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October 30, 2020
Stocks – SQ, AMD, NFLX
Macro – SPY
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- De-Risking Friday
- Big Options Bets Going On
- MCM Thematic Growth 3Q’20 Investor Letter
- Are Yields Going To Explode Higher?
- Double Top Alert -Midday
It was a pretty brutal day. If not for a last-minute surge, the indexes would have been down at least by another 1%. Still, the S&P 500 finished the day lower by 1.2%, while the NASDAQ 100 QQQ finished lower by 2.5%. More surprising was that yields were higher, rising to 87 bps on the 10-year, while the dollar index was basically flat.
S&P 500 (SPY)
We came very close to testing the confirmation zone for the double top pattern on the S&P 500. But we managed to avoid it. It was strange because I think more than anything, with earnings over, all those short-term call options that were out of the money basically collapsed, and that left dealers to unwind their hedges. That certainly didn’t help the matter.
Additionally, there appeared to be a broad derisking taking place in the market, as evidenced by yields rising, the dollar going sideways, and the S&P 500 dropping. There is a possibility we trade lower from here, to perhaps the 2,800 to 2,900 range on the S&P 500.
Netflix (NFLX)
Also, we saw a steep decline in Netflix, which was surprising given it rose sharply yesterday when it announced it would raise subscription prices. Still, the stock gave it all back today. That $475 region is like a rock; the falling RSI suggests it goes lower, but to this point, no such luck.
Square (SQ)
Square got hit hard because Twitter got rocked. I really don’t buy that. But anyway, the stock broke its long-term uptrend, and I see that as a big negative. This stock could have a long way to drop should things get worse—a long way.
AMD (AMD)
AMD’s moment of truth likely comes next week, with the stock going out sitting on support at $75.
Back tomorrow with a special edition
-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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