Stocks Fall Sharply On March 23 As Reflation Trade Ends

The S&P 500 gave back all of yesterday’s gains and then a couple of extra points to finish lower by 75 bps. Meanwhile, the Qs only managed to decline around 45 bps; it still has some further to fall before filling the gap from yesterday; maybe that will happen tomorrow. There is a huge gap still at $301 waiting to be filled from March 8.


The pattern on the hourly chart in the Qs and the Nasdaq 100 Futures shows a bearish double top on the Intraday. Now it doesn’t tell us where the market is going longer-term, but it would seem to suggest that the next move is lower, likely stopping at $301, as mentioned above.

S&P 500 (SPY)

For the first time in a long time, we have the RSI and the advance/decline line trending lower simultaneously in the S&P 500.

3,900 on the S&P 500 held today, but once it breaks, based on the movement in the RSI and the advance/decline suggest, the next level to look for is at 3,835. That is a huge support level because it marks a gap fill and the March 2020 uptrend.


Today, the reflation/risk-on trade was crushed with oil, copper, the Russell, and biotech hit very hard. From the looks of it, the sell-off is likely just starting, at least based on copper prices.

At of this thanks to the dollar, which is now very close to its 2021 highs, and has likely much higher to go. I talked about the positions in the futures market this weekend’s premium video. The index is likely moving back to around 94.

Caterpillar (CAT)

Caterpillar was crushed, dropping 3.5%, and more importantly, the uptrend is busted, with $201 acting as the next level of support.

Disney (DIS)

It looks like Disney is ready to roll over, too, as it falls out its rising wedge pattern.

Freeport (FCX)

Freeport is about to make a big drop if it falls below support at $32. Tons of volume traded today, and the RSI is trending lower. The next stop for Freeport is likely $25.50.

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Disclosure: Mott Capital Management, LLC is a registered investment adviser. Information ...

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