The First Crew Launch of SpaceX Falcon 9

Stocks Drop on October 19, 2022, as Rates Launch Higher

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10/19/22

#STOCKS – $TSLA

MACRO – $SPY, $QQQ, $TIP, RATES

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The S&P 500 finished the day lower by around 70 bps, despite being up more than 1% in the overnight trading session. The gains evaporated as the dollar surged and rates rose sharply. The S&P 500 is trading opposite the dollar at this point, and it seems like when the dollar falls, the S&P 500 rises and vice versa; I don’t think there is much else going on here.

The S&P 500 is getting supported by Friday’s option expiration date, and that big gamma level is at 3,700. But come Friday at 9:30 AM, a lot of gamma is going to roll off, and that means the S&P 500 will lose the support, and if the dollar continues to rally, the S&P 500 is likely to drop.

The S&P 500 may even start to drop before that, especially if rates and the dollar continue to climb. There is a nice-looking bear flag in the S&P 500 futures, which would indicate the market drops back to around 3,640 in the short-term and potentially back to 3,600.

Additionally, today we saw a big move down in the TIP ETF, and that ETF is close to breaking down and through support at $104.70. The QQQs have detached from the TIP ETF a bit, which suggests the QQQ could drop. But more importantly, if the TIP ETF breaks lower to a new low, the QQQ should not be far behind and on its way to a new low.

2-Yr

The 2-yr traded up to 4.56% percent, and I guess it could rise to around 4.85% over the next couple of weeks.

Tesla (TSLA)

Tesla reported results, and I thought they weren’t good. The company missed revenue, missed automotive gross margins, missed automotive revenue, and missed adjusted EBITDA. Stocks valued like Tesla can’t afford to miss, and they did. I’m surprised the stock isn’t down more, but support at $209 is critical, and if Tesla should break that support level, it could result in the shares falling back to $180.

That’s all for today.

Mike

Charts used with the permission of Bloomberg Finance LP. 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 investments.