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5/29/24
#Stocks: $CRM
#Macro: $SPX, $USDCAD, #RATES, $CDX
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Sentiment was undoubtedly in a risk-off mood on Wednesday across the market, following the trends on Tuesday. The bigger question is whether this is the start of a shift in longer-term trends towards tighter financial conditions or a little pause in an otherwise risk-on market. Starting tomorrow and running into next Friday, June 7, there will be a lot of data that will determine where the trends go from here.
The CDX high-yield credit spread index rose, and as noted yesterday, the trend appears favorable to its further rise. If today’s move marks a breakout of that index, with it popping above the downtrend, that could be important, as it could lead to a significant widening of credit spreads.
Treasury rates were also sharply higher on the day and got an extra boost following a pretty tepid 7-year Treasury auction. The 10-year is approaching that resistance region around 4.7% again, and the last time the 10-year rate was here, the S&P 500 was trading closer to 5,000, so a continued gain in rates would likely push equity markets lower.
Meanwhile, the USDCAD moved higher today and has moved back above the 1.37 region. The big level we are watching here is the 1.38 area. A break above 1.38 could be a big risk-off signal for equities, as that has been a key level in the past for the USDCAD.
Meanwhile, the S&P 500 closed down around 75 bps, and at the same level, it was on the day of the big bearish engulfing candle. There is support at 5,260, so for this sell-off to have any legs, the S&P 500 will need to gap lower tomorrow at the open and undercut that support level, which can setup a test of 5,200.
Things could get more interesting at that point, mainly if a rising wedge has formed in the S&P 500 since February 2023. The zone of support is in the 5,150 to 5,200 region. Indeed, from a longer-term cycle standpoint, the time has come for a trend reversal, and if support breaks on the pattern, that trend change could be here sooner than we may think.
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The bears certainly have the ball in their court to start the day, with Salesforce trading lower by more than 16% following its results tonight. I haven’t had the time to look at those results, though. The stock appears to have completed a giant descending triangle and has now filled a gap from November around $225.
There will be a lot of data starting tomorrow, so we must monitor the data to determine where the charts are likely to go.
-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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