9 Monster Stock Market Predictions: Is It 1999 All Over Again?
Michael Kramer | May 10, 2021 12:18AM ET
Stocks moved higher on Friday, despite the Jobs report coming in much lighter than expected. The move higher allowed the S&P 500 at least to break free of its recent trading range, while the other indexes continued to show signs of weakness.
The options market was only implying a move of 1.15% last week, based on the long straddle strategy from the $422.50 strike price.
h2 The Ghost Of 1999/h2The divergence of the indexes is very reminiscent of that of the late 1990s. The 1998 bottom serves as the perfect starting point for the S&P 500 of today. Again, perhaps it is a coincidence, and I’m not trying to suggest they are the same or that the same fate lies ahead. I’m merely trying to point the similarities.
The Nasdaq Composite has been able to find support around the 50-day moving average. Clearly, a break of that moving average would be a big blow and likely result in the Composite moving back to the March 2021 lows. The index has lost plenty of momentum, so this week could be of great importance in determining what happens next.
One could argue there were plenty of points where we could have seen the end of this recent rally in the S&P 500, and through the miracles of market rotation, the index has managed to grind sideways or higher in astonishing fashion.
However, one could also point to this recent high as the end of a 5 wave count off Vaccine Monday. That was when a broadening wedge pattern started. Additionally, Wave 3 is equal to 1.618% of Wave 1, and Wave 5 is equal to 1.618% of Wave 3. It does nicely. Wave 5 would complete somewhere around this 4250 region.
Get The News You Want
There also remains a substantial divergence in terms of the trend in the S&P 500 and the percentage of total stocks above their 50-day moving average. Of course, none of this tells when a correction will occur in the market.
It tells us that we must remain on a high alert because not all is healthy in the market.
Alibaba Group Holdings (NYSE:BABA) will report results later this week, and the chart does not look strong. The stock has been struggling for months, and there appears to be a descending triangle pattern. That is a bearish pattern suggesting the stock falls to around $193.
Capital One Financial Corporation (NYSE:COF) has been on a parabolic run higher recently, with multiple bump-and-run patterns. Perhaps it can continue over the longer term, but with an RSI of 82, one has to think it pauses and consolidates sideways or moves lower.
3M Company (NYSE:MMM) has made it this far; you have to think it will fill the rest of the gap up to $219.
Uber Technologies (NYSE:UBER) looks terrible, and the stock has performed the last several weeks horribly, and there seems to be no reason to me why it can’t retest $36.
I guess we can only wonder at this point if the deflation of Zoom Video Communications Inc (NASDAQ:ZM) will continue to not.
Clearly, we know just how overvalued the stock was. No doubt they have changed how we communicate, and the stock will likely be a good buy at some point, but probably not yet.
Would it be surprising to see it back at $200, before not too long? No, I would not be surprised at all.
DocuSign Inc (NASDAQ:DOCU) is another stock deflating. I’m not sure what is they do that is special.
You can sign a Document electronically, great. Sounds revolutionary? Not really.
It has been holding on to $190 for its dear life, but, once it breaks, it is over; with a long deflationary way down.
Well, Roku's (NASDAQ:ROKU) active account growth seems to be slowing dramatically on a quarter-to-quarter basis.
They still have roughly the same number of accounts as Amazon (NASDAQ:AMZN), so there is nothing disruptive.
You would be surprised at the number of people that do not know that Fire Stick and Roku have about the same number of active accounts. It looks like it filled the gap at $335, and now it will probably fill the gap at $285.
Original Post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.