Stocks Drop And Approach New Lows
Michael Kramer | Nov 04, 2022 02:11AM ET
Stocks moved lower yesterday, with the S&P 500 dropping by around 1%. It looked like one of those pause days we see pretty often on the charts, in between bigger-sized moves. Today with the Jobs report, anything is possible, but given the strength of the data in many recent surveys and jobless claims, I think we have seen little, if any, change in the unemployment rate. Estimates are pretty low, with the nonfarm payroll rising by around 198,000 and the unemployment rising to 3.6%.
But based on how we have seen these big drops followed by pause days work before, I think we probably continue to head lower and towards filling that gap at 3,580.
The iShares TIPS Bond ETF (NYSE:TIP) is very close to making a new low here, and as we have tracked now for a very long time, if the TIP ETF makes a new low, the Invesco QQQ Trust (NASDAQ:QQQ) won’t be far behind. Watch the TIP ETF today for clues.
The CBOE Volatility Index moved lower yesterday, and we are seeing traders looking for hedges more aligned with the economic data schedule. With S&P 500 options that now expire every day, why buy a put that is 30 days away when you can buy a put that expires next week? So you can see that the VIX fell yesterday, but the VIX 9-Day Volatility Index remained in the same range it has been for some time.
PayPal (NASDAQ:PYPL) was clocked after hours on weak payment volumes and weaker-than-expected revenue guidance. So much for my bull flag and rising RSI. At this point, the stock is in the range that could lead to it retesting the lows around $69.50. After that, you could be talking about a stock that goes under $60 because support thins out after that. It is just amazing what has happened to this stock.
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Adobe (NASDAQ:ADBE) fell sharply yesterday, and this has been one of the stocks I like to watch for broader market sentiment. So I will watch closely to see if Adobe will soon make a new low. If it does, it is probably a harbinger of what will come for the rest of the market.
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