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Mysterious Trades, Apple, and The Stock Market Drop – Having Fun?

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Mysterious Trades, Apple, and The Stock Market Drop – Having Fun?

 

Having fun yet? The market the past couple of days has been intense to the say the least. For a while there today, it had seemed like that 2633 level I plotted out the on Monday was going to hold, but then the end of day sell-off smashed through. The finish to the day in the stock market was terrible, with the markets finishing on the lows.

Mott Capital Management, Michael Kramer

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Searching For The Stock Market Bottom

 

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But if we look around the market as a whole complex there are a lot of conflicting signals, and I’m not entirely sure which is right, any longer. The equity markets around the world are in turmoil, even tonight Japan is down over 3 percent, while Hong Kong is down about 4 percent.

The Hang Sang in Hong Kong topped out at about 33,500 also on January 26 and is now trading 29,500, a decline of roughly 12 percent. The FTSE 100 in London peaked at 7,785 on January 16 and is currently trading at 7,160, a drop of about 8 percent. So apparently this seems to be a global unwind, not just US related.

Meanwhile rising yield is not just US based either, with the German 10-Year Bund increasing by a considerable amount. Get this, on December 18 the 10-year Bund was trading at only 30 bps, as of today it trades at nearly 80 bps, that is huge! US 10-year rates were at roughly 2.35 percent on the same date, and are now at almost 2.85. But what seems to be interesting as well, is that we see no flight to safety anywhere! Surely not in Bonds.  Not in Gold, and not in the Dollar. The question is why?

The idea that this sell-off is about runaway inflation concerns seems lame, Gold is not even rising, nor is there any sign of that. For that matter, Oil has been falling recently as well.  Additionally, wages increasing by 3 percent, as noted in the January employment report, are anything but overheating.

What about the Fed unwinding the balance sheet, well to this point it seems to be more talk than action. There is zero evidence of a balance sheet unravel to this point. It is yet to be seen when a meaningful decline starts to happen.

Fed balance sheet

But if the market is freaking out about higher interest rates in the US shouldn’t the dollar be rising? But rates are also increasing in Europe as well, and perhaps that is why we are not seeing the dollar rising. But then some will argue that it is tax reform and the massive deficits to come, that will cause the dollar to weaken, but the dollar has hardly moved in either direction, but more in a range recently.

Meanwhile overnight libor rates, have also remained relatively unchanged. 

Mysterious Future Trades

But then when looking at a chart of the S&P 500 futures, it seems interesting to see a tremendous amount of volume to suddenly trade, when the cash market isn’t even open, in the middle of the night. The chart below shows that at 4:30 am on February 6, a tremendous amount of volume trades, more than any time since before September.  The trade reversed the futures and was of course on the day the stock market saw that big snapback 2 percent rally.  The real question is what is happening at that time of the day to see that type of volume trade? Asia is winding down, and Europe has only been open for about one and half hours, while the US is mostly still sleeping.

S&P 500

The S&P futures traded as low as 2,535 and the volume spike occurred around the price of around 2,575 we will call it. Watch that level in the futures.

S&P 500

It is bizarre, and it also came on the day after the VIX had a crazy surge and there was a substantial downdraft in the equity market in the middle of the day.  Somebody either made a colossal bet or covered a substantial short.

Let’s continue to monitor this and see if anything else comes of it. There are no coincidences though.

Apple

Apple closed right at its uptrend, and that is now two times it has tested that support level. Let’s hope it continues to hold. Apple was one of the first stocks to start declining, let’s see if can be one of the first on the way higher.

apple

Maybe Apple is the key to this market.

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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. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #sp500 #flashcrash #bottom

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stock market bottom

Here Is Why I Think The Stock Market Just Bottomed

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Here Is Why I Think The Stock Market Just Bottomed

Mott Capital Management, Michael Kramer

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From Yesterday’s commentary:

stock market

“As the chart above shows, the markets finished near the lows today, so to not see more selling to start the day would be surprising. In fact, what I would like to see is a gap lower on heavy volume, followed by a period of stabilization, and then a sharp turn higher mid-afternoon, with a positive close on the day.

Where would that turn occur? It is a good question, and I shall take a stab at it, and say 2,633. Again, this merely a guess and for entertainment purposes.”

 

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Genius or Dope

So either I’m a freaking genius or there some level of predictability to the stock market. For the most part what I wrote last night is precisely what happened in my opinion, even the turn at 2,633. There are no such things as coincidence, and what seems like chance, isn’t. Anyone who reads this commentary daily knows I never brag about my calls, and will almost always admit when I have been wrong.

S&P 500

But the stock market gave us exactly what I would have liked to see in a bottoming process; a sharp gap lower on the open, followed by snap rebound and the testing and re-testing of a bottom. That testing came at 2,633 on two occasions, after the initial plunge.

The chart has a fairly classic double bottom, followed by an overwhelming wave of buying going into the close of trading. The setup in the close suggests higher prices are coming with a rise back to around 2,740, in my opinion.

