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Stocks Drop Sharply Ahead of U.S. CPI Report

ByMichael Kramer
Published 11/10/2022, 03:28 AM
Updated 09/20/2023, 06:34 AM

Stocks finished sharply lower yesterday, with the S&P 500 declining by around 2%. The sell-off in the market accelerate after the 10-year auction at 1 PM EST. The auction didn’t go very well, pricing at 4.14% versus a when-issued yield of 4.106%.

I have been looking for a hotter-than-expected CPI report, and I expect that today. The VVIX has moved up quite a bit over the last couple of days due to the VIX’s rising implied volatility. Sometimes, a rising VVIX can act as a leading indicator to the VIX rising and the S&P 500 falling. I believe the market could be preparing for a hotter-than-expected CPI report, and the need for traders to look for hedges post-CPI.

VIX Daily Chart

Bitcoin

It certainly didn’t help that Bitcoin and other cryptos assets are getting smashed on this news on FTX and its implosion. The decline in Bitcoin has been long and drawn out, it has had a descending triangle on the chart for months, and it even nearly faked everyone out with that move above the trend line briefly, but that turned out to be nothing more than a throw over. Now Bitcoin is on the verge of cutting through support at $16,650. BTC could trade down to around $10,200 by the time all is said and done.

BTC/USD Daily Chart

S&P 500

Meanwhile, the S&P 500 has fallen out of the diamond reversal pattern I pointed out on Tuesday. Again, 3640 should be the first level of support, but these patterns tend to retrace their origins and make new lows.

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S&P 500 Futures Hourly Chart

Zoom

Zoom (NASDAQ:ZM) is very close to making a new low. This stock has been one of the most significant leading indicators of the overall market for months, maybe even longer. If this stock makes a new low, a new low in the broader indexes could be around the corner.

Zoom Inc Daily Chart

ARKK ETF

The ARK Innovation ETF (NYSE:ARKK) did make a new low yesterday. I do not even know what to say here.

ARKK ETF Daily Chart

Goldman Sachs

I’m still shocked by Goldman Sachs' (NYSE:GS) run over the past several weeks. You can see the trendline, how close the stock is to the trend line, and the overbought conditions on the RSI. It is very close to breaking the trend line. If the trend line breaks, that is not a good sign for the market because this market has been held together due to the rotation of the growth to value trade. Goldman is an indication of that trade.

Goldman Sachs Daily Chart

IBM

The canary maybe IBM after it broke that trend line yesterday when it gapped below the trend line at the opening.

IBM Daily Chart

Original Post

Latest comments

Michael, you usually are a great reader of the market trends. How did you miss this one? What was overlooked?
Sweet mother of God Kramer you have a lot of explaining to do to your followers. A LOT .... like +6% of explaining 😄And please we don't want childish rants from you, be serious what in the heck happened and where you were dead wrong.
200 week moving average on the S&P is holding rock solid and is on track to retest 4100. Sloping resistance has been hit multiple times, so there's a good chance it fails and we get a face ripping breakout. Dollar index is pulling back and yields on the 10 year are pulling back below 4%. We probably got one last bear market rally going into Q1 next year before we start the 2nd Great Depression.
Michael Kramer wiped out -- why he has not wrote any new articles today
🤣
Well the market will be heading NORTH from here..
Trying to predict day to day movements in the market is a fools errand.
Whoops!, that was way off....
well Michael,  read that and your seeking alpha, and agreed, but CPI did come in low.  so had to exit my short or small loss.  cant get it right every time I guess.  Mike Wilson is saying there will be a rally to 4200 in December.  then the fun begins in 2023.  so i try not to fight the market.  Core CPI was a big suprise.
You are probably the one smart person that follows Kramer. If you are a kramer follower, do not follow him blindly. Kramer is extremely biased, so when he is wrong he will be dead wrong and will cause pain in your account. Do what Kris here does, think for your self, do your own analysis. Kramer's analysis is just one small part of the whole. Manage your risk, and if it does not make sense to you get out.
 well sure, no single pundit is 100% correct.  No guru like Warren Buffet is also 100% correct, look at ALLY financial.   But Kramer's value is in the analysis and charts, and he is not alone in saying that going forward things are not going to be good.  something's going to break.  The market on the other hand, does what it wants, like rallying 7% in one day on a slightly smaller CPI which will not change the course of interest rate hikes.  If you are going to play the rally then fine, just next week may be data that is not favorable,  and you can play rally up through december.  Maybe SP500 does get to 4200.   but earnings season in Jan will not be pretty and effects of tightening will become louder.   Housing will not turn until mid-2023.  So there is a big lag .  if your plan is to be long from this point on because of a slight CPI reduction, I say that is risky as we are still in for some pain.
WOW such great analysis, the CPI came in cold and we are rallying. Like I said you are the best ..... INVERSE INDICATOR lololololooool.
gamblers and gamblers...
Short sell market
good analysis
Good job. Predicting is tough. Your analysis is very good. Northman trader and you provide a view based on data. 👍🏻
Zoom is not a market indicator LMAO.  CPI will come cold and markets will rally
CPI hot? You always say that. You are a bear, of course you think that way.
It seems CPI will not be bad, perhaps improving a little. Shelter CPI will decide, but the prospects (nowcasting Cleveland FED, freight prices, Manheim...) are good. Will see...
Musk should put Twitter in his Tesla rear mirror snd focus on keroing Tesla st the head of the pack of all electric cars while convincing everyone his price points are truly competitive and guarantee freedom frrom maintenance abd gas!
And it is gonna to soaring more sharply
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