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7/11/24
#Stocks: $NVDA
#Macro: $SPX, $NDX
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- RTM: June Services ISM Tanks
The CPI report came in weaker than expected, and the big question is what this all means. For the most part, the reason nominal GDP growth has been so robust has been the high inflation rate. But it seems pretty clear that after the past two reports, the likelihood of nominal growth remaining robust is diminishing.
The real clue in all of this will be when 5-year breakevens break down. A move below that 2% bound on the 5-year breakeven will probably be the first real signal that the bond market is pricing lower inflation and slower growth. This will be the indicator that tells us monetary policy is too tight.
Today’s data also seems to support the view that a yield curve steepens as well. Two months of a rising unemployment rate and falling m/m inflation suggest that some slowing may finally be taking hold in the economy. Whether it is due to Fed policy or not is another question altogether. Perhaps the higher prices have finally brought the economy to a breaking point. Regardless, if the 2/10 can get above -17 bps, it will have a lot of room to run, and that is when things become really interesting.
What is also apparent is that this is a giant rising wedge pattern in the S&P 500 that appears to have hit some climax in the past few trading sessions, with some pretty stretched technicals. I think I have shown this before, but here it is again; using a log chart and closing prices, we can see that the S&P 500 has a 78.6% extension of the March 2020 and October 2022 lows and what appears to be a nice-looking ending diagonal triangle. It looks nice, that’s for sure.:)
The odd thing was that even with the S&P 500 down about 90 bps on the day, there were 395 stocks higher and only 107 lower. So, this was a good day for the equal-weight S&P 500 and the Small-cap IWM. It is hard to say if today’s move means anything, though, for the IWM because it couldn’t get above resistance around $212. But also, we saw the samething in June, when the small caps jumped following the CPI report, only to give back all of the gains in the days to come.
Nvidia was down today, closing below its 10-day exponential moving average; it could mean something or nothing. The last time Nvidia saw two bearish engulfing patterns a couple of weeks apart was in April, which led to a 20% decline in the shares. I’m not sure if that is what happened this time, but that is what happened last time.
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The nasdaq closed on the 10-day exponential moving average, and that has served as support a few occasion, so if the level should break tomorrow, it could tells us that the trend in the NASDAQ 100 has changed.
Anyway, I think that I will cover it today.
-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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