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Tomorrow May Be The Start Of A Tectonic Shift For The Stock Market
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN SHARES OF V, MA, AAPL
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Wednesday Is Important
The S&P 500 finished the day slightly lower by 14 basis points, a flat day. At least for today bonds on the long-end fell with the 10-year finishing the day around 3.2%. Tomorrow will be a big day for yields because we get PPI for September. Estimates are for 2.8%, and that is flat versus last month. (Read more for Free here:
The Monster Look At The Week Ahead In Stocks For October 8.)
As I have shown you before the price of oil has a big impact on the PPI. But the good news is that y/y increases in oil are becoming smaller, so hopefully, that means the read through in PPI means a lesser impact.
As one would expect long-term rates follow inflation closely, I don’t think you need me to tell you that though. But it is nice to see it visually.
If that wasn’t enough for you on Thursday we get CPI, but more on that tomorrow. But as the chart on the 10-year below shows, yields thus far have stayed below the all-important 3.25%. Why is this level significant? Because should interest rates rise above that resistance area it could quickly increase not to 3.5% but 3.75% and would most certainly create a great deal of nervousness for stock investors.
The Canaries – (Read More Here For Free: These 4 Stocks Are The Canaries In The Coal Mine.)
Visa
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Visa had a solid day holding support at $140, but also notice how it failed at resistance around the price of $143.
MasterCard
MasterCard looks very similar to that of Visa, with the stock holding support around the price of $203, but failing at resistance around the price of $211.
Square
The same holds for Square.
The Rest
Apple
Apple continues to move nicely higher along its uptrend, and that is undoubtedly a positive sign for the market as a whole.
Micron
I had thought that Micron would get a short-term bounce back to around $50. Instead, the stock is drifting lower. This region between $40 and $42 is critical, and if the stock falls below $40, it is very likely on its way to around $35.
Alibaba
The China stocks continue to get crushed, Alibaba is now well into the mid-140’s, and it looks like it’s on its way to the low $140’s. If $140 doesn’t hold, we could be looking at the $120’s.
FX
If you want to know why this is happening to Alibaba, look no further than the RMB versus the dollar, as the RMB continues to weaken.
Hang Seng
The Hong Kong, Hang Seng index, is nearing a potentially massive breakdown here.
The key for tomorrow remains yields and inflation. That PPI will be very important. My gut says it comes in-line if not slightly lower. We shall see.
Good Luck!
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.
SPY, DXY, AAPL, V, MA, SQ, BABA, INFLATION, YIELDS
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