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September 16, 2021
Stocks – CAT, GDX, BABA
Macro – SPY, QQQ, UUP, IEF
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The S&P 500 finished the day lower, falling by 15 bps. The index fell sharply to start, and bottomed around the European close, and gained back most of the day’s declines. The index for the second day in a row climbed to a high of 4485 but failed to push through. That is the third attempt to get above 4485 this week.
Tomorrow is quadruple witching, and that should loosen this market up quite a bit and allow the volatility to pick up gamma levels get reset. The big reset comes right on the open when index options expire. This should immediately unleash the index from the tight trading range this week.
For now, it seems impossible to find any clues to what happens next. There has been no improvement in the Advance/Decline line, which has just continued sideways, and other sectors like housing and transport have continued to churn.
The only noticeable thing is that the percentage of stocks above their 200 day-moving-average in the S&P 500 is now at 70%, and that is the lowest level it has been in some time. In more recent times, when that number has fallen below 70%, it has been typically associated with the index dropping, so that may be a very important indication of what comes next if that number continues to trend lower as it has. There also remains a considerable divergence between it and the index.
Additionally the NASDAQ McClellan Summation Index is now trending lower again, and typically when the index gets this low is associated with lower levels on the NASDAQ Comp.
The same appears to be true for the S&P Index as well, although it is not nearly as low, but a rather notable divergence.
Yields
I’m stilling waiting to get some form of confirmation on treasury yields and which way they want to go. The other day it seemed as if we were going to break lower, but that has been avoided for now.Â
Dollar
The dollar was very strong today, rising back to 92.90 and the trend higher still looks very strong, with a retest of 93.50 likely coming soon.
Gold Miners (GDX)
The strong dollar heavily on the Gold Miners ETF today, which fell by 4%. The ETF finds itself at critical support around $31. A break of support at $31 would spell big trouble for the group and a big drop.
Caterpillar (CAT)
Caterpillar is struggling and is sitting on support at $203. The trends in the RSI are not strong, and suggest the decline is not finished yet. The way commodities like Iron Ore and Copper are dropping one would think that Caterpillar will be following them lower really soon.
Alibaba (BABA)
Just when you thought it couldn’t get any worse for Alibaba it actually can. The stock has been destroyed and I fear this is not the bottom for it. The stock is retesting support at $154 and the way the RSI and the price are coming together, there may be another leg lower to $146.
-Mike
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Charts used with the permission of Bloomberg Finance L.P. 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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