The Ghost Of 2018 Threatens This Bull Market

The big problem for the market right now is that inflation expectations are collapsing. The 10-Year breakeven inflation rate is now at 2.32%, and the 5-year breakeven rate is at 2.42%. In fact, the 5-year TIPs yield rose today by 7 bps to -1.69%. If you are not taking notice, you better because something is happening here, and it is a clear signal for the reflation trade, which appears to be breaking down.

(Refinitiv)

JPMorgan (JPM)

JPMorgan broke the diamond pattern today and is now likely heading lower to $157.25. The RSI has broken the trend too and took out its recent lows. This is confirming the lower price action in the stock.

UPS (UPS)

UPS was crushed today after giving inline guidance for 2023. There may be an underlying message here, but on the surface, that message seems to suggest that upside surprises may not exist in the future and that this is the best it will get; that is my takeaway. The stock fell below support at $210, and that gap at $178 is just screaming to be filled.

Micron (MU)

Micron was down another 2% today, and there were many bearish options betting on this one yesterday. This stock appears to be heading for around $76, although the put options suggest an even lower price by the middle of August.

Have a great night

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

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