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Subscribe →Things started getting a bit ridiculous toward the end of last week. Say what you want, but the concentration in daily activity in the S&P 500 is increasingly centered around semiconductors. In fact, based on my internal estimates, Micron was the single largest contributor to the index move on Friday, followed by NVDA, AAPL, AVGO, AMD, INTC, TSLA, SNDK, AMAT, and QCOM.
When you dig a bit deeper, the options volumes going through stocks like Micron seem, frankly, pretty insane. Micron appears to be in the middle of a massive gamma squeeze, with implied volatility steadily rising, call volumes off the charts, and the stock price surging. The good news, at least potentially, is that this week is options expiration, which may give the market a chance to flush out some of the excess.
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Technically, the stock looks beyond stretched, trading above its upper Bollinger Band, with an RSI of 84, and — get this — trading 157% above its 200-day moving average. Even in March 2000, Micron traded “only” 78% above its 200-day moving average.
The SOX index is also trading above its upper Bollinger Band, has an RSI above 70, and is trading nearly 60% above its 200-day moving average. The only other times the index traded this far above its 200-day moving average were in July 1995 and March 2000. Neither ended particularly well.
At this point, it seems clear to me, from both a technical and an options-market perspective, that there is a good chance these moves have not only become overextended but have entered the land of the absurd. Like Oracle rising 35% in a single day absurd. It is not as if the stock is even cheap, trading at nearly 5.5 times next-twelve-month sales estimates.
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This week, the Treasury will shift from paying down T-bills and injecting cash into the funding markets to becoming a net issuer of T-bills again, restarting the draining process. That begins with roughly $13 billion in bill settlements and another $42 billion in coupon settlements. Next week, T-bill issuance should ramp up significantly.
The paydown phase has treated the market fairly well. Coupon settlement days have generally been less favorable, though not disastrous. Net T-bill issuance days, however, have not been kind to the market since the reverse repo facility was effectively drained. Whether that relationship continues during this semiconductor mania remains to be seen.
Since the end of October, paydown days have seen the S&P 500 rise 64% of the time, compared with 52.4% for non-paydown days. Paydown days have also averaged gains of 59 basis points, versus 66 basis points on non-paydown days. However, on down days, paydown days have averaged losses of 47 basis points, versus losses of 66 basis points on non-paydown days.
Treasury bill settlement days, meanwhile, have seen the market rise only 24% of the time, compared with 62% for non-settlement days. Settlement days have averaged gains of just 50 basis points, versus 66 basis points on non-settlement days. More importantly, on down days, the S&P 500 has averaged a 94-basis-point decline on settlement days, compared with a 52-basis-point decline on non-settlement days.
–Mike
Glossary by ChatGPT
- Advanced Micro Devices (AMD): A semiconductor company specializing in CPUs, GPUs, and AI computing solutions.
- Basis Point: One hundredth of a percentage point, commonly used to describe changes in interest rates or market returns.
- Bollinger Band: A technical analysis indicator using volatility bands plotted above and below a moving average.
- Call Volume: The total number of call option contracts traded during a specific period.
- Coupon Settlement: The settlement process for Treasury coupon-bearing securities, which can impact market liquidity.
- Gamma Squeeze: A market event where rising stock prices force option dealers to buy additional shares to hedge exposure, accelerating gains.
- Implied Volatility: The market’s expectation of future price fluctuations derived from option prices.
- Intel (INTC): A semiconductor manufacturer focused on processors, data center chips, and computing technologies.
- Moving Average: A technical indicator that smooths price data over a specified period to identify trends.
- Micron Technology: A memory and storage semiconductor manufacturer heavily tied to DRAM and NAND markets.
- Net T-bill Issuance: The amount of Treasury bills issued minus the amount maturing, influencing liquidity in funding markets.
- NVIDIA (NVDA): A semiconductor company known for GPUs and AI-related computing hardware.
- Options Expiration: The date on which options contracts expire and either settle or become worthless.
- Paydown Days: Periods when Treasury debt reductions inject liquidity into financial markets.
- Reverse Repo Facility: A Federal Reserve mechanism used to absorb excess liquidity from financial institutions.
- RSI: Relative Strength Index, a momentum oscillator measuring the speed and magnitude of price movements.
- S&P 500: A benchmark index tracking 500 large publicly traded U.S. companies.
- Oracle: A technology company specializing in database software and cloud infrastructure.
- PHLX Semiconductor Sector Index: A stock index tracking major semiconductor companies.
- T-bills: Short-term U.S. Treasury securities with maturities of one year or less.
- Technical Analysis: A method of evaluating securities using price patterns, indicators, and trading activity.
Disclosure
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.
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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Mott Capital's Market Chronicles May 8, 2026 10:02 AM