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Stocks May Be Facing A Massive Decline

By Michael KramerStock MarketsOct 12, 2022 04:01AM ET
www.investing.com/analysis/stocks-may-be-facing-a-massive-decline-200630959
Stocks May Be Facing A Massive Decline
By Michael Kramer   |  Oct 12, 2022 04:01AM ET
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Stocks finished the day lower yesterday, with the S&P 500 dropping 65 bps. It was a volatile session, with markets selling off to open, rallying mid-day, and selling off into the close. The focus will shift today to the FOMC minutes, which have been lost in the shuffle between rising rates and a significant CPI report on Thursday.

I do not think there will be any surprises in the FOMC minutes this time, as it seems pretty clear what the Fed’s intentions are here. The only thing I will be paying attention to is the mention of rates potentially heading beyond 4.6% and how many times the word recession comes up.

The market fell late yesterday after Governor Andrew Bailey of the Bank of England warned pension funds that the bond-buying program will end in three days, and they should finish rebalancing their positions by then.

Stocks didn’t like this because the news that the BOE would be buying bonds was seen initially as the first central bank caving in. That is not the case and never was the case, and once reality set in, it led to the index dropping into the close.

SPX Chart
SPX Chart

S&P 500

Nothing on the chart from yesterday makes me think that anything has changed in view, with the potential for the S&P 500 to fall to between 3500 and 3520 over the next few days. The 3,580 support region on the S&P 500 futures is essential because it marks the September 2020 high, and once that level breaks, there is a path to reach 3,220, which could be reasonably quick. When the market rallied in November 2020 after the election, it did so in a straight line, and sometimes those straight-line type rallies can be almost like gaps and fill fast once they come back into play.

SP 500 Futures Daily Chart
SP 500 Futures Daily Chart

What is sort of a concern is that the 2008 analog chart, which I have shared previously, also suggests we are in the middle of such a drop. Once 3,580 support breaks, things could quickly deteriorate with the CPI report coming Thursday, the FOMC minutes today, and the BOE intervention ending Friday, the ingredients for a 10% plunge in the market between now and the end of October are there.

SPX Index Daily Chart
SPX Index Daily Chart

Roku

Roku (NASDAQ:ROKU) continues to melt, and the RSI continues to melt. The RSI tells you the slide in shares isn’t over. While it might be hard to see on my chart, there is a gap to fill from January 2019 at $34, and that may be where this stock is heading.

Roku Inc Daily Chart
Roku Inc Daily Chart

JP Morgan

JP Morgan (NYSE:JPM) will report results on Friday morning; the stock is acting poorly heading into that report. The shares broke down yesterday, falling below support at $102. At this point, the next significant level of support comes at $96.

JPM Daily Chart
JPM Daily Chart

Microsoft

Microsoft (NASDAQ:MSFT) also looks very weak, with support at $225 now in question. If that support level breaks, there is nothing until $211. I am a long-term believer in Microsoft. I have been for years, but things can get dicey should $200 break.

MSFT Daily Chart
MSFT Daily Chart

Taiwan Semi

Taiwan Semiconductor Manufacturing (NYSE:TSM) fell sharply yesterday after the ordinary shares reopened in Taiwan after a holiday. The stock played catch-down to the rest of the sector’s weakness, and $58.80 appears to be a place shares may be heading. But more importantly, TSM can be a good indicator of the direction of the S&P 500 over time.

TSM Daily Chart
TSM Daily Chart

Original Post

Stocks May Be Facing A Massive Decline
 

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Stocks May Be Facing A Massive Decline

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Comments (11)
Petet Larkar
Petet Larkar Nov 14, 2022 5:01PM ET
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this guy usually calls the bottom. buy when he sells bearish. I'm suprised he is even in business
Emanuel Dabah
Emanuel Dabah Oct 15, 2022 8:52AM ET
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We have more 50% down , most stoks are infalated for 20 years now time
taylor jason
taylor jason Oct 12, 2022 2:04PM ET
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Michael Kramer bearish? what else is new. another failed TA analyst
Skullnbones Skullnbones
Skullnbones Oct 12, 2022 1:33PM ET
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already had massive decline. daa
abrar khan
abrar khan Oct 12, 2022 11:40AM ET
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technically markets are grossly in oversold even on monthly charts, never been such even in pandemic bottom.We just one pause or hint towards it ,markets ready for lasting upmove.
rony cheng
rony cheng Oct 12, 2022 11:40AM ET
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upmove will be ever lasting and down move is always temporary... lol
Andrea Mears
Andrea Mears Oct 12, 2022 11:40AM ET
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Thank you for the analysis and targets!
Joe Rizzuto
Joe Rizzuto Oct 12, 2022 8:27AM ET
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the rally in November 2020 times with the Pfizer news of first vaccine for covid
Mario tragik
Mario tragik Oct 12, 2022 7:50AM ET
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The Kramer indicator is the best there is, thr more assumptions he makes and the gloomier he gets tells us there is probably some reversal coming soon. So time to go long in the short-term.
Dweeptaru Das
Dweeptaru Das Oct 12, 2022 7:50AM ET
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as Kramer said, first gloom then only any probability of next bloom. that's correct and will happen just like he said
Kris Jay
Kris Jay Oct 12, 2022 7:50AM ET
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he has been spot on in terms of the decline since spring of 2022 when i first watched video or saw his analysis.  i wanted to find fault with it,  given he's virtually unknown and lacking polish.  But he's been right on and very good technical analysis.  I was getting reassurance and direction of the market in my SQQQ and SPXU positions from Kramer. or as I say the three Michaels, Kramer, Burry and Wilson.
taylor jason
taylor jason Oct 12, 2022 7:50AM ET
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this guy has been around for years. he is bearish every time. only difference this year is that the market is actually bearish. just watch. when the bear market is over. he will remain bearish throughout the course of the entire next bull market
John Berry
John Berry Oct 12, 2022 7:34AM ET
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CPI Report is gonna melt the markets to put it mildly. Unless that CPI number comes in below 7.5%(which will never happen). the market is in trouble short term. Long term I am scooping up stocks at these prices. See you in 2024 when they all double from here
Mario tragik
Mario tragik Oct 12, 2022 7:34AM ET
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imagine it was that easy.
Richard Saunders
Richard Saunders Oct 12, 2022 7:34AM ET
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It actually is. The hard part for most people is the inability to stop checking the market every 3 minutes on their phone. Most don't have the stomach to hold long-term.
Dweeptaru Das
Dweeptaru Das Oct 12, 2022 7:34AM ET
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u are precisely correct ✔
jason xx
jason xx Oct 12, 2022 5:43AM ET
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The only thing that 2020 rally did was make up fot the decline right before it. You would be better off reading chicken bones...
Stan Flation
Stan Flation Oct 12, 2022 5:40AM ET
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TIPS and TLT are at lows from 2011 and FRA-OIS still rising. It looks like S&P500 (and all the other indices) deserves more discount if the CPI doesn't print a exceptional good print!!!
jason xx
jason xx Oct 12, 2022 5:40AM ET
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You're not bias at all. Dont get to excited CPI could be exceptionally low and cuase a massive rally. Rate hikes have to have an effect at some point.
 
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