5 Monster Stock Market Predictions – The Week of May 23, 2022

This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.

Otherwise, enjoy the column!

Subscribe to the Monster Stock Market Commentary and join the 2,812 subscribers getting it for FREE every day!

5/22/22

STOCKS – ZM, TSLA, NVDA

MACRO – SPY, VIX

Mike’s Reading The Markets (RTM) Premium Content – $65/MONTH OR $520/YEAR – The First 2-weeks are FREE to try – GET 20% OFF!.

This week’s free YouTube video:

Stocks had a very volatile trading session on Friday, with the S&P 500 opening higher to start the day, then falling sharply mid-day, only to rally into the close. Believe it or not, The index rose by more than 1% to start, then plunged 3.3% from that point, only to rally 2.4% to finish the day up one bps. There is no doubt that options expiration played into the volatility.

This week will be volatile, too, with a modest amount of economic data, but more importantly the release of the Fed minutes. The Fed minutes for the most part have been a sell the news event, but this time may prove to be different, especially since it seems like Powell may have front the minutes when he gave an interview at a WSJ event.

The only difference this time, is that VIX is already elevated. It will take an even more significant VIX surge to get the market moving down again. The VIX even though it is 29.4 is at its highest level heading into an FOMC minute event. If the market were to rally sharply on Monday and Tuesday and the VIX moved back to the mid-20s, the odds for another post-minutes sell-off increase. But if the market stays down and the VIX remains around 30, it will take an even more hawkish reading of the minutes to get the VIX moving higher.

It will make the direction post FOMC minutes a moving target this week. That said, reserve balances held at the Fed continue to drop, and I think even if we get a rally, it is likely to be well contained and remains no higher than the 4050 region.

S&P 500 (SPY)

I had noted on Thursday there was a bear flag that started, and I think it still has a bit further to go before the reversal starts. I get the feeling that we are likely to see continued selling pressure to start the week, and ultimately, the FOMC minutes serve as a de-risking event, with maybe an Intraday low coming at some point in the low mid-3700s to start the week.

Zoom (ZM)

Zoom will report results on Monday afternoon, and there has been a decent amount of bullish options betting for the stock. The one bearish options trade I saw was more of a bet on a range than a plunging stock. The chart, I think, shows bullish signs. Despite the broader markets making new lows, this stock hasn’t made a new low since May 12, and the RSI is firmly moving higher, a bullish divergence. Could there be more bad news out of Zoom? Well, anything is possible. But I do think a move to $107 is possible. (Should be free to read – Zoom’s Stock May Surge Higher Following Quarterly Results)

 

Nvidia (NVDA)

Nvidia will report results this week too, and given AMD’s results, I’m not sure Nvidia will have a great outlook. I know many people think that AMD had a fantastic quarter and amazing guidance. But based on everything I have seen, the estimates that AMD beat did not include Xilinx, and the guidance that AMD gave that beat estimates, was also based on estimates that did not include Xilinx. So when I added the forecast for Xilinx with AMD’s, I found that the guidance AMD provided was basically in line with the two companies combined analysts’ estimates. So sure, Nvidia could beat and raise this quarter, it is possible, but the question is if it will be good enough always matters. The chart looks terrible, and it continues to track Cisco’s 2000 meltdown nicely. Actually, it tracks worse. Remember, for those of you that don’t know, in 2000, Cisco could do no wrong, and the sky was the limit. (Should be free to read- Nvidia’s Declines May Be Far From Over)

Tesla (TSLA)

Tesla has not reached oversold levels yet, and I think its declines are not over yet. My biggest concerns with the stock and the reason I sold my remaining balance on its last visit, around $1100 in early April, was due to that projected growth rate that the company has laid out. The more cars they deliver, the harder it becomes to achieve that 50% annualized growth rate, which made me worry that once that growth rate guidance falls or is anticipated to slow, the stock could get hit hard. The odds of this stock falling back to $550 are high, and there is even potential for it to back to that gap at $400 overtime. Before you start thinking, I have no idea what I am talking about; consider that I bought Tesla in August 2014 and held it for almost years. It Doesn’t mean my assessment will be right or wrong, but I certainly understand this company better than most.

That will be all for today; see you back here on Monday.

Mike

Charts used with the permission of Bloomberg Finance L.P.

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. 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.