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.
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STOCKS – AAPL, NVDA, CSCO
MACRO – SPY, BTC, VIX
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MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN AAPL
Stocks rallied on Friday, with the S&P 500 finishing higher by 1.7% to close around 4,280. At this point, the index has risen into overbought territory with an RSI now 71 and at the upper end of its Bollinger band. Additionally, there continues to be a rising wedge pattern in the index, but one that is a bit wider than how I initially drew it out. These things are formidable to gauge to something, and the rising wedge in the RSI seems to confirm that the rising wedge in the S&P 500 continues to exist.
Additionally, the index is now within 20 points of closing a gap from May 4. That gap could offer plenty of resistance should the index open higher Monday morning and push higher. Regardless, I still think we will likely see a significant pullback to the 3,950 region over the next couple of weeks. The 3950 would be around 61.8% retracement should we top out between 4,280 and 4,300.
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VIX / VVIX
The VIX and VVIX divergence grows wider, and I am curious to see how much longer this plays out. There appears to be some normalization process, as the ratio of the VIX to VVIX is coming down quickly now, and appears to be on the path to return to the previous uptrend that had been placed. I think this “normalization” process should continue a bit more, but at the same time, I also think it is near its end.
Bitcoin has managed to hold up much than I thought it might, but the outlook appears to be the same. A rising wedge pattern is forming within the bear flag pattern, strengthening the case for this fall lower and potential test 16,400.
Apple’s rally seems overdone. I’m happy to see it rise, as I have owned the stock for years. But it looks unrealistic, especially following an earnings report and guidance that didn’t appear to be among the company’s best. The shares are overbought with an RSI over 70 and approaching its upper Bollinger band. A fill of the gap back to $156 doesn’t seem that hard to believe to me.
Nvidia gapped below an uptrend, and that is generally very bearish. At this point, it appears to be either revisiting the breakdown or attempting to fill the gap. Either way, the stock looks like it doesn’t have much upside left. Their revenue shortfall was significant, and once unless they give better than expected guidance when they report results, I don’t see how any rally is sustainable.
Cisco is in the process of filling a gap from May, and it would be disappointing for the stock not to fill that gap at $48.45, especially given how far it has come in recent weeks. They will report results this week, and those results will probably be a determining factor in what happens next.
Anyway, that is it for a summer Sunday.
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. 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.