Stocks Set To Plunge On August 14 As Algo’s Go Wild, Again!

August 14 – Stock mentions, SLV, SPY, AMD, CSCOWealth Strength IndexCSCO is Moderately Flat and trending Down, BAC, M, UBER

Michael Kramer and the clients of Mott Capital own CSCOWealth Strength IndexCSCO is Moderately Flat and trending Down

US Markets

  • S&P 500 Futures -42
  • US 10-Year 1.60%
  • VIX 19.24
  • Oil $55.96
  • US Dollar Index 97.83

International Markets

  • Japan Nikkei +0.98%
  • Shanghai +0.42%
  • HSI +0.08%
  • KOSPI +0.65%
  • FTSE -1.07%
  • DAX -1.55%

The Yield Curve On August 14

Guys, the yield curve has been working towards inversion for how long? Should anyone be surprised that the yield curve is inverting considering that Fed has,, an effective Funds rate of around 2.1% and the German ten-year Bunds are at -0.63%. Market force and a stubborn Fed are triggering the inverted yield curve.

D&D’s

Anyway, I will repeat it. It isn’t one-day of inversion that determines the odds of a recession. It is about the Depth and Duration of the inversion. Let me know about 10-months from now where we are.

yield curve

yield curve

Anyway, maybe the bank’s stocks can rally like they did yesterday, because that made sense. We can get to that in a few lines.

First, the S&P 500 futures are dropping today, I guess on the yield curve? Or perhaps it is following the European markets lower. Maybe it was the weaker than expected industrial production in China.  Regardless,  it playing out how I feared it might last night.

S&P 500 (SPY)

The S&P 500 e-mini futures on August 14 are hovering around support 2,890. Hopefully we can manage to hold around this level or risk declining further to around 2875 on the futures.

For the S&P 500 that translates to support in the 2890 to 2900 region, followed by a drop to around 2872. Basically putting us back to where we were on Monday.

SP 500, spx

SP 500, spx

If history is a guide, we probably gap lower to around 2890 and use the rest of the day to work our way higher to fill the gap. In reality, the spread on the 2-year and 10 years falling to 0 from 0.01% yesterday isn’t much a game-changer is it?

Bank of America (BAC)

Anyway, the banks are not looking good on August 14 as they shouldn’t look good. Bank of America is falling this morning by over 3% and is now at risk of taking its June low around $26.50. Next stop is probably $25.75. I have been talking about this since last week.

macy's

macy's

Macy’s (M)

Macy’s reported some pretty horrendous earnings today. Lowering guidance. Not good. I remember about a year ago I got an email from a “hedge fund manager,” notice the quotes, that was not happy with a negative article I wrote on Macy’s. He called me a fool, for not realizing the amount of free cash flow Macy’s generated and how the stock up nearly 100% spoke of a turnaround story. I told him it was merely a dead cat bounce. I guess I was right. The lesson, because you are “hedge fund manager” does not mean you are smart.

Anyway, Macy’s is probably heading to $15.

macy, m

macy, m

AMD (AMD)

AMD is testing support today at $31.40 as I thought it might. A break below these levels sends us to $29.40.

amd

amd

Cisco (CSCOWealth Strength IndexCSCO is Moderately Flat and trending Down)

Cisco reports tonight. I’m not sure why the stock has been so weak? CSCOWealth Strength IndexCSCO is Moderately Flat and trending Down told us last quarter they had already taken care of tariff concerns. I guess we will find out. Maybe I’m missing something. Support comes around $49.

csco, cisco Stocks Set To Plunge On August 14 As Algo's Go Wild, Again as they fear what an invert yield curve may or may not mean.

csco, cisco Stocks Set To Plunge On August 14 As Algo's Go Wild, Again as they fear what an invert yield curve may or may not mean.

Silver ETF (SLV)

Well, the only thing green on my screen is the SLV. I’m not usually a talker of silver, but again I have seen lots of calling buying here in recent days. $16.50 is the level to watch before a move higher to $17.25.

silver, slv Stocks Set To Plunge On August 14 As Algo's Go Wild, Again as they fear what an invert yield curve may or may not mean.

silver, slv Stocks Set To Plunge On August 14 As Algo's Go Wild, Again as they fear what an invert yield curve may or may not mean.

UBER (UBER)

UBER= $36 – Crickets! Uber’s Stock May Sell Off After Results. Hey, you want to bet against me go ahead, I’m only right about 62% of the time, and counting.

Have a great one, and have some fun today. My advice turn it off and do something that puts a smile on your face.

-Mike

This article appeared first on Mott Capital Management.

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