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 – GM, BA, GS
MACRO – SPY, QQQ, RSP
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- RTM- Replay Of Live Session
Stocks jumped again on December 7 as the VIX fell back to 21.9. This type of price action coupled with implied volatility move lower suggests a short-covering rally from oversold conditions. The move lower in the VIX means that traders were likely closing out put positions which led to market makers buying S&P 500 futures.
But I won’t expect the VIX to drop much more from these levels. The front-end of the term structure fell sharply, the rest of the VIX structure moved down less. Suggesting the market is still anticipating higher volatility in the future.
The volatility dump helped the S&P 500 to fill the gap at around the 4,695 area finally, we had spoken about in the past. The pattern today looks a lot like the pattern from November 29 and a few patterns we saw back in September. Most of the time, we have seen the S&P 500 give back the gains and fill the gap at lower levels, which would be around 4,600, with this type of pattern.
I have been working on something new the last few “weeks,” and I thought I’d try it out tonight. It has worked reasonably well in the Asian markets, so I will give it a shot. The box in the QQQs suggests the ETF falls back to and fills the gap at $386. If it works, we will see.
S&P EW (RSP)
The gap in the RSP also filled the gap today. The ETF tried to take out the gap but was unable to. The RSP was very sold, falling below 30 on the RSI and the Bollinger band.
Goldman also filled the gap today but could not push beyond it. The trend here remains bearish at this point.
The gap in GM was also filled today, with a lower trend still in place.
The gap in Boeing was also filled today, with a solid downtrend still in place.
That’s all today.
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. Past performance is not indicative of future results.