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Stocks Pop, Then Drop Following Weaker ISM Data


Portfolio Manager with Interactive Advisors, CEO of Mott Capital Management



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


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.


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.


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.


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.

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