Market Radar 18. November 2022


The number 7 scared the stock market

Why can it lead to this surprising opening below the previous day’s low, even though market breadth indicators yesterday signaled quite clearly an upward movement in the stock indices? The President of the St. Louis Federal Reserve, James Bullard, indicated before the market opened that the Fed would raise interest rates above most expectations to contain inflation. Bullard named 7% as a possible peak in the US key interest rate. This frightened the US stock market and probably drove some away from breakfast and towards the computer to click on the “sell button”. Bullard’s threat of 7% caused a hangover mood instead of euphoria: like after a party in which we had danced a little too wild and drank too much and had to realize the next morning that it was not so great at the party after all. The fatigue and headaches that accompany us through the trading day could at best cause a little inspiring “business as usual”. During the trading day, the SPY was able to reduce its daily loss from 1.3% to 0.3%. Is this a good starting point to set up swing trades on the long side? Chart technically yes – we see gimmees in quite buyable zones – but it feels like the damper remains in the head: the party was yesterday. Soon the 7% will come. Now it’s more like: wait and clear your head, right?

The pre-market drawdown also caused the market analysis indicator for new highs and new lows in the S&P 500 to fall below zero. While trend-following activities looked lucrative yesterday, the indicator now advises people to hold back a bit.

IPO ETF has been downgraded

The IPO ETF did not manage to be upgraded from the day stamp “Under observation” to the day stamp “Bottoming or Sideways” because of the morning dampener. Instead, the IPO ETF today receives the frustrating daily stamp “wait and see or speculate on sell-off”. In keeping with the hangover mood, we are now also pondering IPO shares: would you rather wait and see? The sell-off will come later anyway. And if it doesn’t come, then we’ll buy into the stock market later.

In addition to the IPO ETF, only two other ETFs I observed today receive the daily stamp “wait and see or speculate on sell off”: BDRY (freight rates) and BITO (Bitcoin). No shares are held in these ETFs. In the equity market, the downgrade of the IPO ETF remains a singular event.

What do we see under the radar of the major US stock indices?

Super Micro Computer soon at 100 dollars ?

The relative strength of our “super stock”: Super Micro Computer (SMCI). The stock, which was recently presented on the market radar, does not seem to want to deal with consolidations for long. The pre-market drawdown did not take place in the stock yesterday and the stock closed close to the day’s high. SMCI could now head relatively quickly towards the 100 mark. I will increase my position in the stock above $88.

Amgen soon at 300 dollars ?

As of today, the biology industry will receive the day stamp “Under Observation” and will thus be downgraded. The corresponding ETF (XBI) covers the industry in a diversified and broad manner. Therefore, the downgrading is not due to a life of individual shares in the ETF.

The largest position in XBI is Biogen (BIIB), which was mentioned on the market radar yesterday, but it is only weighted 1.57% in the ETF. Despite this gradation, there are very constructive-looking flat bases, especially in the big caps in the sector, which should soon be left upwards.

In addition to Biogen, e.g. B. Regeneron (REGN), Amgen (AMGN) and also Gilead Sciences (GILD). The continuation of the trend for these stocks should actually only be a matter of time. Amgen, for example, was trading ex-dividend on Wednesday. Historically, the existing trend will continue in this share after the distribution.

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