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STOCKS – UBER, XBI
MACRO – SPY, VIX
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Stocks had an exciting day, starting higher and finishing lower. The S&P 500 was up around 1% to start the day and finished the day lower by 85 bps. The index was drifting lower all day and just needed an excuse to sell off, and that came in the afternoon when Apple said it would slow down hiring in 2023.
There are a series of lower highs in the S&P 500 and potentially a triple top pattern. We briefly tested 3,817 today, and it managed to hold. But I think we will fill that gap at 3,790 very quickly, and I still think that gap at 3,675 is going to be filled too.
There is a path to the 3,675 level, which would not violate any of the current trading channels the S&P 500 is currently moving around from a horizontal and vertical direction.
Also, the VIX managed to move higher on the day, rising back above 25. The VIX was higher all day from open to close, and indicated early on that something was off with the rally in the equity market.
10-day realized volatility is starting to creep higher again, which should help drag the VIX up along with it. On top of that, there is a tremendous risk that comes on Wednesday with Mario Draghi’s role as Italy’s Prime Minister, then the ECB on Thursday, and then the Fed next Wednesday; I can’t see how the VIX stays at 25.
Uber rose 4% today, and I’m not sure if the stock has broken out or not. It looks like it may have broken that downtrend, but one can’t be sure until you get some follow-through.
The Biotech’s had a bad day, with the XBI dropping more than 3%. The sell-off in the XBI started much earlier than the S&P 500 sell-off, suggesting sellers were just looking for a reason to sell. In the ETF, there could even be a triple top or Head And Shoulders pattern or whatever you want to call it. The pattern structure is unstable, with two monster days of rallies, similar to what we saw in the S&P 500 futures last week. So if the XBI collapsed, returned to $64, and closed that gap, I wouldn’t be surprised.
That’s going to be it for today.
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. 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.