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#STOCKS – $MCD, $GS, $TSLA
#MACRO – $VIX, $SPY, $TLT, $SPYG, $SPYG
- RTM: Tesla’s Stock Is On The Brink Of Breaking Down
- RTM- 11.4.22 Live Replay
- RTM: Live Q&A Session Friday 11.4.22 @ 1PM ET
- RTM: VIX Down Stocks Down
- RTM: Hawkish As Expected
- RTM- Pre FOMC
- RTM: The Hawkish Surprise May Come Tomorrow
- RTM: Inflation Could Be A Persistent Problem
Stocks finished the day higher on Monday, following through from Friday’s rally. Yields were higher across the board, and the dollar was again weaker. Still, the S&P 500 was able to generate a 1ish% rally. The market seems to be retracing some losses from last week on a continued decline in longer-dated implied volatility and dollar weakness.
But the concentration of implied volatility continues to build up for the November 11 expiration date for the SPY ETF.
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So again, this is a sign that the market is assigning a lot of risk to the CPI report. Instead of buying longer-dated hedges, traders are focused instead on the “day of risk,” which is why the VIX index has been falling steadily. Maybe the feeling is to hedge yourself for the day of and worry about what’s next after the fact.
The TLT was smashed again, and the ratio of the SPY to TLT was back to the upper end of the range. It indicates that stocks are overvalued to bonds, and the further this ratio rises, the more likely it is that stocks reverse hard.
SPYG to SPYV
The growth-to-value ratio is closing in on its 2019 highs, indicating that the reset is nearly over or the worse is still to come. But the reset is not over just yet.
Tesla had a lousy day falling by 5% and closing below support at $209. It was a significant break, as that $200 to $205 had held up very well for several weeks, and the fact that it broke today suggests there is further down in store for the stock, potentially down to $181.
Goldman Sachs (GS)
Goldman Sachs has been one of the stocks leading the Dow higher after results. I don’t understand the thought process here. The interesting thing about Goldman is that the VIX On Goldman has collapsed, and the price action looks like short-covering. We should find out soon if short-covering is the reason because the VIX on Goldman is pretty close to the bottom of the range.
Finally, Mcdonald’s hit a new all-time high just today, which is shocking in this environment. But what is it telling us about inflation after the company reported blowout same-store sales comps in the third quarter of 9.5% versus estimates of 5.8%? It is probably not a good thing when it comes to inflation.
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. Past performance of an index is not an indication or guarantee of future results. It is not possible to invest directly in an index. Exposure to an asset class represented by an index may be available through investable instruments based on that index. 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.