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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Stocks – PLUG, LMND, WFC
Macro – SPY, HGX, Lumber
- 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)
The housing sector seems to be the only group not surging to new highs, perhaps because interest rates are moving higher.
It could also be because lumber prices have soared, but the market is telling you the prices won’t stay this high.
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)
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%
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 results.