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1/8/21
Stocks – PLUG, LMND, WFC
Macro – SPY, HGX, Lumber
Mike’s Reading The Markets (RTM) Premium Content – FREE 2-WEEK TRIAL
- MIDDAY- HERE WE GO AGAIN, GAMMA, GAMMA, GAMMA!
- Morning Note- Euphoria
- Stocks Enter Bubble Zone
- Midday- As Long As You Know What You Are Up Against
- Morning Note – Waiting For The VIX To Fall
- MIDDAY – Bonds And The Dollar Don’t Seem As Excited As The Equity Market
- Link To Live Broadcast Starting 5 Mins
Stocks jump again on January 8, with the S&P 500 climbing 55 bps, to close around 3,825. Today the never-ending stimulus train continued to pump hope into investors’ dreams that money would be hitting their bank accounts.
Don’t worry about the horrible job report because that will ensure that even more stimulus will come. But the market has gone to extremes; the S&P 500 is now trading at its highest valuation since the 2000 bubble on a PE multiple. The daily chart shows that it has an RSI over 70, the monthly chart shows it’s now trading outside of its upper Bollinger Band for the third month in a row. (Paid Subscriber Content – MIDDAY- HERE WE GO AGAIN, GAMMA, GAMMA, GAMMA!)
Even more bizarre is the market could rise to even higher levels. Why, because the S&P 500 multiple peaked around 23 in 2000, which would equate to about 4500 on the index. So can the mania grow, sure!? (If This Is A Stock Market Bubble, It May Have Further To Go)
Housing (HGX)
The housing sector seems to be the only group not surging to new highs, perhaps because interest rates are moving higher.
Lumber
It could also be because lumber prices have soared, but the market is telling you the prices won’t stay this high.
Yields
The yield curve has exploded higher, with the 10-year minus 2-year now almost at 1%, its highest level since July 2017.
That’s why the banks are soaring. In a “should” be free story, I noted that Wells Fargo could rise to around $36. (Wells Fargo Could Climb Even Higher)
Lemonade (LMND)
Meanwhile, Lemonade jumped again. Do you know why? Probably not. Just look at the options volume that traded today. LoL. Look at the implied volatility spike; it’s only at 115%. It is s called a squeeze, no, not a short-squeeze, a gamma squeeze, or a convexity squeeze. Dealers are getting long the stock to hedge themselves against all those call options being traded. No, there isn’t a buyer for every seller; it doesn’t work like that in the options markets. The seller is the market maker, looking to make the spread. (I think this story is still free-Lemonade’s Stock Declines May Have Only Begun)
See FUBO if you don’t believe me – (fuboTV’s Stock Is In The Middle Of A Giant Squeeze)
But what do I know.
Plug Power (PLUG)
or maybe like Plug, with a soaring IV of 130%
Good luck!
-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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