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Stocks May Head Lower Following Options Expiration On October 21, 2022

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.

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10/20/22

#STOCKS – $TSLA, $SHOP, $META

MACRO – $SPY, #DOLLAR, #RATES, $TIP

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Stocks finished the day lower, with the S&P 500 dropping by 80 bps. The index rallied initially as the dollar weakened, but the dollar rallied, and a weak 5-Yr TIP Auction sent rates soaring in the afternoon. That sent stocks into reverse, turning a 1% gain into a loss.

Tomorrow is Opex, and all that gamma at 3,700 in the S&P 500 will vanish on the opening. That may result in stocks moving lower from the stronger dollar and higher rates. The rising wedge is broken, and even a 61.8% retracement of the move from last Thursday’s lows sends the index to around 3,600.

10-Yr

It was just last week, I was on the Charles Payne show, and I was talking about the 10-Yr rising to between 4.25% and 4.5%. Today the 10-Yr closed at 4.23%; I still think it has some higher to go, with 4.3% now in reach.

TIP

Additionally, the TIP ETF is very close to breaking critical support. Once that support breaks, the TIP could drop to around $102, which would likely take the QQQ to a new low.

Dollar

The Dollar index is forming a symmetrical triangle, and usually, these triangles lead to breakouts in the direction of the prior trend, which in this case is higher.

Tesla (TSLA)

Tesla fell today to support around $207, which is where it stopped. That is the critical level, and should it give way, there is nothing to stop the TIP from falling to around $180.

Shopify (SHOP)

Shopify broke above the downtrend today, and the RSI continues to rise. That is bullish, in my opinion. I know the company reports next week, which will have a big say in what happens. For now, $30 is resistance.

Meta (META)

Meta keeps dropping, and the SNAP results won’t help for now. I don’t know where the bottom is, and $114 is possible should $123 break.

See you Sunday

Mike

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 investments.