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There was an apparent rotation in the market today, with the Nasdaq falling by approximately 90 basis points, while the equal-weight S&P 500 (RSP) rose by 1.2%. This divergence has put the RSP on the verge of becoming overbought itself, with an RSI at 69.1 and trading above its upper Bollinger Band.
The move higher in the RSP caused the SPY-to-RSP ratio to fall today. As previously noted, the ratio is now in a range associated with past pullbacks in the S&P 500—specifically, July 2024, December 2024, and February 2025. If these dates sound familiar, there’s good reason. I’d say this is one ratio worth keeping a close eye on.
While I was eating some carrots earlier, with my dogs hovering nearby, I glanced at this chart of the S&P 500 and wondered if a rising wedge with a throw-over pattern might have formed during the past couple of days. After plotting it out, it seems it could indeed be a valid rising wedge with a throw-over.
There are two touches on the lower trendline and three on the upper trendline, making it plausible. Of course, we can’t be certain just yet—the only definitive way to rule it out is if the market continues higher from here. However, if we do break lower, confirming the pattern, it would provide an estimated target down around 5,660.
Anyway, the 21-day realized volatility has likely declined about as much as it’s going to for now, unless trading becomes extremely quiet—something like less than 50 basis points per day. Given that we have the jobs report on Thursday and the tariff deadline next week, the calendar doesn’t seem particularly supportive of such calm trading conditions.
-Mike
Terms by ChatGPT
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Throw-over pattern:
Definition: A brief, false breakout above the upper boundary of a wedge or similar technical pattern, often signaling an upcoming reversal.
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Rising Wedge:
Definition: A bearish chart pattern characterized by converging upward-sloping trendlines. It suggests weakening momentum and a potential price reversal lower when the price breaks below the lower trendline.
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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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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