Stocks Drop On November 20, As The Double Dip Recession Narrative Finally Surfaces
Stocks finished Friday lower, after a rather boring day. Most of the action took place in the final hour. It resulted in the S&P 500 finishing the day down about 70 bps, while the Qs fell about 70 bps.
There was nearly a $2 billion imbalance on the sell-side going into the closing cross. That was the driving force lower into the close, and I would think a lot of that was options expiration related.
S&P 500 (SPY)
I still think this market is heading lower, as it has so many classic signs of a top, which we have reviewed throughout the week. Now there may be a narrative to go along with the signs of a topping, the double-dip recession. I told you weeks ago; this narrative would surface, and it has. Now it is just a matter of when this because a narrative among the rest of the market.
The setup couldn’t be better. We just had options expiration, the number of stocks above their 200-day moving average is near historical highs. Now add to that inflation expectation, which has started to roll-over. We will see how things go.
Zoom
Zoom (ZM) was higher Friday, but remember I said it was likely the stock could go higher first. But notice how it stopped at resistance around $445. That price also happens to be where a downtrend lives, while the RSI continues to trend lower too. Overall, these are all bearish trends, suggesting there are still lower prices coming, and I think the next stop will be around $325.
Nvidia
Nvidia (NVDA) was weak Friday following its earnings earlier this week. The stock hasn’t gone anywhere since early September. The trends on the RSI continue to bearish, while a drop to $460 still seems likely.
Disclosure: Mott Capital Management, LLC is a registered investment adviser. Information ...
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