Stocks Drop on May 16 With Powell On Deck For Tomorrow Afternoon


Portfolio Manager with Interactive Advisors, CEO of Mott Capital Management



Stocks were all over the place, down sharply to open, up sharply mid-day, and down by day’s end. The S&P 500 index finished lower by 40 bps, but fell by nearly 1.1% from its afternoon highs to afternoon lows.

S&P 500 (SPY)

Whatever you want to call this period of consolidation, the pattern is growing more and more negative. Once the trend line at 4,000 breaks decisively, it should result in that gap-filling at 3,930, with the potential to go to 3,860’s.

S&P 500

The S&P 500 futures have formed a potential double top pattern and will need to break below the 3,980s for that pattern to start playing out, which also suggests a decline to the 3,860s.

S&P 500 Futures


The only reason the S&P 500 managed to hold up as well as it did was that there was a mild VIX melt all day long, which was surprising since Powell will be speaking tomorrow at 2 PM. One would think that hedging would have been focused on today, but maybe the plan is to place those hedges tomorrow morning, or perhaps everyone feels they are already perfectly hedged.

Volatility Index

Financial Conditions (IEF/LQD)

It is clear that despite all the games being played in the equity market, financial conditions are still getting tighter, and based on the IEF/LQD ratio, conditions are now their tightest since early March. This measure works well enough to tell us that it is not good for stock prices over the long run as the ratio rises further.

Financial Conditions

Shopify (SHOP)

Shopify fell 10.5% today after a big up week last week. The rally last week looks like a retracement to the other side of the trading channel and nothing more. If so, the mid-280s should be in the stock’s not-too-distance future.


Bank of America (BAC)

The gap for Bank of America at $33.30 stands a chance of being filled. That would take the stock back to prices last seen in February 2021.

Bank of America

Roku (ROKU)

That may be a falling wedge in Roku and a bullish divergence formed on the RSI. It may even mean the stock can go up should it rise above the down trend line and head towards the $110s. Of course, failure could mean the mid-$70s.


Originally Posted on May 16th, 2022 – Stocks Drop on May 16 With Powell On Deck For Tomorrow Afternoon

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.

Any trading symbols displayed are for illustrative purposes only and are not intended to portray recommendations.