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September 26, 2021
Stocks – FB, CAT, MU, NKE
Macro – SPY, DXY, VIX
Mike’s Reading The Markets (RTM) Premium Content – $45/MONTH OR $400/YEAR
- RTM Tactical Update: Nike And FedEx Fire The First Warning Shots
- Live Q&A Session Today At 1 PM ET
- RTM: VIX Crush Sending Stocks Up
- RTM Exclusive- GE Maybe Poised For A Big Rebound
- RTM- The Taper Is Coming “Soon”
- RTM Exclusive – AMD Nears A Massive Break Of Support
- RTM- Gearing Up For The Eye Of The Storm
- RTM Exclusive: Teladoc’s Stock Is Ready To Unravel
- RTM- Targeting The 200 Day-Moving Average
- RTM Tactical Update: Earnings Trends May Have Started On A Path Lower
VIX
Stocks finished the week of September 24, higher by around 50 bps, after starting the week down by nearly 2%. As previously discussed, much of the rebound was driven by a push lower in implied volatility, as noted by the sharp decline in the VIX on Wednesday and Thursday. Friday proved to be a different outcome, with the S&P 500 rising just 15 bps once the VIX returned to lower levels.
Friday’s price action seems to have confirmed that the sharp rally was nothing more than a reflexive trade due to the fast nature and movement of the volatility in the market. With the VIX back to where it started, I would be surprised if the strong buying witnessed last week sticks around. I explained in all in this free YouTube video recorded Friday morning.
S&P 500 (SPY)
The recent rebound in the market at this point was a 61.8% retracement on both the S&P 500 cash and the S&P 500 futures. If it is the case, then the move higher was nothing more than a corrective wave in an otherwise downtrend. It would tell us that another leg lower is coming with a likely retest of the September 20 lows.
Dollar (DXY)
The dollar index looks like it is getting ready to break higher. It would not be surprising considering non-commercials and non-reportables are buying the futures contract and have their most prominent net long positions in forever.
Micron (MU)
Micron will report this week, and I have been relatively bearish on it now for a few months. DRAM prices have been falling more recently, and there had been a massive put buyer of the September $75 strike price a few weeks ago. It looks like they rolled out of those and into the October ones, based on the changes in open interest. You can see the triangle pattern that has formed, which is a sign of consolidation, but generally, these patterns will break in the direction of the trend, which has been firmly lower. Volume has been nothing special either, which tells us that buyers are still hesitant to step into the stock even at these reduced levels. There is probably one more leg lower left, with the potential for the stock to fall to that $58 to $60 range.
Caterpillar (CAT)
Caterpillar shares have made a lower low on the price and a higher low on the RSI. That is typically a good indication that a bottoming process is in the works. It doesn’t mean the stock can’t go a little lower still, but at least for now, that is a positive sign. A lot will depend on what happens when the stock gets to resistance at $199. If it can’t break above that level, it stands a good chance of getting back to $210.
Nike (NKE)
It doesn’t look good for Nike here, gapping below support at $150 while closing below it on extreme volume. I’m hesitant to say it will fall to $133 because it is so oversold now, but the stock can’t get above $151 over the next few days; the odds of a drop to $133 increase dramatically. (You can read more about Nike and FedEx’s results and what they mean for the S&P 500 in this week’s premium newsletter update, on my Shopify store — Nike And FedEx Fire The First Warning Shots for a $9.99 download fee)
Facebook (FB)
Facebook broke the uptrend last week, and now the stock is oversold. Perhaps it rebounds back to $365 over the very near term. But once a significant uptrend breaks like this one has, it is generally not a positive sign.
Have a great Sunday.
Mike
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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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