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STOCKS – AMD, NVDA, RBLX, PYPL, TSM
MACRO – SPY, IEF, LQD, VIX, VVIX
- RTM: See You Later 1H’22 [DAILY UPDATE]
- RTM: Stocks Stall On Rising Growth Fears [Daily Update]
- RTM First Look- Freeport And Copper May Go Down Together
- RTM: Stocks Melt As Dollar Surges
- RTM: Equity Market Headwinds Are Building [Daily Update]
- RTM First Look: Implied Volatility Led Rally
- RTM: Live Q&A Session 6.24.22 – Replay
- RTM: Recession Fears Grow [Daily Update]
- RTM: Next Live Session Will Be Friday, June 24 At 12:30 PM ET
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN RBLX
S&P 500 (SPY)
The S&P 500 finished on a high note Friday but could not erase the week’s loss finishing lower by 2.2%. The rally that came late on Friday had much more to do with the long weekend and the decay of implied volatility than anything else.
The index closed below resistance at 3,830 despite attempting to break above on several occasions in the final 20 minutes of the day. For this rally to have any legs the week of July 5, the S&P 500 will need to gap above 3,830 on Tuesday morning.
There also appears to be a Head And Shoulders pattern in the S&P 500 chart. Which would suggest the index re-fills the gap at 3,670.
The most significant headwind will come on Wednesday afternoon when the FOMC minutes for the June meeting are released at 2 PM ET. The markets have tended to react negatively to the Fed minutes all year, and this Wednesday’s release may prove not to be all that different.
The VIX index slid lower all day on Friday, suggesting that implied volatility levels were dropping as the value of puts fell, which helped push the S&P 500 higher into the end of the day.
The VVIX also moved lower all day, suggesting the implied volatility of the VIX was dropping all day. It is now at the lowest point since January 2020 and indicates that it is still cheap to be buying put options.
Financial Conditions (IEF/LQD)
The IEF/LQD ratio closed on Thursday and Friday above that key resistance area of 0.92 that had held three prior times. A rising ratio would suggest that financial conditions are starting to tighten again and are likely to make a meaningful move higher from here.
It may also indicate that the volatility is about to move much higher, as the VIX and IEF/LQD ratios tend to have a strong relationship.
AMD fell sharply last week to a significant support level at $73.70. That level of support has been vital for the stock going back to July 2020. If that level breaks, the sock will likely fall for around $59.
Nvidia may be foreshadowing the next move in AMD, with Nvidia dropping below support at $153, which means that the next region to look for in Nvidia comes around $135.
Taiwan Semi (TSM)
Taiwan Semi has also broken down, dropping below support at $78. It looks similar to AMD, with a big gap to fill down around $68.
PayPal continues showing positive momentum trends, with an RSI still pushing higher. Meanwhile, the stock remains in a falling wedge pattern and waiting to see if it can break out to the upside and move back to about $82.
Finally, Roblox is also showing positive trends, with an RSI that has broken above resistance and a stock price that is testing resistance at $35. If the stock can clear $35, there is a solid path to the stock pushing higher to around $45.
Have a good fourth
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.