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1/19/21
STOCKS – ROKU, MU
MACRO – SPY, VXX
Mike’s Reading The Markets (RTM) Premium Content – FREE 2-WEEK TRIAL
- Midday: The Craziness Continues
- Morning Note – Tailwinds Returning To Equities?
- A Strong Dollar May Crush The Emerging Markets Trade
- Earnings Previews For The Week Of January 18
- T.W.A – Yields Pressuring Mega-Cap Stocks
- Morning Note- Negative Gamma Regime Will Act As Headwind For Equities
- MIDDAY – A Short Squeeze Of Epic Portions
- Morning Note- Waiting On Volatitly To Break
S&P 500 (SPY)
Stocks advanced on Tuesday, recovering all of Friday’s losses, while the NASDAQ surged by over 1.5%. There was no particular reason for today’s move higher, and honestly, not much of anything has changed over the past few days. So the S&P 500 finished the day around 3,800, while the Qs finished around $317.50.
I forgot about Yellen’s Senate testimony calling for more government spending.
VIX (VXX)
The strange thing is that the VIX doesn’t drop. Maybe tomorrow is when the VIX finally cracks 20? Will it be after the swearing of Biden that all uncertainty is priced out of the market? I don’t know. Seems hard to believe, but I can’t understand why with the S&P 500 trading at all-time with monetary and fiscal policy flowing, why the VIX is trading above 20. It should by all accounts be at 12.
You can even make a case to say the VIX is actually trending higher, making a series of higher lows.
I took the 30-day implied vol and 30-day historical volatility data from Trade Alert, and then I simply created a spread. Interestingly when the IV was about 10 percentage points or more above the historical vol, strange things happen. Like the rocky and turbulent period in 2016, January 2018, the fall of 2018, August of 2019, December of 2019, June of 2020, September of 2020, and October of 2020. All of those periods saw a pretty hefty pull back and certainly lots of volatility. So far, the only period that hasn’t, yet, is January 2021.
I will study this a good deal further.
Micron (MU)
Micron had a big day, climbing nearly 6%, and breaking above resistance at $85, and now on pace to climb to $88.25.
Roku (ROKU)
Roku was up today, and the valuation on this company has now crossed $50 billion. This for a company expected to have $3 billion in revenue at the end of 2022. If it does $5 billion, it would still be overvalued. If it $10 billion, then we could make a case for a fair valuation. Let the options related squeeze continue, that all this is, right, you do know that? – (Should be free to read – Roku: Just When You Thought The Insanity Couldn’t Get Worse)
Ahh, that’s it for today, stocks are moving around by 5 and 10% like it isn’t a big deal, so what’s left to say… Buckle-up it might get interesting real soon, if that VIX keeps “trending” higher.
-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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