Stocks Float Higher, But Probably Not For Long
2022.06.22 09:47
Stocks had a big rally yesterday, with the S&P 500 up 2.45% and the NASDAQ 100 ETF QQQ rising by 2.33%. The rally wasn’t a surprise, given we have seen these countertrend rallies follow OPEX regularly. What was surprising was how quickly the market rallied. I’m skeptical of this rally continuing now. I was only looking for a gain to around 3,800 on the S&P 500, and most of that rally was already fulfilled. I think we could even refill the gap below 3,700, maybe as soon as today.
S&P 500 Index, 15-Min Chart
VIX
The VIX was hardly down yesterday, despite the big rally, dropping by less than 1 point to close at 30.20. I would have expected a more significant drop in the VIX given the big rise in the S&P 500. This is all contributing to my suspicions about this rally.
Of course, today will be Jay Powell’s turn to go in front of Congress, which presents a risk to equities.
VIX Index, 15-Min Chart
Financial Conditions
Additionally, financial conditions tighten yesterday, as measured by the IEF/LQD ratio, and usually, when spreads widen, it is not favorable for stocks. The ratio hasn’t broken out to new highs, but it needs to be watched closely.
IEF/LQD, Daily Chart
Meta
Meta (NASDAQ:META) keeps dropping, falling another 4% yesterday. I don’t know what is going on here. Clearly, something is not good. Maybe they shouldn’t have changed the name from Facebook. However, the $155 level is essential from a technical basis because if support breaks, the next region for support will come at the pandemic low of around $139.
Meta Platforms, Daily Chart
Roblox
Roblox (NYSE:RBLX) seems to again be in a position to break out as the RSI nears potential resistance levels and the stock price approaches a downtrend. This is the stock’s second attempt since June to breach that trend line.
Roblox Corp, Daily Chart
Anyway, that’s going to be it for today.
