12/19/21

STOCKS – CAR, LSCC, AAPL, CROX

MACRO – SPY, QQQ, IWM

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MICHAEL KRAMER AND CLIENTS OF MOTT CAPITAL OWN AAPL

MICHAEL KRAMER OWNS SPY PUTS

 

Stocks had a rough week finishing lower by nearly 2% on the S&P 500 and more than 3% on the Qs. Still, that hasn’t dissuaded the bulls from dreaming of an end-of-year melt-up. First, there was seasonality on the bull’s side, and that seasonality was supposed to produce the melt-up, and with seasonality failing. There are now calls for a massive short-squeeze into the final weeks of the year.

When considering the driving factors of this potential short-squeeze, it seems far-fetched, in my opinion, and not likely to be the driving force needed to push for an end-of-year-melt-up.  The Refinitiv Most Shorted Index looks pretty bad and is currently sitting at a massive level of support. If broken, it could lead to an enormous drop for the most-shorted names from around its current $187 to about $157, a decline of about 16%.

Additionally, some of the most beaten-up names in the NASDAQ, like Zoom, Roku, PayPal, and Twilio, don’t even have significant short-interest levels. For example, these four stocks have less than 4% of their shares outstanding short, which is hardly enough to create a short-squeeze.

AVIS (CAR)

On top of the Russell 2000, AMC and Avis are the two largest holdings, not the two stocks anyone should take comfort in leading the small-cap sector higher. Since Avis erupted higher on November 2, destroying the legacy of the Dow Jones Transport, the stock has been deflating and is likely to return to that $175 price it was trading before its 108% one-day rise.

Lattice Semi (LSCC)

Not only that, but the third-largest holding in the Russell, Lattice Semi, has broken its uptrend channel, on heavy volume too. Meanwhile, its relative strength index is very much in a downtrend. Not bullish and has a date with support at $64.

Crocs (CROX)

On top of that, Crocs, the fourth-largest holding, has fallen out of an ascending megaphone pattern. It probably has a date about 10% lower, with a gap fill at $119.

Russell 2000 ETF (IWM)

Meanwhile, the IWM has fallen out of the same ascending megaphone pattern. Worse, it too, like CROX, may have a date about 10% lower with gap fill at $196 and falling with strengthening volume.

Apple (AAPL)

The top components in the S&P 500 or the NASDAQ 100 don’t look all that much better. Apple has a similar rising megaphone pattern which suggests the stock faces a short-term decline of about 11.3% to $150. On top of that, the uptrend in Apple’s RSI has broken.

NASDAQ 100 ETF (QQQ)

The Qs have a nearly identical pattern, with the ETF likely to fall through the uptrend at $374 and on its way back to $360 and a gap-fill of its own. Additionally, we can see that the RSI has shifted trends from higher to lower.

S&P 500 ETF (SPY)

The S&P 500 ETF (SPY) has the same pattern, with its next stop around $440.

Do not hold your breath if you are waiting for the end-of-year melt-up. Have a good week.

Mike