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 Weekly Monster Market Commentary and join the 3,342 subscribers getting it for FREE!
STOCKS – $ZM, $META, $XBI,
MACRO – $SPY, $QQQ, $SHY, $TIP
(The *Free Trial offer is not available in the app stores, it can only be applied on the desktop version of the SA website)
- RTM: THE S&P 500 MAKES A NEW LOW
- RTM: AMD’s Stock May Have Yet To Bottom
- RTM: Searching For New Lows
- RTM: Q&A Session Replay 9.23.22
- RTM: The Fed May Not Be Able To Stop Raising Rates Anytime Soon
- RTM: Fed’s Dot Plot Much More Hawkish Than Expected
- RTM: Pre-FOMC Meeting Briefing
- RTM: VIX Is Still Stuck
- RTM: Post FOMC Rally, No Matter What?
- RTM: Microsoft’s Stock Is Poised To Break Lower
I keep thinking today is Wednesday, and I’m not sure why. But it is only Tuesday, and the turnaround failed miserably. I have been thinking about the rates, especially in the UK, and what is happening there. I have never seen rates in any market move like that before. I’m wondering, I guess, if there is some gamma squeeze or forced liquidations taking place. The velocity of the move is stunning and unsettling because events like these are how things can break.
It isn’t much different for the US, as I have never seen rates move like this either. So I keep searching for signs of stress in the market, pulling out my 2008 playbook. We are seeing high yield spreads widen, and looking at the ratio of the SHY to HYG; it is clear that we surpassed the June highs.
These wider spreads drive volatility in the market, which we saw today, with the VIX now trading above 32.
At this point, I am unsure whether everything breaks, and we see spreads widen dramatically, and the VIX explodes higher, sending the S&P 500 down another 5 to 10%. Or a lid will be put back on the pot for another couple of weeks before the next downturn? That is where we are right now. Either the market will get much worse, or we are due for some hard bounce.
The S&P 500 did make a new intraday low before the end of the month. The index is oversold, but as much as it is oversold, it has been able to rally. Both Monday and Tuesday saw big rallies evaporate by afternoon. So this market appears to be consolidating right now and moving back inside its Bollinger band and removing some of that oversold condition. Another day or two of this could complete wave four.
The QQQs are not oversold, with the ETF bouncing off its lower Bolinger band and trading with an RSI of 29.3, which just does not fit my oversold criteria. I’m not sure why the QQQ held up better than the S&P 500 in the last couple of days. It certainly does not fit with the rise in real yields.
Meta is now trading below its pandemic lows and appears to be heading back to its 2018 lows. It’s crazy to think this stock could be heading back to $123.
There may be something happening beneath the surface of the overall market because today, Zoom was up, and sometimes, it seems like Zoom is a good indicator of where things are heading overall. I will need to watch this tomorrow.
The XBI also bounced today after finding some support around $76. Again, this can also be a leading indicator sometimes.
We can see tomorrow.
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.