, the current pattern is starting to look a lot like the fall of 2018 set up.

 

10-Year (IEF)

The 10-Year rate rose to 1.96% and is just about breaking out now. The next significant level of resistance comes at 2.15%, but there is no reason this yield can’t push to 2.4% over the next few weeks.

TIPS (TIP)

The TIP ETF made a new closing low today for this cycle, at $123.70. I don’t see why the TIP ETF can’t go back to pre-pandemic levels at $121.80.

 

Facebook (FB)

Facebook is now trading below its pre-covid highs. Pretty remarkable. I think this is just dead money, with a business model that is now being called into question. Believe it or not there is a gap at $195 just waiting to be filled.

Alphabet (GOOGL)

Alphabet saw its entire gap from last week’s earnings close up. I’m not sure what happens next.

Amazon (AMZN)

Now if Amazon can fill its gap, that would be great. That gap should get filled over time, I don’t see why it shouldn’t.

Have a good one

-Mike

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