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STOCKS – ZM, XBI, ARKK
MACRO – SPY, VIX, TIP
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It was a reasonably dull day for the market, with the S&P 500 flirting around the flat line all day. We did catch a late-day rally, with the index rising around 70 bps. Most of the rally was due to the VIX melting into the end of the day. With Vixperation on Wednesday, I’m not sure there is that much room for the market to rise or fall. It is all just a mechanical piece of the market and not due to buyers suddenly coming alive.
But the most important news was that the real yield continued to move higher, and the TIP continued to move lower. The TIP ETF made a new cycle low today, trading around $109.15, and is now back to the pandemic lows and the 2018 lows. It carries a terrible message and one that stocks will likely head lower over the next couple of weeks.
The XBI had a weak day, dropping by more than 1% despite the end-of-day rally. The biotech sector is very rate sensitive, and with real yields moving sharply higher and at new lows, one would expect to see the XBI dropping and probably going to new lows in the not-to-distant future.
The ARKK ETF also had a bad day, dropping by around 30 bps. Again, this falls into the same category as biotech. The higher real rates climb, the lower the valuation of the long-duration growth stocks that the ARKK ETF owns, which makes the NAV worth less.
We talked about Zoom yesterday, and it again is down around another 50bps and inching closer to breaking technical support at $76.45.
So anyway, that is all for a Monday afternoon.
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. 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.