ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
Stock Market Commentary In last week’s decision on monetary policy, Federal Reserve Chair Jerome Powell directly and fully acknowledged inflationary pressures in the economy. Perhaps lost in the inflation buzz was Powell’s quick commentary on financial stability during the Q&A session: “…asset valuations are somewhat elevated, I would say.” Of course, various folks in the … Read more
Credit Suisse downgraded Peloton Interactive (PTON) from outperform to neutral. The analyst at Credit Suisse also slashed their price target from $112 to $50. Despite a price target higher than the previous day’s closing price of $40.70, PTON still fell 5.4% to $38.51 and a 19-month low. So why did PTON sink on an analyst … Read more
Two weeks ago, I expressed caution over Spotify Technology (SPOT) in the wake of sellers fading an extremely bullish upgrade from an analyst at KeyBanc. That upgrade to overweight from sector weight included a $340 price target. The contrary and surprising trading action right after the analyst call was telling. A week after KeyBanc, an … Read more
Stock Market Commentary Say whatever you want, Jerome (Jay) Powell, the chair of the Federal Reserve, affectionately known as J-Pow, has become a master orchestrator of the stock market. Other Federal Reserve Board members peppered the airwaves with hawkish talk about tapering and inflation in the days preceding Powell’s address at this year’s Jackson Hole, … Read more
A False Breakout I started the week with Micron Technology, Inc (MU) as my favorite trade prospect. The breakout from last week was near poetry. MU enjoyed buying support most of the week as it first pushed through resistance at its 200-day moving average (DMA) (the blue line in the chart below) and next sliced … Read more
Stock Market Commentary Welcome to the new world of “The Market Breadth.” I used the switch from AT40 (T2108) to AT50 (MMFI) as my market breadth indicator to improve the name of this blog series. The Market Breadth marks a change from a technical name that sounds like a Space X rocket to an English … Read more
Stock Market Commentary The stock chickens have come to roost on declining market breadth. The stock market indices still generally appear fine, but an ever growing swath of individual stocks have fallen further and further behind. Last week in particular, sellers delivered an extended beating on individual stocks. The signs of waning confidence in the … Read more
Stock Market Commentary The stock market melt-up took a one day break. The signs of trouble were ever more clear ahead of the break. Something was wrong with the picture in the stock market. Yet, sellers could barely follow through. The S&P 500 stumbled with a gap down, but buyers stepped right back in at … Read more
The Downgrade Zelman & Associates gut-punched home builder stocks with a major downgrade of the sector on June 10th. Zelman used a survey of builders to conclude that soaring housing prices are reducing demand. The survey also revealed “a fourth straight month of weaker-than-seasonal order activity in May”. (I have covered this dynamic as “normalization” … Read more
Stock Market Commentary The Federal Reserve seemed to change the rules of the game. To-date, easy money policies and stubborn dovishness in the face of rising inflation was a formula for higher asset prices, reflation and inflation-friendly trades, and even rising fears of an over-heating economy. Last week, Federal Reserve Chair Jay Powell shifted the … Read more