This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.
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October 13, 2021
Stocks – AAPL, FB, TSLA
Macro – SPY, IEF
- RTM – The Market Maybe Worrying About Growth
- RTM Exclusive – A Stronger Dollar May Sink Freeport McMoran
- RTM: The Stock Market Has Changed In Anticipation Of Fed Taper
- RTM – The Soaring Dollar Is A Stock Market Killer
- Tactical Update: The Market And The Fed May Be Heading For An Epic Showdown
- RTM Exclusive: Lemonade’s Stock Is Still Crazy Expensive And Likely To Fall Further
- RTM Exclusive: Intel’s Stock Is Far From Cheap And May Head Lower
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN AAPL, TSLA
The S&P 500 was up today, rising by around 30 bps. It was an uninspiring rebound in the market. One would have thought with the dollar index down 50 bps and the VIX dropping to roughly 18.5, the outcome would have been a much more significant gain.
The VIX falling does not have the same impact as it once did, and perhaps it is because the reflexive action of the implied volatility melt is much smaller. As a result, you get an S&P 500 that gains just 30 bps. I guess you have to wonder what it is going to take to get the market moving higher. It is an excellent question. Is the VIX falling to 16 going to get the index back to 4,550? When going from 20 to 18.6 over the past two days, got a big 30 bps rally? Good luck.
At this point, I would be more worried about the market falling and the VIX spiking to say 24 or 25, which would likely result in a considerable decline in the index. This market has become too mechanical and too tied to the options market. It is so apparent. Just look at the orange line (S&P 500) and compare its peaks and troughs with the blue (VIX).
Even with the dollar down big, it was no real help for stocks. Look at the relationship between the dollar and S&P 500 from the dotted purple line on the right. The chart has the DXY inverted in blue, with the S&P 500 futures in orange. So when the dollar rises, the S&P 500 falls. The dollar was down pretty big today, yet the S&P 500 did very little.
Apple fell today, but the market seemed to blow off the news about the iPhones yesterday. The stock was still down about 40 bps, but not nearly as much as one would have expected. I don’t think anything changes from yesterday, with the shares still on pace to drop to the trend line around $132.
Facebook looks oversold at this point, and it managed to hold on to support at the 200-day moving average for now. Still, it is likely to rise a bit from here, with $325 the optimal target as we head into earnings.
Tesla looks like it has formed a rising wedge pattern, and that is a bearish reversal pattern. It is accompanied by an RSI that is now overbought. A drop below $795 probably sets up a drop to around the $ 720s to start.
That’s all I have today, sorry it was more exciting.
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future result.