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STOCKS – WMT
MACRO – SPY, TLT
- RTM: Tighten Until Something Breaks
- RTM: Stocks Rally In Front Of Powell [Mid-Day Update]
- RTM: Stocks Face A Big Drop Early This Week [Daily Update]
- RTM Tactical Update: The Recent Rally Doesn’t Have Too Much Fuel Left In The Tank
- RTM: Q&A Session Summary
- RTM: LIVE ZOOM Q&A SESSION IS THURSDAY, MAY 12 AT 1 PM ET
- RTM: The Herd Is Running For The Exits
At least through this part of the week, I have gotten this all backward. I thought going into today; there would be put buying with Powell talking at 2 PM. Instead, the VIX has just melted, which has helped to re-inflate the S&P 500, which rose by about 2%. At this point, I think the S&P 500 overshot things and has moved too high. The big gamma level is around 4,000 and generally speaking, the market tends to stay around this level going into Options expiration. So unless there is a meaningful shift in gamma level overnight, it seems unlikely the options will let the index go much higher.
The rally has also taken the index back to resistance at 4,095, the bottom part of the bear flag I noted two weeks ago, which broke on May 9. It is also the 50% retracement level of wave three down and probably completes a wave four counter trend move. Meanwhile, wave C is equal to .618% of wave A within larger wave 4. The only other alternative is that S&P 500 rises and fills the gap at 4,123. Otherwise, I think the S&P 500 has overextended itself this time.
Powell did talk today but did not have his A-game, he just seemed off, and I felt like he couldn’t get his footing. I felt like he was on the defensive and struggling to find the right words. But I did get the sense that the Fed plans to keep raising rates until they see inflation break, which likely means something else breaks along the way. But I also got the sense that Powell isn’t entirely sure just how far they will have to raise rates to bring inflation, and that really shouldn’t be settling for the market at all. It is probably why we saw yield higher into the close of trading today.
It resulted in the TLT dropping by more than 1.2% on the day. I think the TLT has just started it’s next lower here and is probably heading to around $106.
Walmart was hammered today, dropping by more than 11%. The stock closed just a little bit above support at $130. If that technical support does not hold, there is much room for the stock to drop around $117.
This is going to be a short one today.
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. 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