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#Stocks – $MU, $HYG
#Macro – $SPX, #Rates,
- RTM- Live Q&A Session Friday 9.29.23 @ 1 PM ET
- RTM: Stocks Getting Closer
- RTM- At A Breaking Point
- RTM: Yields Rip Higher, Waiting On Spreads
- RTM: Markets At Critical Spot, Near Breaking Point
- RTM: Rates Are Not High Enough
- RTM Options Alert: The Shares Of Citigroup May Face Further Declines
- RTM: Everything Appears To Be Positioned To Move
Stocks were in for a wild trading day, with the S&P 500 firmly in a negative gamma regime. It means that wild swings will persist as long as this case, and there was a pretty good example of that around 1:30 PM when the index erased a 70-bps loss and turned positive in about 30 minutes of trading.
Still, the S&P 500 finished the day unchanged and seems to have found a level of some support at the moment. Ultimately, I think it has further to fall, but a brief pause or rebound doesn’t seem out of the question. A gap below 4,240, would be a negative, and suggest a move back to 4,200 is in the works.
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Much of this was also due to oil surging again, rising to almost $94. Oil has broken out again, and oil moving to a range of $97.50 to $98 doesn’t seem very far off at this point, with little resistance in the way.
Of course, that pushed yields higher, with the 10-year trading around 4.62% and closing in on 4.68%. After 4.68%, it is tough to find a level of strong resistance until you hit 5.25%.
Given the fact the 2/10 spread appears to now be bear steepening, with the ten rising to the two, it seems possible that the 10-year could add on an additional 15 bps from here. That would only get the spread back -35 bps, or post SVB levels, assuming the 2-year remains roughly unchanged.
High Yield (HYG)
Meanwhile, the HYG ETF is sitting on important support, which, once broken, could be a bad sign. It feels like the HYG has somehow managed to stay immune to the carnage in Bond land and hasn’t seen the same level of decline. Clearly, that can change if the HYG breaks support around $73.
In the meantime, Micron reported results that came in better than expected and even gave a better-than-expected revenue guide. But it was its earnings guidance that came in a range of loss per share of $1 to $1.14 versus estimates of $0.96 per share, which is ugly. Then there was the gross margin guide that was even worse, at -2% to -6% versus estimates for 0.66%. Following those gross margins and earnings guides, I would be surprised to see the stock trade higher tomorrow. Micron has tended to be a gross margin story over the years, and that guidance won’t help. There is support around $64.5 and restiance around $72.
SK Hynix (660 KS)
Following Micron, SK Hynix could be one to watch tonight in South Korea. I think the chart below speaks for itself.
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.