October 18, 2021

Stocks – AAPL, MU, PYPL

Macro – SPY, VIX, TLT

Mike’s Reading The Markets (RTM) Premium Content – $45/MONTH OR $400/YEAR

• RTM: Stocks Stall On VIX And Dollar
• Pairing Down Tesla, Buying Allscripts
• RTM Exclusive: Tesla May Plunge Following Results Amid Massive Expectations
• RTM Tactical Update: The Dollar Will Determine The Equity Markets Next Move
• RTM – Volatility Should Return Next Week
• Short-Covering Really Ahead Of OPEX
• RTM – The Market May Be Worried About Growth

MICHAEL KRAMER AND THE CLIENT OF MOTT CAPITAL OWN AAPL

The S&P 500 finished the day higher by around 35 bps, but it was more mixed than that. The equal-weight S&P 500 ended the day higher by just four bps. The divergence was due to the help of the mega-cap stocks lifting the broader index higher, with FAAMG+T all helping and contributing most of the gains. The only two sectors to finish firmly green were technology and consumer discretionary’s.

There is a nearly perfect diamond pattern in the S&P 500, a very bearish reversal pattern. Today’s high was in line with a 78.6% Fib retracement of the peak to trough move lower from the past few weeks. Plus, with all of those open lower gaps, a drop to 4,360 would make a lot of sense. Tomorrow is Tuesday, and that day of the week is most famous for, well, turnarounds.

VIX (VIX)

The VIX finished the day slightly higher, at 16.30. Now, I know technical analysis on the VIX isn’t “suppose” to work. Still, you can see the shape of the falling wedge in the chart, a reversal pattern. Who knows, it may even be confirming the bearish diamond pattern in the S&P 500 above.

Shanghai Comp (SSE)

There is also that bearish descending triangle currently in the Shanghai Composite that bears watching after China’s horrible third-quarter GDP print last night.

Flatter Curve

Meanwhile, yields on the short-end of the curve continue to rise, with the 2-Year finishing the day up by two bps at 42 bps, while the 30-year finished the day down two bps at 2.03%. The prospects of QE are sending short-rates higher, while longer-term rates are pricing in slowing growth. It has the 30-2 yr spread on the verge of a massive breakdown, leading to significant curve flattening.

Apple (AAPL)

Apple had a stellar day on the back of its new AirPods and MacBook launch, plus these new M1 MAX/PRO chips. Maybe Apple has transformed into a company that deserves an Nvidia-like premium with these high-performance chips they are now producing? Something to think about for sure. The stock is struggling around resistance in this $145 to $146 level.

Micron (MU)

Can you believe that Digitimes is reporting that DRAM prices are likely to fall even more in the first quarter? Geez, Micron can’t get out of its own way. $58 is a long way from here.

PayPal (PYPL)

I had thought PayPal was going to head lower, but it is starting to look better these days. The stock held support at $257, and the RSI broke that downtrend. Now the shares appear to have formed a falling wedge pattern. A push above $271 sends the share higher to $280 for starters.

Have a good one.

Mike

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