This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.
Otherwise, enjoy the column!
Subscribe to the Monster Stock Market Commentary to get the Daily Monster Market Commentary and join the 2,936 subscribers getting it for FREE!
#STOCKS – $JPM, $GS, $AMD
#MACRO – $SPY, $VIX $XLF
Stocks closed lower on Monday by around 90 bps on the S&P 500. The sell-off came late, pushing the S&P 500 to approximately 3,960. Four thousand served as a robust level of resistance all-day, which is no surprise given that it is the highest concentration of gamma. That should continue as resistance unless call options are added to higher strike prices. If 4,000 remains, it looks like the index can be topping out.
The S&P 500 also managed to retrace to the 61.8% level of the August peak to the October CPI low.
Today’s high also marked the 1.618% Fibonacci extension off the November 2 lows.
Subscribe to the MCM Stock Market Commentary to get it Daily and join the 2,936 subscribers getting it for FREE!
The structure of the S&P 500 futures looks terrible, and these patterns we have seen a lot in 2022. I might need to redraw the diamond top later. We just saw something similar at the end of October and the beginning of November, and typically these structures are unstable and lead to a new low. Tomorrow will be an important day to see how it plays out.
For the VIX, there are lots of calls above the 23 strike price and many puts below. It also looks like a diamond or inverse Head And Shoulders on the VIX. This makes sense since the VIX trades inversely to the S&P 500. The owners of all the calls set to expire Wednesday need to get the VIX up soon if they want a chance to get them in the money.
The move higher in AMD is bizarre, given how bad its results and guidance were. If AMD stopped and reversed here, it wouldn’t be a surprise, given it hit the 38.2% retracement level off the August highs today.
It looks like JPMorgan may be ready to turn lower. The stock appears to have formed a bearish evening star Doji. The equity also stopped at resistance around $135, and the RSI seems to be rolling over after becoming overbought.
I still don’t understand why Goldman has risen a jaw-dropping 30ish% since earnings. Maybe I missed something along the way. On top of that, the RSI is well above 70.
I point out JPM and GS because the financials sector has driven the market higher, and if that part of the market goes, the market will lose a key leader. The XLF rose to resistance around $35.65 on Friday and reversed today. The trend line is still higher, but there is a considerable gap to fill around $34ish.
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. Past performance of an index is not an indication or guarantee of future results. It is not possible to invest directly in an index. Exposure to an asset class represented by an index may be available through investable instruments based on that index. 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.