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STOCKS – SNAP, FB, ZM, JPM
MACRO – SPY, VIX, TIP
- RTM: This Rally Won’t Last Much Longer
- RTM: Waiting For Options Expiration To Pass [Daily Update]
- RTM: Zoom’s Stock May Be Poised To Rise Following Results [Short-Term Options Idea]
- RTM: Gamma-Mania [Daily Update]
- RTM: Tighten Until Something Breaks
- RTM: Stocks Rally In Front Of Powell [Mid-Day Update]
Stocks jumped on Monday, rising by around 1.8% on the S&P 500. The pattern shaping up looks like the same setup that started on May 2 and 12th. The significant Intraday reversal was followed by the gap higher the next day, a period of consolidation, and the blow-off rally.
Of course, the reversal on May 5 came the day after the FOMC meeting, and the drop on May 18 came following Powell’s WSJ Q&A session. It is probably not a coincidence that the FOMC meeting comes this Wednesday afternoon. Based on the near 5.75% rally from May 2 to May 4 and the almost 6% rally from May 12 until May 18. It wouldn’t surprise me if the S&P 500 rallied to around 4025 to 4050 by the end of the day Wednesday.
But based on the pattern, it would seem that the sell-off would not start until Thursday.
That would probably get the VIX low enough and to around 25, which is probably enough to drop the market like a stone following the FOMC minutes and start the next down cycle.
Today’s price action seemed not “real” based on what I saw in the options market, especially for the SPY was a lot of put buying and call selling, certainly not bullish activity. So if that options activity can continue tomorrow, it would lend further evidence to what I am thinking about it. It certainly would stick with the current cycle of the market rallying post FOMC and selling off post Minutes.
There is a downtrend in the S&P 500 cash market, too, suggesting there is limited upside to just a bit above the 4,000 level.
The TIP ETF was down today, and it is important because it appears that it fell out of a bearish pattern, and it indicates it is probably on its way to another new low. If the TIP ETF makes another new low, it probably means the QQQ will not be too far behind.
Zoom is trading sharply higher following its quarterly results. Earnings were undoubtedly more robust; revenue just barely beat estimates. The company did increase its full-year earnings guidance while providing inline revenue guidance. The improved profitability outlook has the stock trading at over $90. I guess the options guys got this one right.
JPMorgan had a strong day rising by 6% after giving better than expected guidance today at its investor day. It certainly looks like the stock may be trying to break out, but we need to see this one follow-through tomorrow.
Snap is plunging after hours; the company noted in a regulatory filing it has seen the economy deteriorate faster than expected and sees revenue and EBITDA coming in below the low end of its guidance. With a gap to fill around $13, that is likely where the shares can settle.
That is also pushing Facebook lower and potentially out of the lower end of the diamond pattern I noted previously.
That’s going to be all for 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.