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STOCKS – RBLX, META
MACRO – SPY, VIX, IEF, LQD
- RTM: PayPal’s Stock May See A Momentum Shift Higher [Short-Term Options Idea]
- RTM: Stocks Rally, But May Fade Fast [Daily Update]
- RTM Portfolio Update: Acadia
- RTM: Liquidity Is Draining [Reserve Balance Update]
- RTM: Looking For An OPEX Counter-Trend Rally [Daily Update]
Stocks had a big rally, with the S&P 500 up 2.45% and the NASDAQ 100 ETF QQQ rising by 2.33%. The rally wasn’t a surprise, given we have seen these countertrend rallies follow OPEX regularly. What was surprising was how quickly the market rallied. I’m skeptical of this rally continuing now. I was only looking for a gain of around 3,800 on the S&P 500, and most of that rally was already fulfilled. I think we could even refill the gap below 3,700, maybe as soon as tomorrow.
The VIX was hardly down today, despite the big rally, dropping by less than 1 point to close at 30.20. I would have expected a more significant drop in the VIX given the big rise in the S&P 500. This is all contributing to my suspicions about this rally.
Of course, tomorrow will be Jay Powell’s turn to go in front of Congress, which presents a risk to equities.
Additionally, financial conditions tighten today, as measured by the IEF/LQD ratio, and usually, when spreads widen, it is not favorable for stocks. The ratio hasn’t broken out to new highs, but it needs to be watched closely.
Meta keeps dropping, falling another 4% today. I don’t know what is going on here. Clearly, something is not good. Maybe they shouldn’t have changed the name from Facebook. However, the $155 level is essential from a technical basis because if support breaks, the next region for support will come at the pandemic low of around $139.
Roblox seems to again be in a position to break out as the RSI nears potential resistance levels and the stock price approaches a downtrend. This is the stock’s second attempt since June to breach that trend line.
Anyway, that’s going to be it for today.
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.