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June 29, 2021
STOCKS – JPM, MU, INTC
MACRO – SPY, QQQ, VIX
Mike’s Reading The Markets (RTM) Premium Content – FREE 2-WEEK TRIAL
- RTM Video- As Growth Rates Slow, Earnings Trends Will Come Into Focus
- RTM Morning – Slow Start To Busy Week
- RTM Tactical Update- Earnings Growth Will Decelerate In The 2H’21
- RTM Morning Note- S&P 500 Is Now Range-Bound
- RTM Short-Term Bullish Trade Idea- CISCO (CSCO)
- RTM – Expecting A Pullback
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN AAPL AND MSFT
Stocks finished the day little changed, with the S&P 500 index up higher by roughly 3 bps. The rotation seemed to be in perfect alignment again today as the technology sector had risen just enough to keep the declines in the reflation trade from pulling the index down.
If we take that one step further, we could say, Apple and Microsoft kept the S&P 500 in the green. Without those two, the index would have likely been down about 10 to 15 bps on the day.
Volatility levels are rising on the index and single stock level, indicating a turn lower is likely on the way.
Strength Is Being Sold
Despite the calm on the surface, what is happening underneath the surface is really amazing. Strength is being sold, especially in the reflation assets. It tells us how much the mood of the market may have changed in recent weeks. Sectors like the financial and housing started the day higher and were hammered and finishing off their highs.
Volatility (VIX)
Additionally, we have again seen the VIX and VXN creep higher despite overall markets moving higher. It is highly unusual for this to happen, and in the past, this price action has preceded a sharp move lower in the equity markets. The rising volatility indexes suggest that investors are looking for protection, i.e., puts.
Why shouldn’t traders/investors buy protection ahead of the ISM and BLS Job report? The ISM manufacturing report will come on Thursday, with the BLS Job report on Friday.
S&P 500 (SPY)
I am still sticking with the idea that we have a wave “C” in the S&P 500 coming, which should result in a pullback to 4,120, based on the S&P 500 future hourly chart.
The advance/decline traded lower today, not confirming the move higher in the S&P 500 nor the recent move higher that started last week.
Meanwhile, the percentage of stocks above their 50-day moving average also fell again, suggesting more momentum in the index has been lost.
Apple (AAPL)
I know Apple has been rising, and it has surpassed the downtrend I thought might stand in its way. But when we look at the options, we can see the price has been rising on increasing call activity, and now implied volatility is rising. In the past, we have seen this happen when stocks are near the end of recent rallies.
AMD (AMD)
AMD has also rocketed higher, moving to the upper end of the trading range we have been watching. But again, like Apple, we can see the implied volatility level really moving higher, suggesting this little rally is likely to reverse.
Have a good one
-Mike
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.
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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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