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1/4/21
Stocks – AMZN, ROKU, GME
Macro – SPY, GLD
Mike’s Reading The Markets (RTM) Premium Content – FREE 2-WEEK TRIAL
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Stocks had a weak day, with both the S&P 500 and the Qs falling by around 1.5%. Perhaps there was merely some de-risking ahead of the run-off election in Georgia tomorrow, or perhaps the market is merely unwinding from very overbought conditions.
I was looking for a move lower last week, with a push back to 3,700, which is where we closed today. But intraday, it was steeper than that, with the index falling to as low as 3,662. (Paid SA Market Place Premium Content – Morning Note- Risk-On May Be In Trouble)
A pullback to 3,550 would not be surprising to start with; it would mark a 38% retracement of the November election move up. Could it be worse, sure? I have been through several scenarios that point to lower levels. But we need to take it one step at a time. We have seen too many of these one days sell-offs quickly turnaround.
It is not that I am trying to be pessimistic. Stocks rise and fall, and when stocks get too overbought, they need to correct and cool-off. It allows for normal functioning. Markets that overheat are no good because they tend to overcorrect.
VIX
The VIX quickly rose to around 29 before settling around 27.
10-Year
If there was a hint of de-risking today, it certainly was not in the bond market, with the 10-year basically unchanged.
Gold (GLD)
Gold appears to be finally breaking out of the bull flag pattern. Perhaps it the safe-haven asset class; perhaps it is not. Either way, the chart looks bullish, and I think it goes higher, towards $2,300 over the next few months. 
Amazon (AMZN)
Amazon fell by more than 2% today, and tomorrow is a potentially big day for the stock. If it drops below $3,100, it likely means that lower prices lie ahead and that my $2,850 target is still in play.
Roku (ROKU)
If the RSI on ROKU drops below 50, it will signal a very bearish change in the stock’s trend, and not for the better.
Gamestop (GME)
Another painful day for Gamestop, falling more than 8%. Unfortunately, it may not even be done falling, with an RSI only at 51. It needs to fall below 30 before hitting oversold levels. A drop to $15.50 is still alive; even though I originally wrote in my story, I thought it could fall to $17.25 on a technical basis, which is where it closed today. The other side of a CONVEXITY squeeze can be a real hangover. (Should still be free to read- GameStop’s Soaring Stock May Crash And Burn).
Anyway, that’s all I got today. Until tomorrow
-Mike
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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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