Stocks Tank On December 16 As Reality Is Now Starting To Set In

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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12/16/21

STOCKS – AAPL, NVDA

MACRO – SPY, QQQ

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MICHAEL KRAMER AND CLIENTS OF MOTT CAPITAL OWN AAPL

I shared this video with members of my SA Marketplace service RTM today. I hope it helps explain a few things going on from my viewpoint. Also tomorrow I will be hosting a live Q&A session for members at noon ET.

 

So it turns out that yesterday was just a Vanna squeeze, with implied volatility dropping sharply, ramping up stock prices. The VIX started falling at 2:02 and never looked back. That’s over now.

The S&P 500 futures have an interesting tale of their own. At one point today, they traded at just a touch above their previous intraday high, hitting 4743.25, versus the high on November 22 of 4740.50. It was all downhill from there.

The S&P 500 fell just over 2% from intraday high to low.

It gets better because the NASDAQ 100 futures traded to a high of 16,457 today, and just above that 16,445 level we have been using as resistance since November 25. It was straight down from there too. The NASDAQ 100 fell about 4% from the intraday high to the intraday low.

Strange price action, very.

Tomorrow will be another exciting day with S&P 500 options expiring on the open along with stocks on the close. Maybe the market makers will try to get the S&P 500 back up towards 4,700 to salvage that strike price. But once that gamma comes off the board tomorrow, I think you will see more of today’s actions. As I have said for months reducing QE is tightening because financial conditions tighten. I track a number of spreads used in the Chicago Fed National Financial Conditions Index, and based on that, tightening has continued this week.

 

Apple (AAPL)

Apple fell sharply, giving back all of its gains from yesterday, and has a lot of gaps to fill at lower levels. I love Apple, I own it, but this thing needs to come back to around $165. It is just way overbought, and the gamma squeeze has lived its life, but it’s over now.

Nvidia (NVDA)

I think Nvidia is in the same place as Apple, with a gamma squeeze that took it higher and now needs to deflate, with $265 being its support.

Anyway, that’s all

Mike

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.