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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STOCKS – $ZM, $FDX, $COF
MACRO – $SPY, $QQQ, #RATES, $VIX
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- 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
- RTM: Capital One Shares May Plunge
Stocks were up today to start the day, rising by around 70 bps, then after the Fed announcement came, they dropped sharply. Then on schedule, around 2:30, the implied volatility melt started helping to bring stock higher and to their Intraday high, up around 1.3%. But the rally didn’t last, as sellers emerged and the implied volatility rip faded. The index gave back all of the gains, finishing at the lows of the day down around 1.7% and closing below support at 3790.
As I have noted for some time, I think the S&P 500 and the NASDAQ are heading for new lows, and today’s Fed meeting seemed to confirm that is likely where stocks are heading. The dot plots made it very clear that the Fed will not be cutting rates anytime soon and is front-loading hikes, with the potential for 125 bps of hikes between now and year-end, and there are only two meetings left.
S&P 500 (SPY)
The break of support at 3,790 could be significant because the next gap that needs to be filled for the S&P 500 comes at around 3,675, which is right back at the June lows. Additionally, the broadening wedge is in the middle of playing out, which would also indicate that the S&P 500 could be heading to new lows.
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For the QQQ ETF, that are no open gaps from what I can see, and if real and nominal rates are heading higher, then the QQQ should continue to head lower. I think the QQQ will also be heading to new lows and undercutting the $269 level.
The VIX options expiration took place this morning, and the more hawkish than expected FOMC projections sent the VIX higher. This 28 level is enormous and has been strong resistance for some time. But that was primarily due to opex, and now that opex has passed, the VIX should be able to move more freely, so a spike higher from here would not be surprising.
Additionally, based on the FOMC projections, I think the 2-Yr rate is heading to 4.25%, if not even higher.
Zoom made another new low today, and the break of support at $76.50 opens the door for a drop to $70.
FedEx continues to drop following results, and now it is on the cusp of filling that gap from July 2020, down at $139.
Capital One (COF)
I had seen some bearish option betting earlier this week in Capital One, and the stock looks like it could fall off a cliff at this price, with $80 being the next major support level to come.
Have a great night.
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.