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February 3, 2021
STOCKS – MSFT, ADBE, DOCU
MACRO – SPY, VXX
Mike’s Reading The Markets (RTM) Premium Content – FREE 2-WEEK TRIAL
- Midday – Here We Are Again, The Top And Bottom Of The Range
- MORNING NOTE: RATES AND THE DOLLAR ARE HEADING HIGHER
- Midday Note: This May Be The Top End Of The Range For Stocks
- Morning Note: Back To The Grind
- Earnings Analysis: Amazon’s Stocks May Struggle As AWS Disappoints
- Earnings Preview: PayPal
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN MSFT
So here we are again. The VIX is back to 21.8, basically the very bottom of the range. Meanwhile, the S&P 500 is back at the top of the range. No pause in between, just a vacuum in both directions. The market’s behavior is beyond strange; it functions in one of the mechanical, algorithmic manors I can remember.
The amount of options volume that trades daily is jaw-dropping. But that is what keeps implied volatility levels and skew extremely high when looking across all stocks. All of this options volume will make it very difficult for the VIX to return to pre-pandemic levels because Implied volatility will remain high for dealers to properly account for all the added risks they are taking on.
So with the VIX at 21.8, maybe it drops to 20. I doubt it drops back to 14, and if that is the case, how much further can the S&P 500 index rise? It a tough question, but clearly, much of the energy the S&P 500 index generates is from implied volatility levels falling. If the VIX is at the bottom of the range, then implied volatility levels aren’t falling.
The S&P 500 filled the gap yesterday along with a weak close. Today, the index was able to move right thru that 3,850 level like a hot knife through butter. So it means the next level to towards would come around 3,890 to 3,900. That is where the trend line was broken late last week. That would be the place the index could pause.
DocuSign (DOCU)
DocuSign has been trading in a very well defined trading channel. Whether the stock should be valued here or not is a separate question, but the upper end of the range is around $275, and that is probably where it will head over the short-term.
Adobe (ADBE)
Adobe might have a pretty bullish pattern forming. It needs to clear about $500 for a breakout.
Microsoft (MSFT)
Microsoft still has a fairly good shot of making it to $255.
-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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