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The Stock Market Is Like A Sea Of Tranquility Waiting To Be Stirred

By Michael KramerStock MarketsAug 26, 2021 12:39AM ET
www.investing.com/analysis/the-stock-market-is-like-a-sea-of-tranquility-waiting-to-be-stirred-200600036
The Stock Market Is Like A Sea Of Tranquility Waiting To Be Stirred
By Michael Kramer   |  Aug 26, 2021 12:39AM ET
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US500
-1.72%
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MU
+0.89%
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WDC
+0.06%
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-2.09%
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+-0.26%
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S&P 500

Stocks pushed higher to close up about 22 bps on the SPX. It is the case of the dwindling and disappearing volume in the equity market. Futures volume in the e-minis has dropped dramatically and appeared to be at the lower end of the range over the past few months. It tells us that it doesn’t take much effort to move the market higher at this moment in time.

It makes it easier, I guess, for the equity market to convince itself that Powell is going to be dovish on Friday morning because the meeting is now virtual.

S&P 500 Emini Futures Daily Chart
S&P 500 Emini Futures Daily Chart

Meanwhile, the equity market appears to be clueless about what is happening in every other corner of the macro landscape. Bonds, currency, volatility, and the international markets seemed to be positioned in such a manner that would suggest a tapering signal is expected. I talked about all of this much more in a video today – RTM Video: Every Market Sees It But The US Stock Market – The first two weeks are free to try.

Take yields; for example, bond yields rose sharply Wednesday, climbing to 10-year. It looked like a breakout to me, and that once it clears 1.40, the path to 1.55% gets pretty easy. The RSI was bullish and broke free of that long-term downtrend that started in March. The 2-year had a big move yesterday, and the only thing that would push the 2-year yield higher at this point was in preparation for the Fed to taper.

US Govt Bonds 10 Yr Yield Daily Chart
US Govt Bonds 10 Yr Yield Daily Chart

Micron

Micron Technology (NASDAQ:MU) shot up Wednesday after they reported that Western Digital (NASDAQ:WDC) was in talks with Kioxia. Micron rose right to the 50-day moving average and resistance around $75 and crumbled once it reached that price. I really don’t see much changing for Micron, and I think the failed breakout attempt on the news confirmed the bearish view I hold.

Micron Inc Daily Chart
Micron Inc Daily Chart

Salesforce

Salesforce.com (NYSE:CRM) blew out results yesterday, with non-GAAP earnings of $1.48 per share, which was $0.55 per share better than estimates. No surprise, right? Of course, they also had non-GAAP earnings due to mark-to-market accounting, which accounted for $0.43 of that big beat.

Still a beat, by $0.12 when you factor that out, but given that the stock moved up more than 11% since the middle of July. Revenue beat too, coming at $6.34 billion vs. estimates of $6.24 billion. Revenue guidance for the year was in-line. I’d be surprised if the stock traded over resistance today at $267.

Salesforce.com Inc Daily Chart
Salesforce.com Inc Daily Chart

This is the NASDAQ McClellan Summation chart. It shows what we have talked a lot about here, which is the weak breadth of the market. The chart shows that the summation has broken down and really decoupled from the broader NASDAQ. It also shows that given the recent reading of that index, one would think the NASDAQ was down a lot.

The last time the summation index was this low on the NASDAQ was in March 2020, December 2018, February 2016, August 2015, and June 2012. During that period of time, I know the market was like a sea of tranquility, but really quite the opposite. So here we are, with the NASDAQ trading at a record high. Probably means nothing, right?!

MCSUMNAS Daily Chart
MCSUMNAS Daily Chart

Original Post

The Stock Market Is Like A Sea Of Tranquility Waiting To Be Stirred
 

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The Stock Market Is Like A Sea Of Tranquility Waiting To Be Stirred

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Comments (3)
Franco Dominguez
Franco Dominguez Aug 26, 2021 8:59AM ET
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powell would said nothing only "your generation is trazh" if he moves 1/4 rates, would be okay for later downtrend. before pandemic 0% rate, after pandemic 0% rate. what a job not doing anything
Tom Jones
Tom Jones Aug 26, 2021 3:55AM ET
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Thanks for posting. Guess the summation indicator is a good ex of why multiple indicators are used in TA to deterr entries/exits.
Vv Pp
Vv Pp Aug 26, 2021 3:09AM ET
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Probably it means McClellan fail even if NASDAQ goes lower now.. at least this is obvious from a mathematical point of view according to this chart
 
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