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January 25, 2021
STOCKS – SQ, PYPL, TDOC
MACRO – SPY, VXX
Mike’s Reading The Markets (RTM) Premium Content – FREE 2-WEEK TRIAL
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Another fun day in the land of make believe, with the S&P 500 rising by 35 bps. Most of the gains came in the final few minutes of trading, essentially the opposite of what we saw on Friday. Meanwhile, the most shorted index soared by over 2.2%. The index has taken on a life of its own; it is really rather stunning.
S&P 500 (SPY)
The S&P 500 failed to take out Friday’s highs. At this point, it could mean something. Depending on what happens tomorrow, there are potentially three lower highs on the intraday chart. Ideally, the bulls need to see today’s high taken out tomorrow.
We can also see that the move higher is starting to tighten up, meaning the range is growing small, creating a rising wedge pattern. Additionally, the RSI has not confirmed the new highs with a new high of its own, and the Advance/Decline has now, potentially, stalled. A break of that lower trend could result in a steep pullback back to 3,200.
VIX (VXX)
The VIX had a pretty big day rising by 5%, despite the S&P 500 climbing. If you think that is strange, well, it is. That isn’t supposed to be what happens, but it does every once in a while. String a couple of days like that together, along with the S&P 500 rising at the same time, and you probably have a situation where the market is ready for a pullback; at least that has been the “tell” in recent months.
Square (SQ)
Square did not have a good day, with the shares falling almost 3%, and is down about 12.5% from its peak. For now, it is still holding on to support around $216and has tested this level a couple of times. It likely breaks that support level, as the RSI shows a lot of momentum being lost and that lower prices are likely coming.
PayPal (PYPL)
PayPal also appears to have a bearish pattern forming in it. With a potential rising wedge, along with an RSI that appears to be suggesting a decline to around $215.
Teladoc (TDOC)
Teladoc looks to be in the middle of a convexity/gamma squeeze. All the signs are there. Option volume exploding, implied volatility rising with the stock. It probably means a reversal lower in TDOC is around the corner.
That’s it
Mike
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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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