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12/20/21
STOCKS – CMG, SHOP, TSLA
MACRO – SPY, IEF, LQD, VIX, SKEW
- RTM: Closer To The Beginning, Then The End?
- RTM: Volatility May Really Ramp Up The Week Of December 20
- Ford’s Stock Is Ready To Break Much Lower
- RTM- Post FOMC Update
- RTM: It Broke
- RTM: The Bond Market Warnings Grow Stronger
- RTM Exclusive: Uber’s Stock May Be Ready To Surge
MICHAEL KRAMER AND CLIENTS OF MOTT CAPITAL OWN TSLA
Stocks finished the day lower, with the S&P 500 dropping by around 1.1%. The index had been down nearly 1.8% at its worse. The market seems to be facing several headwinds that will make it hard to see an end-of-year melt-up. Covid cases are on the rise, the fiscal stimulus deal appears to be shelved, and the Fed is tightening monetary policy all at the same time. The equity market is sure not to like this situation very much; it shouldn’t.
Before this is all said and done, the markets will likely be screaming for the Fed to reconsider its tapering schedule and demand the Fed stop the taper altogether. Give this a few more days to all seep into the market’s train of thought. I don’t see how this end-of-year rally is going to manifest itself.
S&P 500 (SPY)
Even the VIX is hardly positioned to help. The VIX was at 27.35 at its peak today and closed at 22.86, a pretty significant drop, and all the index could rally was about 60 bps, hardly equal to the big Vanna rally we saw after the Fed meeting. Perhaps the S&P 500 attempts to fill that gap at 4,620, and the VIX pushes back to 20. But I’m not too fond of the macro factors heading into the final days of the year.
IEF/LQD
The IEF/LQD ratio moved sharply higher today, indicating that financial conditions are likely still tightening. Not a positive for stocks and an indication that the VIX can remain elevated for some time longer.
Skew (SKEW)
Another indication that the VIX may not be so fast to come down is that the SKEW index continues to decline. It fell again today, which is an indication that traders aren’t looking for out-of-the-money options for hedging, which means they probably aren’t selling volatility.
Shopify (SHOP)
Shopify finished very close to a significant level of support, around $1,280. A break of that support level likely leads to a considerable drop, perhaps to about $1030.
Tesla (TSLA)
Tesla closed below support today at $910, and the uptrend, a bearish indication. It suggests there is still further to fall here, with the next level to watch for around $840.
Chipotle (CMG)
Chipotle still looks weak, too. The stock managed to rise back to resistance at $1,750 and failed. It seems like it wants to move to $1575 and then make a more significant move down.
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. 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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