7 Monster Stock Market Predictions – Don’t Count On An End Of Year Short-Squeeze

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 2,400 subscribers getting it for FREE every day!

12/19/21

STOCKS – CAR, LSCC, AAPL, CROX

MACRO – SPY, QQQ, IWM

Mike’s Reading The Markets (RTM) Premium Content – $45/MONTH OR $400/YEAR – The First 2-weeks are FREE to try AND get 20% off!

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

Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future results.