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Stocks rallied again today, bringing volatility back to levels last seen on November 4, with the VIX 1-day closing below 12. At this point, I think the volatility-driven support for the index has largely run its course. As I mentioned yesterday, there was still some room for additional upside as volatility continued to decline. However, that process now appears largely complete, suggesting little additional support left to come from further volatility compression.
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Meanwhile, the Nasdaq rose more than 2% today, although it finished off its highs after gaining nearly 3% earlier in the session. On a positive note, the index gapped above its 200-day moving average. It has also moved out of oversold territory, pulling away from its lower Bollinger Band, while the RSI has climbed firmly above 30.
The next major test will come at the 20-day moving average, which could prove to be an important resistance level. If the Nasdaq can break above it, the upper Bollinger Band would seem like a reasonable next target. However, clearing the 20-day moving average will be critical in determining whether this rebound has room to extend further.
The bond market was closed today, but the dollar staged a strong rally, with the Dollar Index closing at its highest level since April 2025. The move appears to mark a clear breakout from a bullish flag pattern, suggesting the Dollar Index could have significantly more room to climb from here.
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That will be all.
-Mike
Glossary by ChatGPT
20-Day Moving Average: A short-term technical indicator representing the average closing price of a security or index over the previous 20 trading sessions.
200-Day Moving Average: A long-term technical indicator representing the average closing price of a security or index over the previous 200 trading sessions.
Bollinger Bands: A technical indicator consisting of a moving average and upper and lower bands typically set two standard deviations away, used to assess volatility and relative price extremes.
Bull Flag: A bullish technical continuation pattern characterized by a sharp advance followed by a period of consolidation, potentially signaling another move higher.
Dollar Index (DXY): An index measuring the US dollar against a basket of six major foreign currencies, with the euro carrying the largest weight.
Implied Volatility: The market’s expectation of future price fluctuations derived from options prices.
Relative Strength Index (RSI): A momentum indicator measuring the speed and magnitude of price changes on a scale of 0 to 100, with readings below 30 commonly interpreted as oversold.
Resistance Level: A price area where selling pressure has historically limited further advances in an asset.
Technical Breakout: A price movement beyond an established resistance level or trendline that may signal continuation of an existing trend.
VIX1D: The Cboe 1-Day Volatility Index, which measures expected S&P 500 volatility over approximately one trading day.
Volatility Compression: A decline in implied or realized volatility, often associated with lower options premiums and changes in hedging activity.
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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. 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.
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.