Stocks – INTC, FB, SNAP, CMG
Macro – SPY, IEF, DXY
Strange day for stocks, with the rally coming in the final hour on a relatively small buy imbalance. Whatever the case, it did the job of pushing the S&P 500 to a record close. Whether it holds tomorrow, I’m not so sure. Volume levels have been melting away, not exactly what you want to see for a sustainable rally.
There was a risk-off move across the entire market complex, from copper falling by 4% to the dollar rallying. Yields also rose dramatically on the front of the curve. Stocks ignored it all, perhaps trying to buy the rumor ahead of earnings. But tonight’s earnings have not gone very well.
S&P 500 (SPY)
Now the S&P 500 closed right on that February trend line I mentioned yesterday, which doesn’t tell me much in terms of this recent push higher sticking. Now I don’t usually look at the 4-hour RSI, but it works well enough at times to indicate the index remains very overbought. Again, gap over that trend, and the bulls can continue to party. If not, it could be the start of a rather dramatic turn of events.
Rates (IEF)
Now it seemed not to matter that rates rose today. In March, growth was getting hammered because the 10-Yr was at 1.7%. Now the 10-Yr is at 1.7%, and nobody seems to care, which makes total sense. I haven’t spoken about the 10-year in some time, but my general thoughts the last few weeks was that it could run up to around 1.76%, which would be the spring highs, with the potential to run to 1.95%. I have believed now for some time that rates on the long-end of the curve would either stay flat or rise at a slower pace than the front-end of the curve, resulting in flattening.
Dollar (DXY)
This is helping to set up the dollar index to get very close to breaking out. I have thought the dollar index could rise to around 96.30.
Intel (INTC)
Intel is falling after it gave guidance that missed expectations, now down around 9%. There’s not much to say here. Intel has no growth, and can’t seem to get out of its own way. So either the environment is slowing or maybe it is losing to the competition. If the stock manages to stay below $52 it will probably be on its way to $47.
SNAP (SNAP)
Snap is falling nearly 23% after reporting guidance that missed the consensus. It seems the iOS 15 adoption is creating issues for them, and what is most likely to be a problem for Facebook too. I’m surprised Facebook is only down 5% tonight. Maybe they pull off a miracle when they report on Monday. Anyway, Facebook needs to hold on to support $323, or this is toast on its way to $300.
Chipotle (CMG)
Chipotle is down about 1.5% after hours, but they seemed to guide margins, lower for next quarter, and the moment the market seems fine with it. We will see how it goes tomorrow. There’s is that giant gap down around $1570 that needs to be filled, and I guess you just never know. There is a bearish trend in the RSI and looks diamond pattern.
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Originally Posted on October 21, 2021 – Stocks Rally On October 21 But Earnings Disappoint
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