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3 Keys To The Stock Market For The Week Of February 12
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Subscribe →The week of February 12 will continue to volatile, whether the stock market is going up or going down. The tug of war we saw on Friday, between positive and negative territory will likely continue especially on Monday. But as we wrote yesterday, signs are emerging that a bottom is in the process of being put and place, and there will be some keys to this market that could suggest the worst is over.
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Vol
Volatility will obviously be the key to the market, and the VIX and many of the ETF products will be the critical focus. The chart shows how dangerous the inverse VIX ETF products are, below is the SVXY, which has been destroyed. But more important than prices, we want to see the volume continue to fall back to normal levels.
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Here in lies the problem too, and I am shocked when I see products where you can buy volatility on individual stocks, like the VXAZN, and VXAPL, basically betting that vol will rise on Amazon or Apple, these are nothing more than casino like products, betting on volatility rising.
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Inflation and Yield Watch
The Consumer Price Index reading is coming out this week, and the street is looking for m/m reading of 0.3 percent, and a y/y rise of 2 percent. We can see that CPI has traced OIL pretty consistently over the past.
But unfortunately, it also likely means that the inflation reading is likely to come in ahead of expectations. But I will guess that unless it comes in some crazy reading of above 3 percent, I think the market will be calmed, that inflation is not running away, which I don’t think it will do.
For now, over the short-term, if I had to guess, yields are likely done rising for a bit and a retracement back towards 2.6 percent seems in order.
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Stock Watch
Watch the leadership in the stock market from stocks like Apple, Alphabet, and Microsoft. These are the leaders in the market, and when times get rocky one wants to see the leaders lead.
Micron could also be a big one to watch during the week, as the company recently pre-released revenue guidance which was higher than expectations.
But the market cared not, and if a bounce or even a bounce is attempted, it should be found in companies that continue to beat and raise expectations.
Facebook also has seen its shares fall sharply, and have fallen to levels not seen since the early fall, and for now, have found a meaningful bounce.
The technology ETF (XLK) could also be critical, as that ETF was grossly overbought, and has come down hard. Strength and outperformance would is a big positive.
Good Luck
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Tags: #sp500 #apple #technology #alphabet #micron #facebook #amazon #microsoft #vix #yields #volatilty
This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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