D&D Note (6.13.2022) ~ Markets Hit New Low of 3749 on S&P 500 as Investors Look Ahead to Wednesdays FED Meeting ~
We saw a broad based selloff today with all sectors finishing in the red. The S&P 500 put in a new low of 3749.63 putting us officially into a technical Bear Market (which is falling 20% from recent high). The level we broke to go down over -20% was 3837 on the S&P 500.
The 2 Year Note tops the 10 Year Note today causing another inversion of the yield curve since doing so in April. The 2/10 Year spread is now at -0.27%.
All Eyes are on Wednesdays FOMC meeting where now investors are beginning to price in a 75 basis point hike. While it’s still more likely the FED only does a 50bp rate hike Wednesday there is now a high probability they will hike 75bp in July.
D&D is still holding a large position in cash and haven’t dove back into Megacap tech as it looks like the market still has further downside.
While the VIX jumped 22.59% today to 34.02 we are still not in extreme fear territory which is around a 40 handle.
Travel stocks got hit hard today on worries of demand destruction due to inflation.
Bitcoin crashes -17% falling below $23,000 today wiping out $200 billion. We did see Bitcoin come off the lows of the day but still finished down -15.22%. Binance had to pause Bitcoin withdrawals today for several hours today due to a “stuck transaction.”
The California exodus continues with many Californians now moving to Mexico. In 2021 there were 360,000 people that left California for states including Texas, Arizona, and Washington.
Stock Specific News:
Amazon is set to begin drone deliveries in California later this year.
Coinbase down -11% and Microstrategy down -25.01% were under immense pressure today with the fall of Bitcoin.
Revlon falls 44% on news the company is preparing to file for bankruptcy.
D&D today bought more of Devon Energy and Palo Alto Networks today.
Closing Markets (as of 2:15pm PST)
DOW down -2.79%
S&P 500 down -3.88% (3,749.63)
NASDAQ down -4.68%
VIX up 22.59% to 34.02
2 Year Note up 29.31bp to 3.35%
10 Year Note up 20.63bp to 3.36%
Oil up 0.348% to $121.09 a barrel.
Gold down -2.949% to $1820.20 an ounce.
Bitcoin down -15.22% to $23,282.72
Ethereum down -15.79% to $1,244.70
~ Dave James / Principal Trader and Market Strategist