5/2/22 April Left with The Bulls

News:

Friday’s losses capped a dismal month. The Nasdaq led the decline losing 4.2% on the day…

The selling ended one of the worst Aprils on record. Here’s how the indexes performed…

  • Dow Jones Industrial Average -4.9%
  • S&P 500 -8.7%
  • Russell 2000 -10.0%
  • Nasdaq Composite -13.3%

It was the Nasdaq’s worst month since 2008. It and the Russell 2000 each reached new 52-weeks lows signaling that the bear market is not over.

The biggest loser of the day was Amazon (AMZN) falling over 14% after disappointing earnings. The decline erased over $200 billion in market cap.

Elon Musk’s sales of Tesla (TSLA^) topped $8 billion as he works to fund his Twitter (TWTR^) purchase. As we noted on Friday these sales were expected and we don’t expect any further selling from Musk.

Warren Buffett’s Berkshire Hathaway (BRK) hosted its annual shareholder’s meeting over the weekend. Buffett has been deploying cash. Notable purchases were Alleghany (Y), HP Inc. (HPQ), and Chevron (CVX).

Technicals:

The bottom fell out … Literally. The Nasdaq and the Russell 2000 ended the day near their lowest point of the past year and below any real support.

QQQ Daily Candles – Chart via thinkorswim

While RSI levels are nearing oversold they remain in neutral territory.

The put-to-call ratio remained oversold for a 7th day…

Timing:

May marks the beginning of the worst six months…

Since 1950 the Dow Jones has gained only 26% collectively from May to October. The best six months, November through April gained 12,209%.

The FOMC meeting will be held in the week ahead. The market is expecting a 0.5% rate increase to be announced on Wednesday afternoon.

Since the market was not able to rally when it should I am concerned that the bears might have a strong showing during the time they are expected to prevail. I’m not a buyer right now.

And don’t forget … We’re in the middle of earnings season. Here’s the outlook for the week ahead…

Watchlist:

*Low Float
^Open Position

^*RCMT has support at $14
*BLBX has support at $5
*RDBX has support at $5
^CYN is on watch
SGML has support at $15
^REI has support at $4
MBII has resistance at $1.15
ARLP has support at $17.50
^CXW has support at $12
SU has support at $35
EDU has support at $12

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