Financial News vs. Noise
I expected kind of a nothing day ahead of all the data that started after hours and of course the FOMC. That’s not what happened. A 10 minute SPY chart tells the story perfectly…
Flipping back to daily you have an obvious short sale as it bumps up and fails at the 50 day.
If we didn’t have a ton of earnings, FOMC, jobs, and the Treasury funding announcement this short would be a lay up. With all this data we are still in a spot that anything could happen. It didn’t help things that the economic releases yesterday pointed to stagflation.
I find this interesting…
Treasury Secretary Janet Yellen pushed back Tuesday at her predecessor Larry Summers over his recent comments that the Federal Reserve may need to consider hiking interest rates because inflation isn’t trending in the right direction.
Could she be setting us up, or pressuring the Fed, or both, to be dovish?
Traders Expect Biggest Fed-Day Move in S&P Since 2023, Citi Says-Bloomberg
The SMH chart looks like a carbon copy of SPY.
Yesterday I mentioned the relative importance of SMCI earnings. They are taking a beating pre market, as is AMD. NVDA is down over 2% in sympathy. Again, I think the semi’s are the most important area of the market right now.
Opinion: Nvidia is chip sector’s only hope after AMD and Super Micro disappoint-MarketWatch
Nvidia will report its earnings in another month, on May 22. That is a lot of time for investors to get carried away with expectations. Super Micro has surged 202% so far this year, while Nvidia is up 74%. After steadily falling from a peak of around $227 since mid-March, AMD is now only up about 7.4% year to date. These stocks are incredibly volatile, and investors need to remember they can change on a dime.
Rates popped again. While the S&P looks like a clear downtrend, the 10 yr looks like a clear uptrend. I have been short TLT but we flipped back to long at the close.
Coming into today my counter trend models were mostly out from last week’s rally so we did buy the dip at the close. I won’t override my models, but I do decide position sizing and how to structure the trade. Position sizes are light and whenever possible I am still using credit spreads to finance calls.
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Matthew Tuttle is the Chief Executive Officer and Chief Investment Officer of Tuttle Capital Management, LLC.
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