Stocks – F, XOM, AAPL
Macro – SPY, QQQ, IEF, FDN
Stocks fell sharply again today, undercutting Friday’s low by falling roughly 1.9%. The market turned on Powell’s tapering stance, which seemed to favor a faster taper. It was noted on a few occasions on TV about the timing of this stance, especially with the uncertainty around omicron.
The timing was not a mistake; everything Powell says, I’m sure, has been carefully vetted and thought about. He is sending a message to the market that new coronavirus variants will not derail the Fed’s plan to taper. I would take it as far as to say that I think the Fed wants the market to do the heavy lifting for them and wants the market to tighten financial conditions because that may choke off inflation, allowing them a chance to leave rates lower.
It is just a theory, but he will speak again tomorrow, and maybe he will walk it back, but I don’t think he will. I think he will have the same stance. He wants the rates higher and wants the dollar strong; he knows this action will slow inflation.
Yields
The yield curve immediately reflected this with the short-end rising and the back-end falling, flattening again. The 30-Year minus the 3-Month is something to see. It is currently sitting on a significant level of support and has a broadening wedge pattern present. Both suggest that lower levels for this spread are coming, which would indicate further flattening. That spread could quickly drop to 1%.
S&P 500 (SPY)
The S&P 500 can easily fall to 4365, and nobody at the Fed would likely come to save it. After all, the last 10% gain on the S&P 500 and NASDAQ was just pure stupidity, all driven by multiple expansion. The “real” losses only start after we break 4,365.
For now, 4,550 is the next significant level of support, and then 4,490 and 4,450. So there is a lot of room here for things to happen.
Nasdaq (NDX)
It looks like a head and shoulder pattern is forming in the NDX, and once it breaks 15,990, that pattern will be complete, which could mark a significant top.
Technology ETF (FDN)
The FDN fell sharply today, breaking that significant uptrend I noted not long ago. $223 is the next level to look for; it doesn’t speak highly for technology stocks in general. You can also see that triple top, head-and-shoulders pattern present as well.
Exxon (XOM)
Crude oil was slammed again today, and Exxon continues to look very weak here. I still think it fills the gap at $57.50
Apple (AAPL)
Apple was up today on a report out of Digitimes that said that sales of the new iPhones surged in China. I don’t know where Apple should go at this point. At this point, this stock seems like a haven trade more than anything else. I am happy it is up, don’t get me wrong, I have owned it for a long time. But something seems off here.
Ford (F)
Ford is very close to breaking support at $19, which would push the shares back to around $15.55, filling the gap.
–
Originally Posted on November 30, 2021 – Stocks Drop On November 30 And Are Now Left To Stand On Their Own
Disclosure: Mott Capital Management
Mott Capital Management is the portfolio manager for one portfolio offered by Interactive Advisors. Interactive Advisors clients do not invest directly with the Portfolio Managers like Mott Capital Management, and the Managers do not have discretionary trading authority over Interactive Advisors client accounts. The Portfolio Managers on the Interactive Advisors platform simply license their trade data to Interactive Advisors, which then allows its clients to have the same strategy and trading decisions mirrored in their accounts if the Portfolio is in line with their risk score. Portfolio Managers like Mott Capital Management implement their trading philosophy and strategy without knowing the identity of Interactive Advisors’ clients or taking into account these clients’ individualized circumstances.
Mott Capital Management has entered into a Portfolio Manager License Agreement with Interactive Advisors pursuant to which it provides trading data IA uses to offer a portfolio to its investment advisory clients. Mott Capital Management is not affiliated with any entities in the Interactive Brokers Group.
Interactive Advisors is an affiliate of Interactive Brokers LLC.
Pursuant to the Investment Management Agreement between Interactive Advisors and its clients, all brokerage transactions occur through Interactive Brokers LLC, an affiliate of Interactive Advisors. The use of an affiliate for brokerage services represents a potential conflict of interest as Interactive Brokers LLC is paid a commission on trades executed on behalf of Interactive Advisors. Interactive Brokers LLC does not consider this conflict material as it does not sell, solicit, recommend, trade against or otherwise attempt to induce Interactive Advisors to place any orders in any products. Interactive Advisors does not offer services through any other broker-dealer. All trading by Interactive Advisors is self-directed. Interactive Advisors clients acknowledge this potential conflict of interest and authorize Interactive Advisors to execute transactions through Interactive Brokers LLC when they open an Interactive Advisors account. Clients should consider the commissions and other expenses, execution, clearance, and settlement capabilities of Interactive Brokers LLC as a factor in their decision to invest in an Interactive Advisors Portfolio. Interactive Advisors believes it satisfies its best execution obligation by trading its clients’ trades through Interactive Brokers LLC. While there can be no assurance that it will in fact achieve best execution, Interactive Advisors does periodically monitor the execution quality of transactions to ensure that clients receive the best overall trade execution pursuant to regulatory requirements.
Disclosure: Interactive Brokers
Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from Mott Capital Management and is being posted with its permission. The views expressed in this material are solely those of the author and/or Mott Capital Management and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
