We posted this to subscribers last night...
Last week I wrote (to subscribers) that I thought it looked like SPY, QQQ, BTC and Oil could all breakdown in unison. Ahead of that I said that the tech fundamentals were deteriorating and I downgraded semis last Sunday a week ago.
I mentioned that I thought that tech fundamentals would turn technicals from up to down. Normally I don't want to 'predict' technicals but when earnings fundamentals are changing up or down that's a legit reason to get in front of technicals.
It's important to listen for slight changes in datapoints. Tech datapoints continue to sound slower. Covid lockdowns in China continue which should slow ordering and demand. Ordering slows because OEMs can't fill their desired quantities if they can't get full allocation of everything they need. Demand slows in China because consumers are distracted. Add to that European consumers distracted by war and you have two major markets slowing real-time.
I think that Q2 eps guidance will disappoint and, as I've been saying (to subscribers) I expect that the stocks should (now continue to) trade down ahead of those reports, balancing the risk/reward before we get to actual earnings reports.
Reports are coming out that so far the war has not affected industry allocations of substrates. But if the war were to continue another few months, then there will likely be one more important item tightening supply and likely slowing tech orders.
Tech is not cheap and many stocks are closer to their highs and lows. These are meaningful changes fundamentally that should be appreciated.
CPI reports on Tuesday and is expected to be a big number. The Fed is about to unwind all the goodness that launched markets up. The combination of slowing fundamentals and tightening Fed is a negative combination for markets.
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