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7/14/24
#Stocks: $WING, $NVDA, $SMH
#Macro: $SPX, $NDX,
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I will be taking some time off again this week, and the usual schedule for a daily write-up will be disrupted. I will post when I can. Otherwise, you can expect this column to return to its regular schedule starting next Sunday, July 21.
This week won’t contain all of the economic data we have seen the past couple of weeks, but there will be a Q&A session between Jay Powell and David Rubenstein on Monday, July 15, at 12:30 PM ET. I’m not sure that Powell will have all that much new to say following his commentary last week. The data from the CPI report came in lower than expected, but then the PPI data came in hotter than expected. The message from the Fed has been consistent that they want to gain greater confidence, and I don’t think two months of better inflation data, aided by falling gasoline prices, are enough following four hot prints.
Retail sales are expected to fall by -0.2% m/m on Tuesday. These numbers will be important, especially following the weak CPI data. Remember, retail sales are reported in nominal terms. We will get a GDPNow update on Tuesday following the data.
The Bloomberg economic surprise index has collapsed recently, and I will say that it isn’t very often that you see the S&P 500 and this index travel in opposite directions. Historically, peaks in the surprise index typically accompany peaks in the S&P 500 index. It would suggest that the S&P 500 is not trading with the macro data.
Turning to Friday’s rally and afternoon sell-off, a large $4 billion-plus market on close SELL imbalance weighed. I think the main message is that when the sellers show up, this market is not nearly as strong as it would appear to be. Volume on the SPY ETF has been very light recently and, for the most part, below the 20-day moving average. But at least on Thursday and Friday, those volumes did pick up.
Volume will likely pick up further this week, with a VIX OPEX on Wednesday. On Thursday, the QYLD ETF will buy to cover that NASDAQ July 19, 19,750 call option, which could create buying pressure as it is repurchased; then, on Friday, the QYLD ETF will sell a new at the money NDX covered call for August OPEX, creating potential selling pressure. Plus, the Monthly OPEX this Friday, in general, will bring higher volumes.
S&P 500
This past Friday, after falling all day, the market reversed in the final hour, creating another 2b top pattern on the SPX. Again, these patterns can be reversal patterns and form when trying to make a new high, failing, and closing below the prior high close. The pattern would be invalidated with a close above 5,635.
The S&P 500 is still in the rising wedge pattern noted a few times previously and is still sitting at the 78% extension, so this remains a candidate for a topping pattern in the market. The 2b top mentioned above strengthens that case.
NASDAQ 100
The same pattern on the NASADQ occurred on the weekly chart, which could carry more weight because we won’t know if this pattern is invalidated until the end of next week.
SEMIS
The SMH ETF also remains in the ascending broadening wedge pattern and is again very close to breaking the trend line holding the pattern together. The 10-day exponential moving average is serving as that support level for now. A breach of the 10-day EMA will confirm the broadening wedge pattern breaking and could indicate a potential loss of momentum in the sector.
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Nvidia
The 10-day exponential moving average is also essential for Nvidia, and it, too, is supporting the stock at the moment. In addition, the stock has created two bearish engulfing patterns in recent days; the last time was back in March, followed by a 20% decline. The stock, this time, needs to break support around $118 to indicate that something more serious is coming.
Wingstop
Meanwhile, Wingstop continues to struggle, and this stock is more of a risk gauge than anything at this point. It has been a market leader but has really struggled of late, falling by 11%. The key level to watch here comes at $370, as that was a support/resistance zone going back to March. If the stock continues to break down, it likely serves as a leading indicator of what is to come for the broader market.
Anyway, that’s all for today. See you soon.
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.
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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.
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