2,633

The 2,633 level is no random level by any means, that was the gap that was created in the S&P 500 chart on December 8, that went unfilled. Even more ironically the market jumped that due to the strong November job’s data.

s&p 500

We shall find out in a number of days time, just how smart or stupid I am, but you can’t fault a guy for trying.

Good luck.

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Mott Capital’s Reading The Markets – An In-depth Global Macro Stock Market Commentary – In Video Format – See How Michael Dissects The Markets

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Join our 536 Daily Subscribers And Get This Commentary In Your E-Mail! Subscribe

-OR-

Photo Credit Via Flickr

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. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #sp500 #flashcrash #bottom

machines run wild fall

Mayhem In The Stock Market As The Machines Go Wild

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Mayhem In The Stock Market As The Machines Run Wild

Over the weekend, someone asked me, how they would regain confidence in the stock market after Friday’s over 2 percent decline. My response, never. You should never be confident in the market; it is when you get lulled to sleep that shit happens.

Mott Capital Management, Michael Kramer

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Machines Gone Wild

Sharp Declines Continue

The past two trading days have been breath-taking, as I watched the Dow, and the stock market fall and just blow through various levels, it might have very well been Bitcoin trading at that point because the market was moving at speeds, honestly, I have never seen before. I have been in this business for over 20 years. I started my first summer internship in about 1997 when I was 19, but I began trading the market when I was 18 and started tracking the markets, even younger when I was 16. I repeat, I have never seen the market move with such speed.

S&P 500

 

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Incredible Speed

To show the speed of the market above is a one minute chart, and this so necessary to understand. At 2 PM the S&P was trading at roughly 2,730. By 3 PM it had declined by 40 points or nearly 1.5 percent. But from then it fell to a low of 2,638 by 3:10 PM. That is in 10 minutes; the S&P 500 fell by 1.93 percent, in just ten mins! That is not human, that is all ETF’s and ALGO’s just driving the prices down, and bids get pulled.

 

It is just a vicious cycle of the algorithm pushing stock prices, and ETF’s selling the stocks in the basket of the ETF’s holdings. It is the nature of the beast, and the effects can result in sharp downturns like today.

To sit here and say that at some level the S&P 500 is going to find support is crazy because as we saw today when the market is moving, it does not matter. The machines ran wild, and this is the what the human investor is up against.

As the chart above shows, the markets finished near the lows today, so to not see more selling to start the day would be surprising. In fact, what I would like to see is a gap lower on heavy volume, followed by a period of stabilization, and then a sharp turn higher mid-afternoon, with a positive close on the day.

Where would that turn occur? It is a good question, and I shall take a stab at it, and say 2,633.  Again, this merely a guess and for entertainment purposes.

stock market

The Rest Of The Market

But despite all the craziness in the equity market, which resulted in the VIX spiking by 115 percent to 37, as investors scrambled to buy puts for protection. Yields, the dollar, and gold remained relatively tame.

^VIX Chart

^VIX data by YCharts

Gold hardly moved today, which is very surprising, because investors tend to hedge bets by running to gold as haven trade.

gold

Even yields on the 10-year did not fall all that much, by maybe 8 bps, which doesn’t feel like a big move given the velocity of trading in the equity markets.

yield

Even the dollar index didn’t rise much.

dollar

If there is one piece of good news, it is that for now, this misery seems contained in the equity market, how long it will stay that way is an excellent question.

Any people ask me why I only invest for the long-term and gave up on the day-to-day to trading. Now you know.

Good luck.

Products from Amazon.com

Mott Capital’s Reading The Markets – An In-depth Global Macro Stock Market Commentary – In Video Format – See How Michael Dissects The Markets

Just $200 Per Year – Get Your Free Trial

Recent Videos:

Machines Gone Wild

Don’t Freak Out About Friday’s Sell-Off

How The “Street” Got Apple So Wrong

Qorvo Sheds Some Light On Apple

Did Broadcom Seal Apple’s Fate?

The Sky Is Falling. Relax It’s Not.

Getting Ready For S&P 500’s Pullback, Plus Subscriber Mailbag

Dollar Breaking Down, Biotech And Intel Breakout

Why Apple May Not Be Toast Afterall

Why It May Be Time To Get Bullish On Materials As Dollar Plunges

 

Free Articles Written By Mike:

Nvidia Options Traders Bet Big On Chipmaker As Stock Drops

Bitcoin Investors Face More Pain On Likely 35% Plunge

Why Apple’s Supercycle Has Only Begun

Qualcomm’s Time To Decide Its Fate Has Come

Why Visa’s Stock Is Running on Fumes

How Tesla Mauled The Bears

Chipmaker Broadcom Doesn’t Need Apple To Rebound

Apple May Lose Crown As World’s Most Valuable Company

Chipmaker Skyworks Seen Rising Despite Apple Skepticism

Why Boeing’s Stock Will Keep Flying High

Join our 536 Daily Subscribers And Get This Commentary In Your E-Mail! Subscribe

-OR-

Photo Credit Via Flickr

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. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #sp500 #flashcrash #yields #vix #nasdaq #djia