5/18/22

STOCKS – AAPL, TGT, CSCO

MACRO – SPY, IEF, LQD, BTC

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• RTM: Q&A Session Summary
• RTM: LIVE ZOOM Q&A SESSION IS THURSDAY, MAY 12 AT 1 PM ET
• RTM: The Herd Is Running For The Exits

Michael Kramer and the clients of Mott Capital Own AAPL

 

TODAY, the S&P 500 plunged by more than 4%, pulling the index back below the 4,000 level to 3,923. Anyway, I’m happy that it finally worked out. Of course, we all want to know what happens next, and I do too. Unfortunately, these next two days will be tough to predict, but I will try my best.

The biggest problem is that there was a lot of put selling and call buying in the SPY and SPX, and most of it was today’s expiration date, so I would guess that the gamma level at 4,000 is still pretty firm. This means there is a good chance the market has now overshot itself to the downside, and there is a good chance we will see a rebound tomorrow purely from a gamma perspective heading into OPEX on Friday morning.

But from a technical perspective, as noted last night, it seems like there is a good chance we have entered a wave five down, and if that is the case, it makes for a good chance we will undercut the 3860 level before not too long, maybe even tomorrow.

The other problem is that the S&P 500 appears to have what looks an awful like a pennant pattern, which also suggests lower prices lie ahead and potentially as low as 3,750.

Financial Conditions (IEF/LQD)

Financial conditions continue to tighten, and stocks will pay the price if they continue to tighten. The IEF/LQD remains the easiest way I can think of to track conditions during the day.

Bitcoin

Anyway, Bitcoin is on the verge of taking its next major leg lower. I think it has been proven that Bitcoin offers no value of any kind, to no surprise. It is undoubtedly not an inflation hedge; it doesn’t produce anything of value or yield anything; there are a countless number of these things floating around, and it is just another form of a worthless risk asset.

Right now, it is consolidating around 29,000, but that looks like it will go soon enough, and when it does, the 16,000 area shouldn’t be too far behind.

Target (TGT)

Target was obliterated today after reporting disappointing results and soaring costs. The stock gapped right below a technical support level at $167 and just kept dropping, closing around $161 and falling nearly 25%. There is some more support, around $151. But of course, there is a giant gap at $137 just screaming to be filled.

Cisco (CSCO)

Cisco is trading lower by 13% tonight after giving horrid revenue guidance. Given how much we know the market likes to fill gaps, this thing could be trading sub $40 very soon.

Apple (AAPL)

Apple should be on everyone’s screens tomorrow. If this stock breaks support at $139, it’s probably lights out for the entire stock market. That would create a lower low for Apple, a breach of support, and set up a drop to around $123. I don’t see how the entire market doesn’t follow Apple lower at that point.

I’m tired tonight, and I can tell that I am because I repeated many of the same words, and my editing was a struggle. Sorry if the writing was weaker than usual.

Have a good one.

Mike

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.