Subscribe to receive this FREE daily commentary directly in your email
July 13, 2021
STOCKS – AMZN, MU, CMSCA
MACRO – SPY, RSP, HGX
Visit our new content store and find some great commentaries with a longer-term take:
- The Technology Sector Is Historically At A Peak Valuation And Will Not Be Immune To Slowing Growth
- Slower Growth Should Lead To PE Multiple Compression – 7.4.21- FREE
- Earnings Growth Will Decelerate in the 2H’21 Potentially Leading to A Lower PE Ratio 6.26.21 – FREE
The S&P 500 finished slightly lower today by around 30 bps, but it really doesn’t tell the whole story. The S&P 500 equal-weight ETF fell sharply nearly 1%, this after eking out an all-time yesterday. Additionally, declining stock far outweighed advancing.
S&P 500 (SPY)
Notice the diverging trend of the RSI of the price of the S&P 500 since September 2020, with the RSI making a series of lower highs and the S&P 500 making higher highs. This is a very long-term bearish divergence that is taking place in the market. This divergence at some point is likely to be a problem in the index.
Overall, this is a market that is very over-extended here and needs to correct some. The first ideal spot comes at 4320. This market is not nearly as “strong” as it is made out to seem.
S&P 500 EW (RSP)
The RSP ETF has really struggled and has gone nowhere since the middle of May and is also losing serious momentum, with an RSI clearly in a short-term downtrend. The RSP is telling us that not all is well as the broader S&P 500 may indicate.
When we add the advance/decline inline to the RSP chart, we can clearly see how the RSP ETF and the advance/decline follow one another closely. This is telling us that the S&P 500 is being led higher by just a handful of stocks. Additionally, the percentage of stocks above their 50-day moving average in the S&P 500 has slipped below 50%.
Housing (HGX)
Meanwhile, the housing sector struggles to find its footing and fell almost 2.5% today, to its lowest level since March. It hasn’t even reached oversold levels, which could suggest the decline is far from over.
Dollar (DXY)
Also, the dollar index pushed higher today, despite the hotter inflation reading of the CPI report. The dollar is getting very close to a significant breakout, with the next major resistance level resting around 93.20 for now.
Amazon (AMZN)
Amazon fell some today, and I noted over the weekend, the stock is extremely overbought at these levels. Bad things tend to follow when the stock has an RSI this high in the days that follow. Could a drop back to $3,150 be in the cards? Yes, it seems incredibly possible.
Micron (MU)
Micron fell today, but the stock has really managed to hold on to support around $77. That really needs to break, and it should, eventually. The momentum trends suggest the stock breaks lower and that $69 is coming.
Comcast (CMCSA)
Comcast doesn’t want to break out; resistance has been so tough at $58. I think momentum needs to turn because the RSI has been trending steadily lower for some time; maybe it just needs to consolidate for a bit longer.
Ok, back tomorrow.
-Mike
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.
Subscribe to receive this FREE daily commentary directly in your email
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.
Comments are closed.