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1/24/2022
STOCKS – NVDA, NFLX, ISRG
MACRO – SPY, QQQ
- RTM- Market Is Repricing Risk
- RTM Long-Term Update- Adding Altria
- Tactical Update: The Fed Put Is Dead
- RTM: Thoughts On The Sell-Off
- ICYMI: LIVE Q&A SESSION –REPLAY
- RTM: Real Yield Spike Causes Market Reversal
- RTM Exclusive: PayPal’s Next Leg Lower Is Near
A pretty rough day in the market, with the S&P 500 dropping just about 4% through the morning and finishing the day higher by 28 bps, a huge reversal. Days like today will not help the case of the markets to see the Fed become less hawkish, had the market stayed down, maybe. But a big rebound like this, coupled with some follow-through tomorrow, will not persuade the Fed to lighten up. There is very little the Fed can do to change paths. It will take a more significant correction to get the Fed to change course. I think do think the Fed wants assets prices to come while they still have QE running to ensure there is enough liquidity and markets don’t start freezing.
S&P 500 (SPY)
The gap down and the significant drop seemed to be way overdone. An inverse head and shoulder pattern formed mid-day and was completed in the late afternoon. After that, the market went for the gap fill.
NASDAQ (QQQ)
The Qs may show everything a bit better, as it appears we may have just wrapped up wave three and are in the middle of or near completion of a wave four higher. This means there is one more wave five lower yet to come. Based on some preliminary numbers, it looks like that could end up dropping to around $300.
VIX
The VIX reached 40 today before reversing and finishing the day at 29.9. So that tells you what led to the big market rally, as people closed put positions, which created a short-covering rally.
But I think what is important to remember here is that the market is in the middle of repricing, and repricings can be very violent, and that is what this looks like to me. You can see this clearly with the PE ratio breaking down and falling below 20 over the past few trading sessions.
Nvidia (NVDA)
Many stocks appeared to put in short-term bottoms, like Nvidia. It fell to nearly $207, which is a support level. Additionally, the shares reached oversold conditions based on the RSI. I don’t think it means the declines are over, longer-term for this one.
Intuitive Surgical (ISRG)
Intuitive Surgical may have also put in a short-term bottom as well.
Netflix (NFLX)
I would hope Netflix has too. The decline in this stock has been jaw-dropping.
I expect volatility to remain high tomorrow as people position for the Fed, but it would not surprise me if we finished little changed. It’s Wednesday afternoon that concerns me.
-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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