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STOCKS – SHOP, AMZN, INTU
MACRO – SPY, QQQ
- RTM: Replay Live Q&A Session
- Final Notice: Zoom Details For Today’s Q&A Session
- RTM First Look: The Stock Rally May Be Finished
- RTM: Post FOMC Rally Arrives On Schedule [Daily Update]
- RTM: S&P 500 4300 Key Resistance [Pre-FOMC Update]
- RTM: The Bull-Bear Fight Post FOMC
- RTM: Real -Yields Are Breaking Out
Stocks had a horrible day, with the S&P 500 dropping 3.6%. If not for a near 100 bps rally in the final 10 minutes, it could have been worse, as liquidity appears to have vanished. The S&P 500 futures show this the best in a 1-minute bar on roughly 21,000 contracts of volume. Unfortunately, when markets get volatility like this, spreads widen, and the top of the book thins out, creating unstable moves like the one below.
I don’t think the move lower is over, and I expect the rest of the pattern to be completed, with the S&P 500 moving back to the recent lows around 4,070 and a new low. The futures managed to hold it around the 4,130 support level, but it looks more like a consolidation than a bottoming process. With the job report tomorrow coupled with a plethora of Fed speakers and next week’s big CPI, this market is going to remain highly volatile.
It was worse for the NASDAQ, with the QQQ ETF dropping 5%. The ETF has support at $308, but I don’t think that will hold, and I think the next leg lower may be ready to start. At this point, it seems like the QQQ has a date with $300 and lower.
The number of stocks making new lows continues to outpace the number making new highs. It isn’t even showing signs of stabilizing yet. In the past, new highs-new lows usually flattened out when the market was ready to turn. That hasn’t happened here yet, so I think lower prices are still coming.
Shopify was obliterated today, dropping by almost 15% after reporting some horrific results, and the sell-side commentary sounded equally as bad, based on what I read. The funny thing is that the chart doesn’t look so bad. I’m not saying it has bottomed yet. But I think it is getting closer, with an RSI that is now starting to show the signs of a bullish divergence. I ultimately think this one will end up bottoming in the $340 to $360 region.
Amazon was destroyed as well, and the stock is going down in the same way it went up. If that is the case, the stock may be heading back to $2,000, maybe even $1,600. I’m not sure yet. The RSI is starting to show a divergence, but it is too early to say a reversal is even close. Shopify seems further along than Amazon.
If Intuit is a sign of things to come, it sent a nasty message today because it fell through support at $409. The low $380’s seems like the next reasonable level of support.
Have a good one! More this the weekend! Tomorrow is Friday!? Oh yeah, Job report, almost forgot!
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. 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.