September 11, 2020

STOCKS – TWLO, AMD, ZM

Macro – SPY, QQQ, 

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MICHAEL KRAMER OWNS QQQ PUTS

It seems hard to believe that 19 years have passed since this sad day so long ago. I remember it vividly. I can remember walking out of the subway that morning thinking about how beautiful a day it was, and wishing I could be at the beach. That turned out to be the best memory of the day.

S&P 500 (SPY)

Stocks are rebounding today after yesterday’s late-day meltdown. The S&P 500 ETF is currently up around 90 bps, and the immediate level of resistance I would look for a turn lower would come around $340, then, of course, around $342.25.

Even if we manage to close higher, I don’t think it changes much in terms of what has taken place and the damage that has been done. I would be shocked if we closed above $342.25.

NASDAQ 100 (QQQ)

The Qs are rising and testing resistance around $275, followed by resistance at $278.

I think these rallies should be treated as suspect, with a gap higher at the open and strong potential for a gap fill low throughout the day. In the past few sessions, the buyers have been run over, and call volumes have been unable to return to their peaks. It tells me that the same buying enthusiasm is not there. We will see, but today is Friday, and Fridays have been intense days because people are trained to believe there will be some positive news dump from the vaccine fairy on Sunday night or early Monday. At this point, I think the positive vaccine news has been priced into the market, and the greater risk is that of disappoint. 

I’m also surprised the market is giving a pass to congress for not getting a bill down. In fact, the longer it goes without a bill, the more unlikely I think a bill will come. The third quarter Atlanta Fed GDPNow is tracking a growth rate of 30.8% for the third quarter, which is about 7.7% q/q. It would leave us down just 3.3% on the year, far better than anyone expected, certainly better than I expected. It actually goes in favor of the Republicans and the President NOT to do a bill

If another bill doesn’t come, one can expect yields to rise and the dollar to strengthen, which will not be good for risk assets overall. So at this point, one could argue, there is more negative headline risk at this point than positive. 

Be careful today. It s not the same market you have grown to love over the past six months; something has changed. The breaking of those trend lines tells you that. 

Zoom (ZM)

Let’s see if Zoom can get past $394 today, or fails. If it fails, which I think it will, it is likely to head down $325.

Twilio (TWLO)

Twilio should find tough resistance around $975, with a drop below $910, sending the shares to $853.

AMD (AMD) 

Maybe today will be the day AMD finally breaks $78 and starts it descent to $72.

Have a good one
Mike

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