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STOCKS – SHOP, DOCU, AMZN
MACRO – SPY, TIP, RATES,
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- RTM: The Rally’s End May Be Near
- RTM: Stocks Continue To Rising On CTA Flows
- RTM: Stocks Stall As Credit Conditions Tighten, ISM Stronger
- RTM Liquidity Update: Stocks Rise In July Due To Easier Access To Margin
- Replay Of Live Session
Michael Kramer and the clients of Mott Capital own SHOP
This is going to be a shorter one today.
Stocks continue to rally today, as short-covering continued with the S&P 500 up another 1.7%. The most shorted stocks are outperforming by a wide margin. The GS Most shorted index has been up nearly 31 since the middle of June, while the Nasdaq is up around 19%.
The velocity of the move and the nature of the outperformance tells us a lot about the nature of the rally, which is due to a broad short-covering rally. As I mentioned yesterday, CTA flows remain favorable to the rally, continuing a bit more. But we are entering a region that is likely approaching the end; we need a few pieces to fall into place, with a decent zone of resistance around the 4175 to 4230 region.
Rates likely have to move higher, especially following more hawkish commentary and the reshaping of the Fed Fund Futures curve, which shows the first rate cut doesn’t come until May. Further strengthening the case that rates will need to remain higher for longer was the ISM services report that was better than expected and suggested the real GDP is growing at a 2.4% rate, which is not recessionary.
Amazon is now really close to filling the gap; it needs to get just a bit higher.
Shopify may have finally broken out, clearing a significant hurdle around $40.60. Now, we just have to see if it has the juice to fill the gap at $48.50.
DocuSign has a similar setup to Shopify but a huge gap to fill up to $88.
Have a good one, more tomorrow.
Charts used with the permission of Bloomberg Finance L.P. 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.