The Dow Jones Industrial Average (^DJI) fell 605 points on Thursday, driven mainly by a selloff in Boeing (BA) shares, which tumbled more than 7% after the company’s CFO warned about draining cash flow.
Yahoo Finance Jared Brickley I’m sharing my market analysis for May 23rd, including why the S&P 500 (^GSPC) may be showing a “flashing yellow light.”
For more expert insights and the latest market trends, click here to watch the full episode of “Ask the Trends.”
This post was written by Stephanie Mikulich.
Video Transcript
It was a rough day for Wall Street in a while, with stocks finishing lower despite the Nasdaq and S&P 500 hitting record highs earlier in the session.
Jared Blier brings us the lowdown on today’s deal.
Jared!
Thank you, Josh.
We’ll start with the PM IS bulletin, which we got at 9:45 a.m. This is not typically a market-moving report.
But we saw this morning that it moved the markets, primarily the bond markets.
And negative yields, which had fallen by a few basis points that day, jumped up by 45 basis points.
Here are some interesting quotes from the report’s contributors:
This is S and P. What’s interesting is that the main driver of inflation is now coming from manufacturing rather than services, meaning that cost and selling price inflation is now somewhat elevated from pre-pandemic baselines in both sectors.
The final step to the Fed’s 2% target seems out of reach.
We’ve been talking about strength in manufacturing, strength in services, and if you look at some of the latest reports here, you’ll see that the goods sector is starting to pick up again.
So what will the Fed do?
Here’s the question.
That was my question.
Jared, do you see this?
Well, yes.
Was that like another data point for you?
Returning to Jay Powell’s 2% target may prove to be a tougher task than some had anticipated.
Well, I think a lot of recent evidence points to problems that are coming.
Now, the city’s economy is phenomenal.
They are trending downwards.
So the US economic data is a little weak.
And that strengthens the view that the Fed can cut interest rates.
But these outliers continue to appear.
And judging by market movements, this was a big thing today.
Now, on to Jared Blier’s next point.
no doubt.
So here we’re looking at vics, and we’re going to show you a chart of vics.
We start the day at the lowest point of the year.
This is a 3 month chart.
Here is a chart of the year-to-date, which was the lowest point this year.
So a VICS with a lower amount simply means there has been a reversal.
Yes, this is a big reversal.
I’ve put up a two-month chart here so you can see this candlestick.
That’s a pretty big candle.
This time it’s the other way around.
The VIX often moves inversely to the stock market.
If you look at the benchmark stock index, the S&P 500, you will see a big red candle.
This was the highest record ever.
Sometimes a gap will occur to a record high, but this simply means that the price opens lower at a higher price than the previous day and then starts to trend lower.
Well, this could be a signal for a reversal.
Well, here’s the chart so far this year.
You can see that there was one candle like this after a very similar situation, although it wasn’t a record high.
We’ve seen this before.
A lot of time.
These candles occur at high prices.
do not want to.
I don’t want to sound the alarm too early because it depends on what happens tomorrow and the day after, but this could be a high point in the short term.
So that’s my question. Jared, when you look at that graph, what kind of signal are you sending to your viewers right now? This is a flashing yellow signal to me.
This means that we need to be on the lookout for further declines in the coming days because, similar to what we saw, we may be experiencing a peak in distribution right now.
This does not mean we are entering a bear market, but that’s a whole other story, because this clearly wasn’t a bear market.
But my point is, after such a surge, it may be time for a pause.
And based on what we’ve seen with semiconductors, we can see that right away.
Well, that’s just further evidence against it.
Let’s move on to the next bullet point.
Let’s move on to the semi-finals.
no doubt.
So I’ve been looking.
In fact, today is one market day out of the year, but so what?
I’m looking at copper and chips because they’re both actually up 23% this year, so I’ll show you a chart of both together.
What’s interesting is the chart of copper and semiconductor stocks.
They go together in a way.
Copper prices have been surging recently, and copper is shown here in light blue.
And here we are in Philadelphia, with the Philadelphia Semiconductor Index in purple.
But you can see that the two prices ended up being the same.
That could just be a coincidence, or the annual refund amounts were the same.
It’s just a coincidence, but it’s relevant.
So I thought, this is relevant.
So, is there a relationship between red metal and semi-autos?
Because copper goes into chip stocks, not into chip stocks.
The chip itself is made of copper.
It is integrated into the architecture.
That’s right, the backbone.
To conduct electricity, we need wires.
Copper is therefore a fundamental building block of chips and an infrastructure for information transmission.
So they kind of go hand in hand here.
In the long term, I think raw material prices will continue to rise.
Well, something interesting happened about this today though.
And then another side point is, we saw the price of the Sox drop, but copper took a big hit yesterday, are the two related?
I think it’s still too early to tell, but I’ll be keeping an eye on chips, raw materials and their prices.
Yes, Jared Bricker.
Thank you, my friend.
appreciate.
