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The Stock Market May Be Setting Up To Break Sharply Lower

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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11/8/22

#STOCKS – $TSLA, DIS

#MACRO – $SPY, $VVIX

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Stocks finished the day higher by around 56 bps to close at 3828. The index had been up sharply, more than 1%, but managed to give it all back Intraday, even turning negative at one point. It appears that the futures have formed a diamond reversal pattern. These aren’t the most straightforward patterns to find, but this one is very close to breaking, so we should find out if it is correct relatively soon. If this does work out, I think we see 3,640, followed by new lows.

Volatility (VVIX)

The VVIX, which measures the volatility of the VIX, appears it may have bottomed, and today it started to push higher. We will want to see if this continues, as it can be a good leading indicator for the direction of the VIX and the overall S&P 500. If the VVIX starts to rise, the VIX is likely not far behind.

Disney (DIS)

Disney’s shares dropped sharply after posting disappointing quarterly results. The stock is trading at around $94. After that, you are talking about a stock that is probably heading back to the low to mid-80s. At the of end the day, this stock has gone nowhere since late 2014.

Tesla (TSLA)

Tesla continues lower, dropping further today. It is in between support at $180 and resistance at $209. The $180 area does become important because after that there is a long way down with a gap to fill to around $136. Not only that, but $180 could serve as the neckline of a Head And Shoulders pattern, and breaking that neckline would open the door to a new set of problems.

Anyway, I sense that tomorrow and the rest of the week will get much more interesting.

Take care,

Mike

Charts used with the permission of Bloomberg Finance LP. 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. Past performance of an index is not an indication or guarantee of future results. It is not possible to invest directly in an index. Exposure to an asset class represented by an index may be available through investable instruments based on that index. 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.