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May 7, 2019
What Happened To The Stock Market Not Caring?
Yesterday’s trade tension didn’t seem to matter to the market; today is a different story. Seems interesting either way. Perhaps my assessment of yesterday was merely wrong? Agree/disagree; I will put it in the wrong camp. I’m not right all the time. It happens. What is more important is what happens next and what the options are. I do happen to believe today may have been the worst of it. Maybe I can also be wrong 2-days in a row.
Again, I don’t think this a repeat of the fourth quarter. Growth in the US is solid, and growth around the globe has shown signs of improvement. The Fed is also more dovish, as is the ECB. So the backstop is already in place. Can we fall further? Yes. Potential as far as a zone of 2,850 to 2,830. That would take us back to an unfilled gap, and it could be a likely place to end the decline. It would amount to a drop of about 4%. For now, the index appears to be testing an area of support around 2,863, and it has held and bounced, so we can hope that we have seen lows. But if it falls below there tomorrow, be on watch.
Did We Bottom?
But for some reason, I don’t think we will fall any further. In the next chart, you can see the somewhat robotic nature of the recent S&P 500 rally. It has been in increments of 130 and 170 points for the most part, with a typical pullback of 2 to 3ish%. Interestingly at the lows around 2,863, it was a 3% decline, and if you add 170 points to today’s low, it takes you to about 3,030. I had looked for a rise to 3030 last week when the index was trading around 2,900; I was using an increment of 130 points though. Coincidence? Maybe? I could also be crazy and reaching. I guess we can find out together how stupid I am.
Also, the sharp decline has left the RSI on the S&P 500 around 45ish. So we went from overbought to neutral quickly. But the good news is that the trend continues to be higher.
VIX
Another positive is that VIX tested resistance today around 20.50 and at least it didn’t close above it.
Technology ETF (XLK)
If you want to find something good out there, the XLK fell to support at $76.25 and for now, has held.
Amazon (AMZN)
Amazon also continues to hold support at $1900. The trend is still higher.
Facebook (FB)
Facebook is heading in the wrong and direction, and support is around $186.
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[youtube-feed feed=7]Boeing (BA)
Boeing fell below support at $357, and I went through a series of the reasons I think the stock may be heading lower in a premium story today. Boeing Is Breaking Down. But $320 seems possible.
Alibaba (BABA)
For now, Alibaba continues to hold support around $179. A break below support sends the shares lower to $166.
Micron (MU)
Micron is also on the cusp of a significant break down that could send the stock to $36.
That’s gonna be it.
Until 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. stock May 7
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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.