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1/31/2022
STOCKS – SHOP, SQ, TSLA
MACRO – SPY, VIX, SKEW
- RTM: Real Yields Fall, Resulting In Market Rally
- RTM: Roblox Update
- RTM Technical Take – End Of Week Short Covering Rally
- RTM: Liquidity Seems To Be Thinning Out
- RTM: Looking For New Lows
- RTM: Fed DUMPS Stocks For Real Economy – Audio
Michael Kramer and the clients of Mott Capital Own TSLA
Stocks continued to rally from their oversold condition and avoided one of the worst single months in some time. Today, there was another considerable buy imbalance of over $4 billion worth. It follows Friday, $6 billion to buy. So this leaves me with the impression that a lot of this may have had month-end rebalancing stuff. The VIX also continued to move lower today, with closing at 24.80.
The S&P 500 managed to finish the day higher by 1.9%, and the NASDAQ finished the day higher by 3.2% on the Qs. But again, just looking at the charts, it seems like there is a high likelihood the rally has ended, and the ABC retracement pattern off of last Monday’s lows with wave A equal to the length of wave C. There could be another 10 points to go to the S&P 500 cash index, to 4,525, but I think that should be it. We will have to see what happens tomorrow.
VIX
The VIX also fell sharply today, which certainly supported the rally. The index managed to fall back to support around 25, and that level held. The volatility in the market has been pretty wild, and at 25, it probably doesn’t have much further to fall. The VIX currently implies about a 1.5% move in the S&P 500 daily, and given the moves in the market recently, 1.5% seems about right.
SKEW
The SKEW index also fell today, which is odd given that the VIX was down sharply. The takeaway is that the move down in the VIX was related to traders selling their puts positions again as the market went up and not due to traders selling volatility short. It is a sort of important caveat because short volatility sellers always rescued the market in the past.
Square (SQ)
It seemed like a bottom feeder day, with all of the stocks that have been destroyed rising. Square, for example, rose by almost 11%. Could it increase back to $133, sure the stock is more than oversold enough for that to happen.
Shopify (SHOP)
Shopify also rose by nearly 11%, and it could just as quickly move back to $1032.
Tesla (TSLA)
Tesla also rose by nearly 11% today but only managed to get back to the trend line. That downtrend has been in control, and while the stock can go back to $992, it doesn’t seem likely to me.
So we will see where this goes on turnaround Tuesday and how long these stocks can hold on to their gains.
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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