the view of the wind raising desert dust

The End To Market Stagnation May Finally Be At Here

#STOCKS: #GE, #RSP, #NVDA

#MACRO: #SPX, #NDX, #DAX, #NI225, #HGX

NVIDIA

Stocks ended the day mostly lower, and perhaps more notably, Nvidia finished flat. For once, it had little to no influence on the broader market, a positive development. Even better, call volume was significantly lower, with just 1.7 million contracts traded. We’ll see how this plays out moving forward.

Historically, Nvidia’s stock price struggles when 1-month implied volatility (IV) exceeds 60%. So, keep an eye on the 1-month IV—if it continues rising, it could signal a short-term top forming in the stock price.

RISING WEDGES

Anyway, the S&P 500 continues to form a rising wedge pattern. The futures look clearer to me, as I can simply wait to see when, or if, the pattern breaks.

The NASDAQ futures are right at the crucial point, having hovered along the lower trend line over the past couple of days. It’s at a tipping point now—either it breaks or it doesn’t. The setup’s appearance suggests it’s ready and positioned for a break lower.

The S&P 500 Equal Weight ETF (RSP) already broke the pattern today.

The Dow futures also appear to have broken the rising wedge pattern.

The PHLX Housing Index (HGX) has broken the trendline, which was part of the bump-and-run pattern.

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The Nikkei 225 dollar futures also had a rising wedge, and it has broken lower.

Even the DAX is close to breaking its uptrend.

GE

GE was hit hard, dropping 9% after reporting results. It broke its bump-and-run pattern and found temporary support around $177. The results didn’t live up to expectations, with revenue missing estimates. Given that the stock has more than doubled over the past year, it’s no surprise expectations were high.

GOLD

The last time gold traded with an RSI above 80 and above its upper Bollinger Band on the monthly chart, it peaked and then returned to its lower Bollinger Band two years later. Gold is starting to look very overextended here.

 

Once again, the market appears primed for a drop, with multiple indexes already breaking down. Nvidia’s options activity seems to be running out of steam, so maybe, at last, we can see a break from this stagnation—which has been absolutely exhausting to endure.

-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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