Stocks Not Out of the Woods as Rates, Oil Keep Surging
Michael Kramer | Sep 28, 2023 08:23
Stocks were in for a wild trading day, with the S&P 500 firmly in a negative gamma regime. It means that wild swings will persist as long as this case, and there was a pretty good example of that when the index erased a 70-bps loss and turned positive in about 30 minutes of trading yesterday afternoon.
Still, the S&P 500 finished the day unchanged and seems to have found a level of some support at the moment. Ultimately, I think it has further to fall, but a brief pause or rebound doesn’t seem out of the question. A gap below 4,240, would be a negative, and suggest a move back to 4,200 is in the works.
Much of this was also due to oil surging again, rising to almost $94. Oil has broken out again, and oil moving to a range of $97.50 to $98 doesn’t seem very far off at this point, with little resistance in the way.
Of course, that pushed yields higher, with the 10-year trading around 4.62% and closing in on 4.68%. After 4.68%, it is tough to find a level of strong resistance until you hit 5.25%.
Get The App
Given the fact the 2/10 spread appears to now be bear steepening, with the ten rising to the two, it seems possible that the 10-year could add on an additional 15 bps from here. That would only get the spread back -35 bps, or post SVB levels, assuming the 2-year remains roughly unchanged.
Meanwhile, the HYG ETF is sitting on important support, which, once broken, could be a bad sign. It feels like the HYG has somehow managed to stay immune to the carnage in Bond land and hasn’t seen the same level of decline. Clearly, that can change if the HYG breaks support around $73.
/h2
In the meantime, Micron (NASDAQ:MU) reported results that came in better than expected and even gave a better-than-expected revenue guide. But it was its earnings guidance that came in a range of loss per share of $1 to $1.14 versus estimates of $0.96 per share, which is ugly.
Then there was the gross margin guide that was even worse, at -2% to -6% versus estimates for 0.66%. Following those gross margins and earnings guides, I would be surprised to see the stock trade higher tomorrow. Micron has tended to be a gross margin story over the years, and that guidance won’t help. There is support around $64.5 and restiance around $72.
Following Micron, SK Hynix (KS:000660) could be one to watch tonight in South Korea. I think the chart below speaks for itself.
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.