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February 17, 2021
STOCKS – AAPL, WMT, XOM
MACRO – SPY, VIX, OIL
Mike’s Reading The Markets (RTM) Premium Content – FREE 2-WEEK TRIAL
- Live Session 2/19 12:30 PM ET
- What Inflation Is According To The Fed
- Midday – Rates Have Already Impacted Stocks Like Apple
- Stocks Fall On Hotter Than Expected Inflation Rates
- T.W.A – Does Volatility Lie Ahead?
- Midday: Big Move Coming One Way Or The Other
- Apple’s Stock Sees A Big Bearish Bet
- Cisco Could See Lower Prices After Results
Strange day for stocks with the market dropping sharply at the opening following the hotter than expected producer price index. However, the S&P 500 managed to grind higher all day, filling the gap produced at the opening to finish lower by 3 bps and close at 3,931.
The rates on the 10-year climbed to around 1.34% today, which was the 2016 low. It would not be surprising to see some consolidation around this 1.3% level, or even a pullback and a retest of support around 1.2%.
Meanwhile, the VIX finished just a touch higher at 21.5 after rising as high as 23.4 Intraday.
I still believe that S&P 500 is at the top of the range, and the next likely move for the S&P 500 is lower, filling the technical gap at 3,780. The VIX continues to hold on to its trading range of 20 to 22, and I believe that will not change.
It will take a spike in the VIX to give the S&P 500 the fuel it needs to push through 3,950. Additionally, option expiration is this Friday. It seems likely that time decay in calls will force market makers to lighten up some of the there hedged positions, potentially weighing on stocks overall.
Fed Minutes
The Fed also noted that it was more than happy to let things run very hot in the minutes today. My takeaway is that what the Fed will consider inflation and what the market considers inflation will be two different things. I explain it in great detail in this video but. But those rising lumber prices, which are due to supply constraints, are not considered inflationary. Read the text of the minutes:
So only time will tell how the market responds to this. I can tell you from experience markets do not like the risk of runaway inflation rates, and what the market considers to be inflation well is up to the market. (Content for members of RTM- What Inflation Is According To The Fed)
Oil
Oil is in an extraordinary place, hitting up against resistance around $61.68 and a big downtrend, going back to late 2014. A failure at this level could be pretty big, with crude easily falling back to around $54.
Exxon (XOM)
It makes the rising triangle in Exxon potentially damaging, with a reversion to $46.20 possible.
Apple (AAPL)
Today, Apple dropped to support around $130, with the next level to watch for around $127. The uptrend in the stock is broken, and as I noted last week, there was a sizeable bearish bet on the stock. (Content for members of RTM – Apple’s Stock Sees A Big Bearish Bet
Walmart (WMT)
Walmart looks like it may be breaking out after passing the downtrend and resistance at $147. A push above that level could make the stock go higher to around $150, and preferable back to its highs of around $153.
-Mike
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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.
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