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4/13/22
STOCKS – GS, C, JPM
MACRO – SPY, QQQ, TIP
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Stocks managed to rally today, regaining most of what they gave up yesterday, but not all. It is really amazing how much symmetry there is in the market. I don’t know how many of you remember this, but we talked about this back in December, how sell-offs seem to happen, and respect parallel trends. This is still the case, with this recent sell-off running lower parallel to the September and January drops. At this point, it seems that the drop should continue along with this general trend until we get below 4,300.
You can also see the potential Head And Shoulders pattern that has formed.
Today’s rally seemed to be all about the unwind of the VIX and hedging that was placed ahead of this inflation data. The VIX fell by 10% today and closed the gap around 21.25. I don’t think it was anything more than that, along with positioning ahead of tomorrow’s monthly options expiration.
The TIP ETF fell by around 20 bps today; meanwhile, the Qs rose by 2%. After years of following one another, I can’t believe that now that relationship will break down now. It is not unusual for the TIP ETF to lead the QQQ by a few days to a couple of weeks, so at some point, the QQQ will need to catch up, and as long as the TIP ETF keeps making lower lows, I suspect the QQQ will too.
JPMorgan (JPM)
JPMorgan fell sharply today after earnings disappointed, which was surprising given how much those estimates fell into results. It sounds like higher rates resulted in a slow down in mortgage originations, while the bank also started to set aside more loan loss provisions. The stock ended up falling below support at $129.50 and is now on its way to $122.
Citi (C)
Citi reports tomorrow, and if the result comes in like JPMorgan, then there is a good chance this stock fills the gap down to $43.40.
Goldman (GS)
Also, Goldman reports tomorrow, and JPMorgan saw pretty weak numbers in its investment banking unit but strong trading. I’m not sure where that leaves Goldman, but maybe that means results are mixed. The chart doesn’t look great, but there may be a falling wedge forming, which could lead to higher prices at some point down the road.
I don’t have much else to cover today; I’m kind of tired, to be honest, and looking forward to having Friday off.
-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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