Stocks Tank Ahead Of The Jobs Report
2022.05.06 14:26
Stocks had a horrible day yesterday, with the S&P 500 dropping 3.6%. If not for a near 100 bps rally in the final 10 minutes, it could have been worse, as liquidity appears to have vanished. The S&P 500 futures show this the best in a 1-minute bar on roughly 21,000 contracts of volume. Unfortunately, when markets get volatility like this, spreads widen, and the top of the book thins out, creating unstable moves like the one below.
S&P 500 Emini Futures Chart
I don’t think the move lower is over, and I expect the rest of the pattern to be completed, with the S&P 500 moving back to the recent lows around 4,070 and a new low. The futures managed to hold it around the 4,130 support level, but it looks more like a consolidation than a bottoming process. With the job report today coupled with a plethora of Fed speakers and next week’s big CPI, this market is going to remain highly volatile.
S&P 500 Emini Futures 1-Hr Chart
It was worse for the NASDAQ, with the QQQ ETF dropping 5%. The ETF has support at $308, but I don’t think that will hold, and I think the next leg lower may be ready to start. At this point, it seems like the QQQ has a date with $300 and lower.
QQQ Daily Chart
The number of stocks making new lows continues to outpace the number making new highs. It isn’t even showing signs of stabilizing yet. In the past, new highs-new lows usually flattened out when the market was ready to turn. That hasn’t happened here yet, so I think lower prices are still coming.
NAHL Index Chart
Shopify (NYSE:SHOP) was obliterated yesterday, dropping by almost 15% after reporting some horrific results, and the sell-side commentary sounded equally as bad, based on what I read. The funny thing is that the chart doesn’t look so bad. I’m not saying it has bottomed yet. But I think it is getting closer, with an RSI that is now starting to show the signs of a bullish divergence. I ultimately think this one will end up bottoming in the $340 to $360 region.
Shopify Inc Daily Chart
Amazon (NASDAQ:AMZN) was destroyed as well, and the stock is going down in the same way it went up. If that is the case, the stock may be heading back to $2,000, maybe even $1,600. I’m not sure yet. The RSI is starting to show a divergence, but it is too early to say a reversal is even close. Shopify seems further along than Amazon.
Amazon Inc, Daily Chart
If Intuit (NASDAQ:INTU) is a sign of things to come, it sent a nasty message yesterday because it fell through support at $409. The low $380s seems like the next reasonable level of support.
Intuit Inc., Daily Chart
