Stocks – AMZN, AAPL, DIS, FDX
Macro – SPY, QQQ, VIX
Michael Kramer and the clients of Mott Capital own AAPL.
S&P 500 (SPY)
It’s a pretty bad day for stocks, with the S&P 500 falling by about 1.2% to finish the month down 4.7%. The market doesn’t look all that healthy, but then again, it hasn’t looked healthy for weeks, maybe months. It seems like at this point; we are in the middle of wave three down. We will need to confirm this by falling below 4,300 tomorrow. If so, I see a move to 4,240 at a minimum and could be as steep as 4,115.
But here’s the problem, at 4,115, if that does come into play, the S&P 500 would be trading for a stunning 19.3 times its next-twelve-months earnings estimates. A still very pricey multiple. If I had my way, I would like to see the index settle at and trade for something like 17 times NTM estimates, or 3,600. I think 17 is a good PE for the market, given where growth rates are going and the low rate world. We have to hope that earnings estimates hold up and don’t start coming down.
VIX (VIX)
Despite today’s drop, the VIX hardly increased, rising just 2.5% to 23.1. Indeed, not a sign of any fear being built into the market yet. It could be an indication that serious selling hasn’t even begun. If you start to get a VIX that can go up in an orderly manner instead of those significant 20% one-day jumps, you could see a market that moves much lower over time.
Nasdaq (QQQ)
Meanwhile, the Qs have been consolidating and forming a bear flag, which was present in the S&P 500 futures this morning before it broke. The pattern would suggest the Qs fall back to $346.
Apple (AAPL)
The chart for Apple looks pretty weak, and it should break support at $141 and start its drop to the low $130s.
Amazon (AMZN)
Amazon looks pretty bad too, with a break of support at $3,300 and a negative sloping RSI, the stock’s next stop will probably be $3200.
Disney (DIS)
Disney is very close to falling below support at $168, and with a giant gap to fill at $154, it is not looking good.
FedEx (FDX)
The disaster, also known as FedEx, keeps on dropping with no end in sight. It could still have a considerable distance to fall, too, with $180 the most suitable spot.
Originally Posted on September 30, 2021 – Stocks Drop On September 30 – The Fun Has Merely Begun
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