Subscribe to receive this FREE daily commentary directly in your email
4/23/24
#Stocks – $TSLA
#Macro – $SPX, #RATES, $DXY
Mike’s Reading The Markets Macro Subscription Service on Seeking Alpha
- Meta: Investors Anxiously Await
- Tesla: To Be Or Not To Be, That Is The Question
- RTM: Stocks Get A Break
- RTM: Live Session Replay
- RTM: 2-Yr May Go Back To 5.25%
Stocks finished the day higher, with the S&P 500 up 1.2%, following yesterday’s advance. So far, the rally has been relatively ordinary and boring. It appears to be bouncing in ordinary negative gamma fashion, with these rallies emerging out of thin air. However, that will likely start changing as we go through the rest of the week, especially as we get more data; it seems likely that rates and dollars will return from vacation.
We get the 5-year Treasury auction tomorrow, which could be a non-event but still needs to be watched. Today’s 2-year auction was a non-event for the most part. But by Thursday, when the GDP data starts to come out, we could see rates begin to move, which is important.
Generally speaking, we have seen credit spreads retreat, giving the green light to equities to bounce. Now, spreads have to continue to contract for stocks to rally, which is possible through the end of the day tomorrow. But if the data for the GDP comes in more in line with the Atlanta Fed’s GDPNow model of 2.9% and above consensus median estimates for 2.5%, then there is a good chance that rates and the dollar will start to move higher, which will lead to spreads starting to widen.
Additionally, next week, more data will be coming, including non-productivity, employment cost index, jobs data, JOLTS, ADP, and ISM. The Fed meeting will also come on Wednesday, so it would only make sense to me that, given the amount of data to come, we could see implied volatility start to rise again, especially on shorter-dated measures like the S&P 500 50-Delta 1-week option IV, which was flat today even though longer-dated IVs fell sharply.
So far, the S&P 500 has retraced 38.2% of the decline, which is nothing special.
Tesla report results didn’t look great on the surface. Still, headlines about cheaper models were enough to get the stock over the $150 level needed to get market makers to start buying back hedges. Put gamma was the largest at the $150 strike price and the $140 strike price; the IVs were over 100%. So, following the results, the IVs collapsed, and that was probably all that was needed to get the stock moving higher, even though the results were horrible on several levels, including a revenue and earnings miss. Gross margins were better than expected, though, coming in at 17.4% versus estimates of 16.5%; even automotive gross margins were better at 18.5% versus forecasts of 17.6%.
As long as it stays above $150, we could see a short squeeze up to the $170s.
Unlock Deeper Insights with Exclusive Member-Only Video Content on The Market Chronicles YouTube Channel – Just $34.99/Month
Strong Job Report Should Mean Higher Rates, Strong Dollar
The Market Appears To Be Broken
-Mike
Charts used with the permission of Bloomberg Finance L.P. 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.
Subscribe to receive this FREE daily commentary directly in your email
Charts used with the permission of Bloomberg Finance L.P. 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.
Liquidity Strains Persist Creating Dangerous Market Back Drop
Mott Capital's Market Chronicles 7 hours ago