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6/6/24
#Stocks: $HGX, $NVDA
#Macro: $SPX, $NDX, $DJI, $VIX
Recent Titles for Members:
- Pre-Job Report Jitter
- Disclosure Update: ILMN
- The Eye of The Nvidia Storm
- Credit Spreads Widen Following Weaker JOLTS
- Stocks Trade Risk-off Following Mixed Data
- PCE Shows Inflation Trends Remain Unchanged
- 2-Steps Forward, 1- Step Back
- Financial Conditions Are Starting To Show Signs Of Tightening
Stocks finished the day flat ahead of the job report, which seems to be coming ahead of a lot of back-and-forth as to whether the job market is crumbling or not. I have a feeling that is not going to be the case. After all, it is an election year, right? That reasoning is used a lot these days to explain why the stock market won’t go down, and so it seems to make sense that an incumbent president would not want a rising unemployment rate.
Anyway, sarcasm aside, there is not much evidence to suggest that the unemployment rate is due for a sudden rise; we aren’t even seeing unemployment claims or continuing claims rising. Even considering the non-seasonal adjusted basis, they have been coming down lately. Estimates are for 3.9%, which would align with last month. Could we tick to 4.0%? I guess, all that would take is probably a few hundred thousand people entering the labor force that had been idle. The surveys have shown some reduced hiring but have talked about wage pressures pushing up input costs.Â
Meanwhile, the non-farm payroll is expected to rise by 180,000, and the Bloomberg whisper number is 165,000. So, expectations for tomorrow seem pretty low. The low expectations could be why we didn’t see the VIX 1-day rise much today and only got to 13.3. On April 4 and May 2, the day before the report, the VIX 1-day closed at 21.4 and 18.33, respectively, so the close of 13.3 is low, and if there is an IV crush, it will probably be small and short-lived.
We have seen the USDMXN surge in the last few days, and to this point, the risk gauge has NOT translated to changes in the equity market. This is frustrating in many ways because it has worked well for some time, and now that there is volatility in it, it is not working. But like anything, it can work with lags, and nothing works all the time, but it has been reliable in the past for a long time, and so now is the one time you would like for it to do its job and of course, so far it hasn’t worked.
We could certainly see a market drop coming. There appears to be a bear flag in the Nvidia-less Dow.
Interestingly, the HGX index has been weak recently despite falling interest rates. It is not what I would expect to see. Still, it either means that rates are heading higher or something else is going on because, typically, rates and HGX only go lower together when the economy is slowing.
The S&P 500 also appears to have formed a rising wedge, approaching the point that one would expect it to break to the downside, as most rising wedges do. This is also the 1.618 extension of the initial rally from the March 2023 low to the July 2023 high to the October 2023 low. So, this would make a nice spot of an ending diagonal triangle.
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The NASDAQ 100 is also closing in on its 100% extension of the same time frame. It also has that rising wedge pattern in place.
It also marks a 100% extension of the Nvidia rally from the January 2024 breakout to the March high to the April low.
Meanwhile, Nvidia is trading outside its upper Bollinger band on a monthly chart and has an RSI of 87. I can’t say that I remember the last time I saw something I overbought on a monthly chart. It certainly wouldn’t be surprising to see it come back down within that upper Bollinger band before the end of the month, but for that to happen, the stock only needs to trade below 1,114. That’s not all that much, considering how big the moves have been in recent weeks.
Good luck
-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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