This website uses cookies to collect usage information in order to offer a better browsing experience. By browsing this site or by clicking on the "ACCEPT COOKIES" button you accept our Cookie Policy.

Stocks Pop, Then Drop Following Weaker ISM Data

By:

Portfolio Manager with Interactive Advisors, CEO of Mott Capital Management

STOCKS – AMZN, F, BAC

MACRO – SPY, IEF, RSP

Stocks finished the day lower, with the S&P 500 falling by roughly 20 basis points. The index started higher, rising all the way to 4,420 and finishing lower around 4,385, an intraday decline of about 85 basis points. The index managed to fill the gap from Friday’s drop at the open and reversed lower once the gap was filled. The weakness came following the ISM manufacturing report, which was worse than expected and suggests that growth may be slowing faster than the consensus viewpoint. This sent yields and spread sharply lower.

S&P 500 1H

We still have a lower sloping RSI, MACD, and advance/decline line. Additionally, the index appears to want to move lower towards that trend line around 4,330.

S&P 500 1D

Rates

Yields moved sharply lower today following the weaker than expected ISM reading. The yield curve continues to flatten, and while many speculate on the reason, the only that matters is that the flatter curve is telling bonds are worried about future growth rates. Based on the 10-year, it would seem that rates still have further to fall and have not bottomed yet. We could see 1.12% relatively soon.

US Government Bonds

S&P 500 EW (RSP)

This isn’t good for the reflation trade, and today the RSP started sharply higher up by nearly 1% but managed to finish the day down 15 bps. The RSP is starting to look like a failed breakout attempt, but it is still too early to say for sure.

RSP

Bank of America (BAC)

Bank of America looks weak, and it should, given the falling rate and contracting spread environment. However, $37 looks like one place it could stop falling.

Bank of America

Ford (F)

Ford has given back all of its post-earnings gains, with a clear downtrend and support somewhere around $12.75.

Ford

Amazon (AMZN)

Amazon had a fairly weak response today to Friday’s big sell-off, with the stock finishing the day flat. It probably doesn’t speak very well of what is to come. Given the weaker growth outlook, it seems lower prices are likely to come, with the next level of support at 3,160.

Amazon

Originally Posted on August 2, 2021 – Stocks Pop, Then Drop Following Weaker ISM Data

Disclosure: Mott Capital Management

Mott Capital Management is the portfolio manager for one portfolio offered by Interactive Advisors. Interactive Advisors clients do not invest directly with the Portfolio Managers like Mott Capital Management, and the Managers do not have discretionary trading authority over Interactive Advisors client accounts. The Portfolio Managers on the Interactive Advisors platform simply license their trade data to Interactive Advisors, which then allows its clients to have the same strategy and trading decisions mirrored in their accounts if the Portfolio is in line with their risk score. Portfolio Managers like Mott Capital Management implement their trading philosophy and strategy without knowing the identity of Interactive Advisors’ clients or taking into account these clients’ individualized circumstances.

Mott Capital Management has entered into a Portfolio Manager License Agreement with Interactive Advisors pursuant to which it provides trading data IA uses to offer a portfolio to its investment advisory clients.  Mott Capital Management is not affiliated with any entities in the Interactive Brokers Group.  

Interactive Advisors is an affiliate of Interactive Brokers LLC.

Pursuant to the Investment Management Agreement between Interactive Advisors and its clients, all brokerage transactions occur through Interactive Brokers LLC, an affiliate of Interactive Advisors. The use of an affiliate for brokerage services represents a potential conflict of interest as Interactive Brokers LLC is paid a commission on trades executed on behalf of Interactive Advisors. Interactive Brokers LLC does not consider this conflict material as it does not sell, solicit, recommend, trade against or otherwise attempt to induce Interactive Advisors to place any orders in any products. Interactive Advisors does not offer services through any other broker-dealer.  All trading by Interactive Advisors is self-directed. Interactive Advisors clients acknowledge this potential conflict of interest and authorize Interactive Advisors to execute transactions through Interactive Brokers LLC when they open an Interactive Advisors account. Clients should consider the commissions and other expenses, execution, clearance, and settlement capabilities of Interactive Brokers LLC as a factor in their decision to invest in an Interactive Advisors Portfolio. Interactive Advisors believes it satisfies its best execution obligation by trading its clients’ trades through Interactive Brokers LLC. While there can be no assurance that it will in fact achieve best execution, Interactive Advisors does periodically monitor the execution quality of transactions to ensure that clients receive the best overall trade execution pursuant to regulatory requirements.

Disclosure: Interactive Brokers

Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Mott Capital Management and is being posted with permission from Mott Capital Management. The views expressed in this material are solely those of the author and/or Mott Capital Management and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

In accordance with EU regulation: The statements in this document shall not be considered as an objective or independent explanation of the matters. Please note that this document (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and (b) is not subject to any prohibition on dealing ahead of the dissemination or publication of investment research.

trading top