Stocks Rally On September 28, 2022, As Rates Plunge

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9/27/22

STOCKS – $ZM, $GOOGL, $ZM

MACRO – $SPY, #RATES

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MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN GOOGL

Stocks jumped today after the Bank of England noted it would help to stabilize the British bond market. Rates fell dramatically across the curve in the UK, resulting in rates falling in the US. How far rates fall in the US is yet to be seen, as the UK bond buying operation will last only through the middle of October.

It sounds to me like the UK’s bond market was on the verge of spiraling out of control, and the central bank stepped in to stabilize it. How that is good news is beyond me. But after being very oversold, it didn’t take much for the market’s rebound.

But now, the S&P 500 has an RSI, back over 35. Additionally, the index failed again to get over 3,720 and hold on to the gains. So, after all of that, we are nowhere we haven’t been this week. Can the index rally to 3,760? Sure, it would be great to fill that gap at 3,760. At the same time, if we didn’t fill the gap, I wouldn’t be surprised either.

I have no view of the market as of this moment. I need some time to see where it steers me.

2-Yr

The 2-year rate fell by 16 bps to 4.13%, following the BOE news, and where the 2-year goes from here will depend on where the market thinks Fed Funds rates are going. Shorting the 2-year has been a very popular trade, and it has traded “special” now for some time in the overnight repo market, which means it is tough to borrow. I wouldn’t be surprised if much of the move-down in rates today was profit-taking.

Zoom rallied for a second day and continues to act as an excellent leading indicator for the market. But resistance is overhead at $76.45, so at least at the moment, the rally may be closer to its end than the beginning.

Amazon (AMZN)

Amazon rallied by around 3% today, but I’m not sure that the pattern in Amazon is all that bullish. It almost looks like a bear flag. But we will see what happens to it tomorrow.

Alphabet (GOOGL)

Alphabet has fallen out of its bear flag, filling the gap at $97.20. But the decline in the stock to this point doesn’t seem like enough to account for the size of the pole portion. Even from a conservative standpoint, a drop to $83 seems possible.

Anyway, we will see what tomorrow brings.

-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 investment.