11/27/23

#Stocks – $shop

#Macro – $SPX, $NDX #rates #financialconditions #Fed #Powell

Mike’s Reading The Markets Macro Subscription Service on Seeking Alpha – Black Friday Sale Ongoing!

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Michael Kramer and the clients of Mott capital own SHOP

It was a fairly uneventful day, with the S&P 500 falling roughly 20 bps. Meanwhile, the 2-year auction at 11:30 AM was fairly ugly, with the new issue tailing one bps, while indirect acceptance fell to 57.4% from 62% last month. The 5-year auction saved the day, coming in line with the when-issued trading rate and an indirect acceptance rate of 65.5%, which was better than last month’s 61.5%. Tomorrow, the 7-year auction will come at 1 PM.

NASDAQ 100 (NDX)

It isn’t entirely unclear at this point, but it appears we are consolidating and pretty much topping out at these levels based on the NASDAQ futures. The future contracts have traded sideways since November 15, and that isn’t saying much for a market that is supposed to be going higher.

S&P 500 (SPX)

Meanwhile, for the S&P 500, as I have noted a few times now, I think the rally off the October low is a 3-wave structure and is a retracement of the declines from the July peak. At this point, this still seems valid, as the index remains below the July highs and, like the NASDAQ, appears to be churning.

If that is the case, I have no evidence to change my opinion, the lows of October, around 4,100, should be undercut. That may be a hard thought process for many to swallow, given what we have witnessed and all the other chatter from many other sources. However, given my data and my understanding of market mechanics, fundamentals, and technicals, this is my belief. Additionally, I work in isolation and do not rely on what others think, and I like to form my own opinions.

CDX

At least for today, the CDX High Yield Index increased, and it will need to continue to rise for my opinions on the S&P 500 to prove correct. Stocks, after all, are merely a derivative of the credit market, and where credit conditions go, stocks are likely to follow, especially when considering the earnings yield of the S&P 500.

This week could see things pick up, especially with more economic data, a PCE report, and Jay Powell. Depending on how all of this goes, we could see these spreads widen further, and if that happens, stocks will reverse lower as spreads widen, pushing implied volatility higher.

Shopify (SHOP)

Meanwhile, Shopify had a good showing today after reporting strong black Friday sales metrics for its merchants. The stock has performed very well, and while its RSI is over 70, the Bollinger Band shows it could still rise some more, as it doesn’t appear to be overbought yet. If it can clear $75, it has a chance to fill the technical gap at $89 from February 2022. Members of my services know I have owned this stock since June 2022, when it was trading around 5x sales.

Have a good night.

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.