Stocks Finish Flat On June 22 As Financial Conditions Tighten Further
American twenty dollar bill being squeezed in a vice
The S&P 500 finished the day lower by 13 bps. It was a volatile day, with the market dropping sharply to open and rallying sharply, only to close flat. There was a strong sell-off at the open, with the S&P 500 falling to around 3,720 and rebounding nearly 80 points to 3,800. But in the end, it closed at approximately 3,760.
Maybe it was due to Powell’s testimony; I’m not sure. He had nothing new to say, which may have been reason enough to rally.
I don’t think anything changed today, so I will stick with my view that the S&P 500 retraces to under 3,700 in the next couple of sessions.
(Click on image to enlarge)
Financial Conditions (IEF/LQD)
As measured by the IEF/LQD ratio, financial conditions tightened again today and made a new closing high for the cycle. So typically, when this ratio rises, it tends to coincide with the S&P 500 dropping. So either the ratio is playing catch up to the S&P 500, or the S&P 500 has a new low coming very soon. Tomorrow will tell us a lot.
I inverted the IEF/LQD ratio on the chart below to make the relationship with the S&P 500 easier to see.
(Click on image to enlarge)
Exxon (XOM)
Today, I wrote up a story about Exxon and a potential move lower in the stock. A bearish megaphone has formed, which could see the stock fall first to around $83, but I think there is potential for $70.
(Click on image to enlarge)
Freeport (FCX)
Copper prices have been dropping, and today Freeport also fell by nearly 8%. It is a big spot for Freeport on the chart, with the stock hovering around technical support at $30. Where copper goes, Freeport will follow. But if Freeport drops below $30, there is a long way for this to fall, potentially to as low as $26.
(Click on image to enlarge)
Copper
Copper is now trading below $4 and appears to be heading to around $3.70, which is the next big support level.
(Click on image to enlarge)
Taiwan Semi (TSM)
As noted over the weekend, copper seems to be following Taiwan Semi lower. So it probably isn’t a good sign that Taiwan Semi is back to trading at its recent lows. This is, of course, also bad news for Freeport.
(Click on image to enlarge)
Disclaimer: Mott Capital Management, LLC is a registered investment adviser. Information ...
more