3/6/24

#Stocks – $TSLA

#Macro – $NDX, $SPX, #VOLATILITY

Mike’s Reading The Markets Macro Subscription Service on Seeking Alpha

Some Recent Titles:

• RTM: Powell – More Of The Same
• RTM: Who Turned The Lights Off
• RTM: Nvidia Up, Apple Down = Going Nowhere
• RTM – Risk-On
• RTM – Hot Supercore PCE, Highest Since December 2021
• RTM: Still Waiting
• RTM: Market Seeing Inflation As Stalled

Stocks finished the day mostly higher, with the NASDAQ retracing 61.8% of yesterday’s declines at its peak today. Typically, when we have seen 61.8% retracements in the past and a failure to follow through, we tend to see the previous day’s trends resume. So, if we have started a correction in the market, we should follow through lower tomorrow and take out the low of 17,810.

Powell didn’t have much to say today about the path of monetary policy. There were a lot of questions about the banks and Basel III, as well as capital requirements. Perhaps tomorrow, Powell will be more open about the path of monetary policy. The only clue Powell gave us today was that he would like to see more of the same type of m/m of inflation reports we got at the end of 2023 because he knows that y/y will come over time. However, January certainly wasn’t in line, and February CPI is currently expected to be at 0.4%, which would be up from January. So, hopefully, tomorrow will shed more light on the subject matter.

Meanwhile, the S&P 500 1-week 50 delta option saw its implied volatility level increase to just about 13 today, which in the past has been a resistance level for it. So we will want to see if this continues to push higher tomorrow, which is a sign that the market is getting more interested in looking for hedges over the short term.

 

In the meantime, Tesla continues to deteriorate and may continue to weaken if it cannot maintain support around $177. The chart below shows that a break of support could set up a further decline of an additional 14%, at least to the next significant support level.

Finally, we can look at the QQQ to SPY ratio; interesting that we are seeing the relationship where it is at the moment. It has a nice rising flag pattern. What is also interesting is that we are back to levels seen in February 2021 and November 2021, two critical periods in the market. February 2021 was when we saw the peak in the Biotech sector and the ARKK ETF, long-duration growth assets. November 2021, of course, was the peak in the top in the NASDAQ, and of course, the devastation of 2022 that followed. We also started to see the ratio trade with bond prices until they separated in January 2023.

The ratio was only higher in the dot com bubble when comparing the NDX to SPX ratio.

-Mike

 

Charts used with the permission of Bloomberg Finance L.P. 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.