Monster Market Commentary

Stocks Rise And The VIX Rise As The Most Shorted Continue To Surge

February 8, 2021

STOCKS – SQ, XOM, LMND

MACRO – SPY, VIX

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Stocks advanced today, with the S&P 500’s last minutes push higher to close at 3,915. The index was fairly well-contained, trading below 3,910 all day with buyers stepping in for the final thirty minutes of trading, but with a powerful move right at the close.

The most shorted indexed did manage to push higher by over 4%, and the Russell pushed higher by more than 2%. The move higher continues to be a short-squeeze of epic portion with stocks like Sorrento, Fuel Cell, and Novavax leading the way. These are, of course, also in the Russell 2000.

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VIX (VIX)

The VIX was also up today, rising by around 2% to finish at 21.2. Again, one of the warning signs I like to track, rising volatility and rising stock prices; typically an indication of a market that is overheating as market makers jack up the pricing on options.

This, for now, remains the name of the market game, because if this is indeed the bottom of the range for the VIX, which I believe is, and implied volatility starts to rise again, then S&P 500 should be ready to take another dip lower. Whether it is of the 3-5% variety as we saw 2 weeks ago, or something more, I can’t tell right now.

The technical chart would suggest that 3,780 is the next spot on the S&P 500 we will soon see.

Square (SQ)

Square broke out today,, rising above $250. The stock is likely to rise slightly more, perhaps to around $280, and the top trend line.

Lemonade (LMND)

Lemonade is just flirting right now with a potential break of support at $140. If it t should fall below that support level,, it likely quickly returns to around $120.

Exxon (XOM)

Oil probably has a couple of more bucks to rise, which will probably be good news for Exxon. The stock broke free of resistance today around $51, and that will probably give it some more room to rise,, perhaps to around $54.

I don’t know, that’s all I have.

-Mike

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