VIX (VIX)

Stocks sold off on Friday afternoon, finishing the week lower by over 1%. The sell-off came late in the day after the VIX ran up. Typically on Friday, we have seen the VIX meltdown into the close, helping to give the S&P 500 a boost. 

Pixabay

That was absent this week, and as a result, the VIX is very close to breaking a serious downtrend. This will need to be watched closely on Monda; should the VIX continue higher, it would indicate increased put buying is taking place in the market, and worries of a sell-off are building.

S&P 500 (SPY)

This is a pretty important spot we are currently in, with the S&P 500 sitting right on the uptrend that started last October. So a gap lower on Monday below 4,450 and the trend line would be terrible news for the S&P 500 and would likely coincide with a breakout in the VIX index. That would put added pressure on the lower Bollinger band to hold at 4,410.

But there is a problem with the Bollinger band holding at 4,410. A move below 4,440 from a gamma perspective will trigger a wave of selling pressure, with the first minor level of support coming around 4,250, which I noted this week in a write-up for SpotGamma.

So yes, this sell-off could really be the one that turns into more than just a dip; to this point, this may be the strongest case for something greater than a 5% drop that we have seen in a while. Don’t forget the RSI and where it is positioned; it is currently just above a support region at 42.

Additionally, we continue to see a lot of weakness in these economically sensitive parts of the equity market. It does make sense to some degree because now we have started to see clear signs that the economy is moderating very quickly, which is why sectors like housing, transports, and commodities have been trending lower. In fact, if the next trend plays out as I expect it to, it means earnings estimates will start turning lower, which pulls this current cycle incredibly close to that of 2018.  

Apple (AAPL)

Apple fell hard on Friday following the ruling on its battle with Epic. At this point, there is no way to know what the potential impact of this will be. I still tend to think it will still be easier to pay for things with apple pay instead of redirecting to another website. Look, at the end of the day, this stock is not cheap, especially for the growth rate you will get going forward. So I still think the stock is ahead of itself, and we still see a pullback to that $130 region. The RSI is also flashing a bearish divergence with the lower high versus the stock’s higher high.

Square (SQ)

Yep, Square’s been falling again and is really close to support at $245. A break at that price probably pushes Square lower to $229. The RSI is still falling and not yet near oversold levels. I’m curious how all these buy now/pay later thingy will work out in the end. I haven’t made up my mind yet.

Salesforce (CRM)

Well, Salesforce never really made it past $267; I never thought it would. The stock broke support at $260, with $240 most likely the next stop.

Merck (MRK)

Merck managed to hold on to $73 on Friday. There is something that resembles a falling wedge on the 5-minute chart, and perhaps that means the leg lower is finished, and the stock rebounds back up to $75.50.

Uber (UBER)

Poor Uber doesn’t want to go higher. I’m not giving out hope yet, the trends still look to be enacted, and I still think it can move higher to $45. (RTM Exclusive: Has Uber Finally Bottomed?)

Ford (F)

Ford still looks terrible. The stock needs to break down already and move to $12.15; just get it over with.

Roku (ROKU)

The big question is if Roku broke support at $335. It sure looks like it, but it is too close to tell. There is an excellent argument to be made, though, for the stock going to $295 and then lower. We can save that for another day. (RTM Exclusive: The ARKK ETF May Sink Even Lower)

Have a good one

-Mike